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B
A liability
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C
By adjusting it in the P & L A/c
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D
Both B and C
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Solution
The correct option is B Both B and C Outstanding expense are those expenses which are due but not paid. These are expenses like salary for the month of March is not paid but the services are already taken.
To find out the correct profitability, all expenses pertaining to the financial year should be debited to profit & loss account. Hence out standing salary to be added in salary expenses in profit & loss account and shown as current liability in the balance sheet.