ECONOMICS

Detailed explanation-1: -These are mainly the administrative, selling and distribution expenses. Examples are salesmen commission, salary to office, insurance, legal charges, audit fees, advertising, free samples. Similarly, bad debts will also be shown in profit & loss a/c.

Detailed explanation-2: -Bad debt expense is reported within the selling, general, and administrative expense section of the income statement. However, the entries to record this bad debt expense may be spread throughout a set of financial statements. The allowance for doubtful accounts resides on the balance sheet as a contra asset.

Detailed explanation-3: -Sales and Distribution Expenses Sales and distribution expenses mainly consist of salaries and benefits for staff, transportation and insurance costs, maintenance and repair expenses, travelling expenses, office utility expenses, business entertainment and marketing expenses and depreciation costs.

Detailed explanation-4: -A bad debt expense is typically considered an operating cost, usually falling under your organization’s selling, general and administrative costs. This expense reduces a company’s net income over the same period the sale resulting in bad debt was reported on its income statement.

Detailed explanation-5: -Bad Debts: If this department is under the charge of sales department then bad debts will be treated as selling overhead but if it is under the secretary or the accountant then such bad debts will be treated as administration overhead.