Question

Wages outstanding has not been adjusted. While preparing final accounts it should appear in ____________.

• A. the balance sheet only
• B. the income statement only
• C. both income statement and balance sheet
• D. either income statement or balance sheet

Answer 1

Answer: (C)

both income statement and balance sheet

Outstanding wages is that which is due but the payment of which is not done. Outstanding wages is a liability to be shown in the balance sheet along with the debit to the wages a/c.

Outstanding wages need to be shown in income statement by adding the amount to wages a/c and also to be shown in balance sheet as current liability.