Question

Outstanding wages appearing in Trial Balance are shown:

• A. On the debit side of Profit & Loss Account
• B. On the debit side of Trading Account
• C. On the liabilities side of the Balance Sheet.
• D. None of these

Answer 1

Answer: (C)

On the liabilities side of the Balance Sheet.

Outstanding wages are related to the current year but remain unpaid. As they are expenses of the current year, they must be debited and charged from the profit and loss of the current year. The expenses remained unpaid during the current year, so they are liability of the firm.

If outstanding wages are mentioned in the trial balance, they will be shown at the liabilities side only of the Balance Sheet (accounts appearing in the trial balance are shown only at one place in the final accounts).