Similarities & Differences Between Sales And Expenses With Relationship
Sales is the price of goods sold or services re ndered to customers w hile Expenses are incurred for t he purpose of ear ning Revenues for t he b usi ness. Sales is a Direct Revenue for t he b usi ness as it is earned from t h e main source of revenues of t he b usi ness w hile Expe nses may or may not b e related to cost of productio n. So, Expenses are considered as Direct Expenses and Indirect Expenses. Sales is recorded in t he Income Statement in order to calculate Cost of Goods Sold / Cost of Sales w hile o nly direct expenses are incurred in t he cost of productio n. Similarities Between Sales And Expenses Both are Temporary Accounts w hich are fi nally transferred to Income Statement. Both are necessary to carry on t he b usi ness. For example, if t he b usi ness does not generate sales, t he n t he b usi ness will b e shut dow n at t he e nd w h ile at t he same time, the expe nses suc h as Sales Discount , Commi...