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Question

How do you treat outstanding salaries in final accounts?


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Solution

An outstanding salary is an individual personal account. According to the matching concept with the idea, payment is expected but not yet paid. Along these lines, Unpaid compensation is to be displayed as a liability under ‘costs or expenses payable’ or ‘salaries payable’ in the balance sheet on the liabilities side and on different parts of the double-entry system to be set in the profit and loss account.

Also see: Final Accounts MCQs


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