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Core Activities & Non-Core Activities

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Question

Select the most appropriate alternative from those given below:
Royalty on production is a _______ expenses.

A

direct

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B

indirect

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C

capital

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D

none of them

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Solution

The correct option is A direct
Trading account is prepared by considering all the direct expense. Trading account shows the gross profit or loss from the direct trading/manufacturing activity of the firm.

Royalty on production is a direct expenses and to be debited to the manufacturing/trading account.

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