1.Wages and Salaries: The item 'Wages' usually represents the remuneration paid to workers who are directly engaged in the production of goods. It is; therefore, shown on the debit side of the Trading Account (or Manufacturing Account, if prepared) as it is a direct expense. The item 'Salaries' usually represents the remuneration paid to employees working in the office. It is an indirect expense and is, therefore, shown in the Profit and Loss Account. The difficulty arises when wages are clubbed with salaries and the Trial Balance includes a single amount for 'Wages and Salaries'. In such a situation the amount may be shown in the Trading Account. It is based on the assumption that the item includes the salaries of the supervisory staff in the factory itself. But, if the item in the Trial Balance reads 'Salaries and Wages' it will be taken to the Profit and Loss Account on the assumption that the item includes wages of the office staff such as messengers, watchmen, etc.

Note that wages paid to workers engaged for the construction of building or for installation of machinery are a capital expenditure and should therefore be added to the cost of the asset concerned. These are not to be shown in the Trading Account.

2.Carriage: Normally, carriage is the amount paid for bringing the goods purchased to the place of business. It is called Carriage Inwards and shown in the Trading Account. But, when it relates to the goods sold it is called Carriage Outwards. This is treated as a distribution expense and charged to Profit and Loss Account

However, if it is not indicated whether the expenditure on carriage relates to purchases or sales, it is to be treated as carriage inwards and so charged to Trading Account.

3.Trade Expenses: This item represents various small and miscellaneous expenses incurred in the business. It is transferred to the debit side of Profit and Loss Account. They are also called GenGal Expenses or Sundry Expenses or Miscellaneous Expenses.

4.Packing: The cost of packing materials such as polythene bags, wrapping materials, etc. used for packing the items for delivery is a distribution expense and hence charged to Profit and Loss Account. Where, however, packing is essential to make the products fit for sale in the market as in the case of cigarettes, biscuits, medicines, oil etc., it is called 'packaging' and such expenditure is charged to the Trading Account.

5.Samples: Generally, samples of goods are distributed free of charge to increase sales. The cost of such samples should be treated as a selling expense and so debited to Profit and Loss Account.

6.Insurance: Generally, assets are insured to cover the risk of loss, say, by fire. Premium paid to the insurance company should be treated as a business expense. When assets such as factory building, factory machinery etc. are insured, the insurance premium should be debited to Trading Account. If, on the other hand, the premium is paid for insurance of assets in the office, such as office building, office furniture, etc., it should be charged to Profit and Loss Account.

Sometimes, it is not indicated whether the premium paid relates to factory assets or office assets, the same should be shown in the Profit and Loss Account.

7.Rent, Rates and Taxes: These are charges levied by the municipal bodies on the house property. It is a common item of indirect expenses debited to the Profit and Loss Account.

8.Royalties: Royalties refer to the payments made for the use of a copyright or a patent. The amount of royalty is generally based on the quantity produced. It is, therefore, treated as a direct expense and charged to Trading Account. But, if it is calculated on the basis of quantity sold as in the case of books, it is shown in the Profit and Loss Account. Royalties are also paid to the Government for extraction of minerals such as coal, diamonds, gold, etc. These are charged to the Profit and Loss Account of the mining companies.

9.Income Tax: It is the tax payable by a person on his income. In the case of a sole trading concern, the tax paid by the proprietor on the profits of the business is treated as a personal expense. Hence, it should be added to drawings or directly deducted from capital.