CMA Intermediate · Financial Accounting · Final Accounts of Commercial Organisations
Which of the following items is correctly shown on the debit side of the Trading Account of a trading firm?
Carriage inward is shown on the debit side of the Trading Account because it is a direct expense incurred in bringing purchased goods to the business. The other items are indirect or financial charges and are debited to the Profit and Loss Account.
- ACarriage inwardCorrect
- BDiscount allowed to customers
- CSalaries of office staff
- DInterest on bank loan
Explanation
Carriage inward is a direct expense incurred to bring goods to the place of sale, so it is debited to the Trading Account. Discount allowed, office salaries and loan interest are indirect or financial expenses and go to the Profit and Loss Account.
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