Explain the items on the debit side of Trading and Profit and loss account.

Items on the debit side of Trading and Profit and loss account:

• Opening Stock: It is the stock of goods in hand at the beginning of the accounting year. This is the stock of goods which has been carried forward from the previous year and remains unchanged during the year and appears in the trial balance.
• Purchases Less Return:-Goods, which have been bought for resale appears as purchase on the debit side of the trading account. They include both cash as well as credit purchases. Goods which are returned to suppliers are termed as purchase returned and hence deducted from total purchase.
• Wages:- Refer to remuneration paid to workers who are directly engaged in factory for loading, unloading and production of goods are debited to trading account.
• Carriage inwards/Freight inwards:- These expenses are the items of transport expenses, which are incurred on bringing materials/goods purchased to the place of business.
• Fuel/ Water/Power/Gas:- these items are used in the production process and hence are part of expenses.
• Packaging material and packing charges:- Cost of packaging material used in the product are direct expenses as it refers to small containers which form part of goods sold. However, the packaging refers to the containers that are used for transporting the goods and is regarded as an indirect expense debited to profit and loss account.
• Salaries:- These include salaries paid to be the administration, go-down and warehouse staff for the services rendered by them for running the business.
• Rent Paid:- These include office and go-down rent, municipal rates and taxes, factory rent and taxes.
• Interest Paid:- Interest paid on loans, bank overdraft, renewal of bills of exchange, etc. is an expense.
• Commission Paid:- Commission paid or payable on business transactions undertaken through the agents is an item of expense and is debited to P&L A/c.
• Repairs:- Repairs and small renewals/replacement relating to plant and machinery, furniture, fixtures, fittings, etc. for keeping them in working condition are included under this head.
• Miscellaneous expenses:- Though expenses are classified and booked under different heads, but certain expenses being of small amount clubbed together and are called miscellaneous expenses.