Question

Expenses incurred in purchasing goods bringing them to the business and making them fit for sale is

• A. direct expense
• B. indirect expenses
• C. operating expense
• D. non operating expense

Answer 1

Answer:

A. direct expense

Direct expenses are costs directly related to the purchase or production of goods. They are incurred to bring goods to the business and make them ready for sale. Examples of direct expenses: Freight or carriage inward – cost of transporting goods to the business. Import duties / customs duty – if goods are imported. Insurance on goods during transit – while bringing goods to the warehouse. Cost of packaging or packing for sale – if it is part of making the goods saleable.