![]() ![]() Selling expense is also known as sales expense. However, under a contribution margin income statement format, you would be justified in reporting commissions within the variable production expenses section of the income statement, since commissions usually vary directly with sales. You would normally report selling expenses in the income statement within the operating expenses section, which is located below the cost of goods sold. This means that selling expenses tend to be recognized as expenses more quickly under the accrual method than under the cash basis of accounting. Under the cash basis of accounting, you should charge them to expense when paid. Under the accrual method of accounting, you should charge them to expense in the period incurred. There are varying treatments of selling expenses. Research and development expenses (300) General and administrative expenses (200) Impairment losses on trade receivables (100) Operating profit (loss) 1900 Statement of profit or loss 202X1 Revenue 3000 Cost of goods sold (600) Gross profit 2400 Other income 500 Selling, general and administrative expenses2 (900) Impairment losses on trade. An Internet store may have few direct selling costs, but will incur large marketing costs to advertise the site and promote it through social media. Alternatively, if most sales are handed off to outside salespeople, commissions may be the largest component of selling expense. For example, a customized product will require considerable in-person staff time to obtain sales leads and develop quotes, and so will require a large compensation and travel cost. The proportions of costs incurred can vary dramatically by business, depending upon the sales model used.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |