Question

Outstanding salaries are shown as ________________.

• A. Added to salaries while preparing Profit & Loss account
• B. Shown in liability side of Balance sheet under Current Liability
• C. Both A & B
• D. None of the above

Answer 1

The correct option is C Both A & B

Outstanding expenses are those which are due but not paid. Organization has taken the services but the expenses are not paid.

Accrual system of accounting defines that all expenses and revenues of the particular financial year are to be recorded in the books of account irrespective of their payment.

Outstanding expenses is to be added with the respective expenses and shown as liability under the current liability.

Accounting entry will be as under:

Salaries A/c Dr.

To outstanding Salaries A/c