DIRECT AND INDIRECT COSTS, THE METHOD OF DISTRIBUTION OF INDIRECT COSTS

Abstract

Any organization that produces products and/or sells them has costs. If an entrepreneur uses the accrual method in determining profits and costs, then the Tax Code requires that expenses be divided according to their relation to direct or indirect. The distribution of the organization's expenses on this basis is important for internal accounting policy, since it is directly reflected in taxation. They are included in the tax base when calculating income tax. The Tax Code does not provide clear regulations on which costs to attribute to which type. The right to consider certain types of costs as direct is granted to the organizations themselves, only they must justify it in their internal documentation, and the head must approve it.