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Can we treat all technical staff salaries under Admin Expenses ?

Can we treat all technical staff salaries under Admin Expenses ?No doubt, it will not effect the net income, But definitely it will effect on Gross Profit. 

Need your suggestions Please

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Question ajoutée par Khaliq Raza MBA MS CFE AFA , Finance Manager , Vertex Trading
Date de publication: 2017/03/08
shaheryar malik
par shaheryar malik , General Accountant , Valtorque Valves Trading LLC

If you have already separated the salaries as per the departments then it is not right to treat the technical staff under the admin expenses. Normally these kind of cost centers are established for better management reporting. It can also effect the net income as you can only expense out the COGS part of FOH(technical salaries) and if you have some unsold units in inventory then un-apportioned expenses becomes part of balance sheet rather then P&L (Matching Principle).

 

Best Regards

Mohamed Infaz Iqbal
par Mohamed Infaz Iqbal , Financial Analyst , Al Musbah Group

It would be more appropriate to classify expenses based on its type rather than putting the entire thing to admin expense.

For example, lets take a hotel, costs which are directly relevant to the revenue such as housekeeping, kitchen staff would be better off classified under cost of sales. Other staff costs like finance, IT staff salary should go under admin expenses. Sales and marketing salary would go under selling & distribution costs. This would give a more meaningful and better presentation of the Income Statement.

Btw, remember this is the same thing we do to depreciation :)

sohail ahmad
par sohail ahmad , assistant manager finance , Sui Northern Gas pipeline Limited- (Only Public Listed Company in Pakistan in Oil and Gas sector)

We can classify the Expenses just like salaries etc on the activity based principal,

(THUMB RULE).

Becase our appropriation and classification not only hits a lot of areas in Financial Statements, but ultimately affects our decision making process.

Hence, Technical staff salaries (related to core activity of the business) must be reported in COGS or COSR (cost of services rendered) section. It must be in net profit slab.

It will never be wise to report them as Admin Expenses.

Good, your question was good and more conceptual. Thanks

Khaliq Raza MBA   MS   CFE  AFA
par Khaliq Raza MBA MS CFE AFA , Finance Manager , Vertex Trading

Thanks Sir. It's Really Informative and relative. 

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