Q.Which of the following is a Direct Expense, correctly shown in the Trading Account?
(A) Office Rent
(B) Carriage Inward on Purchases
(C) Advertisement
(D) Salaries

Carriage inward is directly connected with bringing purchased goods into the business, unlike office rent, advertisement, or salaries.

Check each item against the test: is it directly connected with buying/readying goods for sale?

Direct expenses are those incurred in bringing goods into the business and making them ready for sale.

Option-by-option analysis:

• (A) Incorrect — office rent is an indirect expense, shown in the Profit and Loss Account.
• (B) Correct — carriage inward on purchases is a direct expense.
• (C) Incorrect — advertisement is an indirect (selling) expense, shown in the P&L Account.
• (D) Incorrect — salaries are an indirect expense, shown in the P&L Account.