View Discount Allowed Is Direct Or Indirect Expense Background. Expenses are amounts paid for goods or services purchased. Sales discounts (along with sales returns and allowances) are deducted from gross sales to arrive at the company's net sales.
A cost may be direct for one cost object but indirect for another. We can find out the share of an article in large number of expenses also, the nature of the business will determine what is direct cost and what is indirect expenses. Every type of business will have both indirect and direct expenses.
Discounts allowed represent a debit or expense, while discount received are registered as a credit or income.
Each branch sells a variety of food products. Even smaller operations like a locally owned auto repair will need to account for both types of costs within the accounting records. Rent paid for building, salary of housekeeping staff front office staff restaurant staff like cook chef, waiter, caption etc. All expenses other than direct expenses are assumed as indirect expenses.