Write down the difference between cost and expense with the help … - Vidyadip

Question

Write down the difference between cost and expense with the help of an examples.

✓

Answer

Example 1.
In a factory there are three products being manufactured. Production unit of each is separate - occupying 50%, 30% and 20% space respectively. The rent of ₹ 50,000/- per month being paid for the factory is an expense. This amount is then allocated between the three products in proportion to the area occupied - ₹ 25,000/-, ₹ 15,000/- and ₹ 10,000/-. These amounts represent the space cost for each of the products to be used in determining what it costs to produce the product. (Here cost is allocated).
Example 2.
A businessman pays ₹ 1,20,000/- at the beginning of the year as the insurance premium. This is an expense. (Accounting jargon is pre-paid expense). Every month ₹ 10,000/- is charged as insurance premium before arriving at the business profitability. This is the cost of insurance per month. (Cost is derived).

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "3 Marks Question" from Business Finance and Arithmetic→Business Finance and Arithmetic — all question types→Entrepreneurship STD 11 Commerce question papers→CBSE Board STD 11 Commerce question papers→CBSE Board question paper generator→

Similar questions

Why are innovative entrepreneurs generally aggressive?

Alignment helps in effective execution of a business plan. How?

Differentiate between entrepreneur and entrepreneurship.

Write down the features of drone entrepreneurs.

How can mentoring be classified on two grounds?

Suman has just ventured into a business dealing in home furnishings. After 2 months of operation, she experiences shortage of cash in meeting her day-to-day expenses. She seeks your advice as a finance consultant, as to which statement will help her to assess her cash requirements. What will be your advice and why?

What are the common methods used for market survey?

Manish runs his own jewellery retail shop. He is well trusted by his customers. With changing times, he has also changed his way of business, by introducing light-weight 18 jewellery, diversifying in diamond jewellery and introducing trendy designs in white gold jewellery. He loves his business and is always the first to arrive and the last to leave. N He had also ventured into the business of producing gold chains, but after sustaining a loss of 10 lakh, he closed that business. But, he did not dwell on that loss much, and was soon initiating certain other ventures. Quoting lines from the passage, identify the various attitudes possessed by Manish. Also state any one value exhibited by Manish.

Give the distinct features of direct and indirect taxes.

What happen if an entrepreneur run his enterprise with outdated, obsolete, worn-out machinery or stick into sick plants?