The double entry for distribution costs is really simple. Distribution costs are only records in the income statement and they are no records in the balance sheet as well as other financial statements like a statement of change in equity as well as a statement of cash flow. Note that there is no difference in accounting treatment for distribution costs and other expenses. The total distribution costs are deducted from the company’s gross profit to calculate the net profit or loss of the company for the period. Specifically, note the selling and distribution expenses. You may not be able to see it in the face of financial statements, but you surely could see it in the note to financial statements. Related article What Are The Direct Costs? Definition, Examples, and Benefit Accounting for distribution costs:Īll distribution costs are considered indirect expenses and come under the head of selling and distribution expenses in the company’s profit and loss statement. It is mainly concern with logistics, shipping, and insurance while the selling and marketing expenses are mainly concern with the advertisement, commission, and salaries of marketing staff. Here note that distribution expenses are different from selling and marketing expenses. The cost of transporting a product from the production department to a warehouse will also include in the total distribution costs. In some companies, there is a reasonable distance between the company’s production department and its warehouse. The same as other operating expenses, distribution costs are also records in the income statement of the entity during the period the costs are incurred.ĭistribution costs mainly consist of transportation expenses like:Īnd maintenance of vehicles used for transportation purposeįrom the above definition, we can say that the sum of all costs incurred in respect of transporting of a product from the production department to the distributor, distributor to retailer, and from retailer to end consumer would be included in total distribution costs. Distribution cost is the sum of all expenses (direct and indirect) incurred by any company, firm, individual, or any other entity to deliver their products from the production department to the end consumer.ĭistribution costs are also known as distribution expenses and they are records in the income statement of the entity by using the same accrued concept the same similar to other expenses.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |