{"id":8701,"date":"2013-02-28T10:18:13","date_gmt":"2013-02-28T10:18:13","guid":{"rendered":"http:\/\/vskills.in\/certification\/tutorial\/?p=8701"},"modified":"2024-04-12T14:14:28","modified_gmt":"2024-04-12T08:44:28","slug":"classification-of-expense-income-assets-and-liabilities-2","status":"publish","type":"page","link":"https:\/\/www.vskills.in\/certification\/tutorial\/classification-of-expense-income-assets-and-liabilities-2\/","title":{"rendered":"Classification of Expense Income Assets and Liabilities"},"content":{"rendered":"\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><a ref=\"magnificPopup\" href=\"https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2020\/12\/MEANING-AND-SCOPE-OF-ACCOUNTING-6.png\"><img loading=\"lazy\" decoding=\"async\" width=\"750\" height=\"400\" src=\"https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2020\/12\/MEANING-AND-SCOPE-OF-ACCOUNTING-6.png\" alt=\"Classification of Expense Income Assets and Liabilities topic details\" class=\"wp-image-92099\" srcset=\"https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2020\/12\/MEANING-AND-SCOPE-OF-ACCOUNTING-6.png 750w, https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2020\/12\/MEANING-AND-SCOPE-OF-ACCOUNTING-6-300x160.png 300w\" sizes=\"auto, (max-width: 750px) 100vw, 750px\" \/><\/a><\/figure><\/div>\n\n\n\n<p><a href=\"https:\/\/www.vskills.in\/certification\/tutorial\/business-accountant\/\" target=\"_blank\" rel=\"noreferrer noopener\">Go back to Tutorial<\/a><\/p>\n\n\n<h3><strong>Classification of Expense Income Assets and Liabilities<\/strong><\/h3>\n<h4><br \/><b>Classification of Expenses<\/b><\/h4>\n<p>The expenses can be classified into two major head that Direct Expenses &amp; Indirect expenses.<\/p>\n<ul>\n<li><b>Direct Expenses:\u00a0<\/b>Expenses which are directly related to the production of material, like raw material purchase, direct labor, wages, carriage inward, etc in case of a manufacturing concern, Without these expenses the production of material is not possible.<\/li>\n<li><b>Indirect Expenses:<\/b> These expenses are those which are incurred after the production of the goods. These include salary, insurance, rent, etc.<\/li>\n<\/ul>\n<h4><b>Classification of Incomes<\/b><\/h4>\n<p>Income has been divided into two main categories operating income and non-operating income.<\/p>\n<ol>\n<li><b>Operating Income: <\/b>Income accruing to the organization in the normal course of <a href=\"http:\/\/www.vskills.in\/certification\/Certified-Business-Accountant\">business<\/a>. Example: Sales of goods by trading or manufacturing concern.<\/li>\n<li><b>Non-Operating Income: <\/b>Income other than operating income accruing to an organization. Example: Rent received, Interest on securities, etc.<\/li>\n<\/ol>\n<h4><b>Classification of assets<\/b><\/h4>\n<ul>\n<li><b>Current Assets: <\/b>These are those assets which are continuously circulated in the business to meet the day to day requirement and hence also called circulating assets, or assets which can be converted into cash within one year of time are known as current assets. For Example Cash, Sundry Debtors, O\/S wages, Prepaid expenses, etc.<\/li>\n<li><b>Long-term Investment: <\/b>These investments are to be held for many years and are not intended to be disposed of in the near future.<\/li>\n<li><b style=\"font-size: inherit;\">Fixed Assets: <\/b><span style=\"font-size: inherit;\">Assets that are acquired for the purpose of establishment of the business entity and are acquired for relatively long periods for carrying on the business. Example: Goodwill, Plant, Machine, and furniture, etc.<\/span><\/li>\n<li><b style=\"font-size: inherit;\">Tangible Assets: <\/b><span style=\"font-size: inherit;\">Assets which have physical existence or which can be touched are known as tangible assets. Example Plant and Machinery, buildings, furniture, etc.<\/span><\/li>\n<li><b style=\"font-size: inherit;\">Intangible Assets: <\/b><span style=\"font-size: inherit;\">Assets that have no physical existence and cannot be touched are called intangible assets. For example Copyrights, trademarks, patents, goodwill, etc.<\/span><b style=\"font-size: inherit;\">\u00a0<\/b><\/li>\n<\/ul>\n<h4><b>Classification of Liabilities<\/b><\/h4>\n<ul>\n<li><b>Owner\u2019s Fund: <\/b>It represents the capital contributed by the owners together with retained earnings example: Share capital and General reserve<\/li>\n<li><b>Current Liabilities: <\/b>The liabilities that can be settled within a normal operation cycle of a business are known as the current liabilities. Most of the current liabilities should be settled within a year&#8217;s time using the current assets. For Example Sundry Creditors, O\/S Wages, Bills Payable etc.<\/li>\n<li><b>Long-term Liabilities: <\/b>These represent the liabilities which have long repayment period. For example: Debenture, long term loan etc.<\/li>\n<\/ul>\n<div class=\"apply\">\n<h3><a href=\"https:\/\/www.vskills.in\/practice\/business-accountant\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-92060 aligncenter\" src=\"https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2020\/12\/Add-a-subheading.png\" alt=\"certified business accountant free practice test\" width=\"960\" height=\"150\" srcset=\"https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2020\/12\/Add-a-subheading.png 960w, https:\/\/www.vskills.in\/certification\/tutorial\/wp-content\/uploads\/2020\/12\/Add-a-subheading-300x47.png 300w\" sizes=\"auto, (max-width: 960px) 100vw, 960px\" \/><\/a><\/h3>\n<\/div>\n\n\n<p><a href=\"https:\/\/www.vskills.in\/certification\/tutorial\/business-accountant\/\" target=\"_blank\" rel=\"noreferrer noopener\">Go back to Tutorial<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Go back to Tutorial Classification of Expense Income Assets and Liabilities Classification of Expenses The expenses can be classified into two major head that Direct Expenses &amp; Indirect expenses. Direct Expenses:\u00a0Expenses which are directly related to the production of material, like raw material purchase, direct labor, wages, carriage inward, etc in case of a manufacturing&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"footnotes":""},"categories":[1],"tags":[3295,3292,3291,3293,3290,3294,5580],"class_list":["post-8701","page","type-page","status-publish","hentry","category-uncategorized","tag-business-accounts-certification","tag-classification-of-assets","tag-classification-of-income","tag-classification-of-liabilities","tag-classification-on-expenses","tag-government-certification-in-business-accounts","tag-income-classification"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v24.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Classification of Expense Income Assets and Liabilities - Tutorial<\/title>\n<meta name=\"description\" content=\"learn about the classification of Expense Income Assets and Liabilities. 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