direct expenses and indirect expenses

What are Expenses in Tally

What are direct and indirect expenses? when a person starts a business, there are many types of expenses in the business, such as rent, salary, electricity bill, telephone bill, rent, petrol, stationery, courier, etc. So these expenses are called expenses in the language of accounting. Now it comes to the fact that there are two types of expenses, Direct Expenses and Indirect Expenses and when an accountant enters these expenses in tally, it becomes difficult to identify which expenses will go to direct expenses and which ones. I will go for indirect expenses.     

Today I will tell you in very simple words that how many types of expenses are there, how to identify them and which expenses will come under which category.

Types of Expenses in tally accounting

1. Direct Expenses

2. Indirect Expenses

Direct Expenses:- Expenses that are incurred by purchasing the material and bringing it to the factory till its manufacturing, we call them Direct Expenses,

Example Purchase, freight, carriage, wages, octori, handcart rent etc.

Indirect Expenses:– When the raw mall reaches the factory, then the expenses incurred between its production and production are called indirect expenses. These expenses can be daily as well as monthly.

Example :- Salary, Electricity bill, stationery, petrol, rent, postage & corior, tea, water bill, telephone bill, etc.

How To Maintain Expenses in tally Accounting

When there are direct expenses and indirect expenses in business and if we maintain it in tally, then it becomes our profit & loss account and we get to know the net profit or net loss of the business. If we also want to see the full account of someone, then we can easily extract his complete details. And by this we get to know the real status of the business. We can also see the details of these expenses monthly, or we can also easily see the record since we have maintained these expenses in tally.

Why it’s important to put expenses in their right Group

Many times it happens that we maintain all our expenses in our tally, but still we are not able to know the profit or loss of our business properly or tell it wrong. So the reason for this is that the expenses you have maintained in tally have been put in the wrong group. Due to which your Profit & Loss account becomes incorrect, and cannot give the actual result. so you enter the rules according to their group of all expenses so that your Profit & Loss account is prepared properly and you can find out your business real status.

What are Prepaid expenses and outstanding expenses in tally

In Tally, apart from direct expenses and indirect expenses, there are 2 types of expenses, which are called prepaid expenses and outstanding expenses. These expenses are not maintained in profit and loss account. Prepaid expenses and outstanding expenses are either assets or liabilities of a company. Which is shown in the balance sheet by any company or person. Let’s understand them.
Such expenses which have been paid by the company ahead of time and the goods or services have not yet been taken by the company, such expenses are called prepaid expenses. Prepaid expenses are the current assets of a company because it is paid by the company ahead of time. You can understand prepaid expenses with the example of an insurance company.
But outstanding expenses are such expenses whose services have been taken by the company but that service has not been paid for yet. Outstanding expenses are the liability of any company which the company has to pay in the coming time. Examples of these are telephone bill, light bill, electricity expenses, office rent. The accountant has to maintain the prepaid expenses and outstanding expenses in the balance sheet of the company.

What are Unearned Revenue in Accounting

Outstanding Expenses in Accounting

What is Accrued Income

Depreciation Definition In Accounting

Debit and Credit Rules of Tally Accounting

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