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Selling and Non-Selling Expenses

It is important to understand the difference between the selling and non-selling expenses as it will impact the valuation of closing stock, abnormal loss and net profit of the consignment business. The differences are summarized in the following points:

 

Non- Selling expenses

Selling expenses

All those expenses which are incurred up to and until the goods have reached consignee’s godown are called non-selling expenses

In other words, all expenses incurred to bring the goods to the present location and condition are called non-selling expenses

All those expenses which are incurred after the goods have reached consignee’s godown are called selling expenses


 

 

Non-selling expenses are also called non-recurring expenses

 

Only non-selling expenses shall be considered for the purpose of valuation of closing stock and abnormal loss

 

Example of non-selling expenses shall include Freight charges, Unloading charges, Coolie and cartage, Octroi, toll tax, direct expenses, Carriage inward etc.

Selling expenses are also called recurring expenses

 

Selling expenses should not be considered for the purpose of valuation of closing stock and abnormal loss

 

Examples of selling expenses shall include, advertisement expenses, Printing and stationery, Carriage outward, Godown rent, salaries to the employees etc.

 

Note: 

  • The classification of selling and non-selling is done only for the purpose of valuation of closing stock and abnormal loss.
  • Irrespective of nature and quantum of expenditure, if it is expenditure in relation to consignment, it should be borne by consignor.





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