To narrate in brief - the expenses are broadly classified as Direct & Indirect Expenses in P&L or Income & Expenditure A/c. Those expenses that relate to the manufacturing process are said to be Direct, and others are Indirect. For e.g. Opening Stock, Purchases, Wages, Purchase returns etc - since it is direct - the expenses are considered as direct expense. The Indirect Expenses are Salaries, Printing & Stationery, conveyance, Office Rent, Discount allowed, Electricity / Water charges etc. The list is more, and considering the nature of expenses involved in a transaction, it should be placed appropriately under that head.