BACHELOR OF BUSINESS ADMINISTRATION

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BUSINESS ADMINISTRATION

FINANCIAL ACCOUNTING

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
If Outstanding salary is given in trail balance with the date of commencement of financial year, it is shown in ____
A
Trading A/c
B
Profit & Loss A/c
C
Assets
D
Liabilities
Explanation: 

Detailed explanation-1: -Hence, if outstanding wages appears in trial balance, this will be shown in the liability side of the balance sheet.

Detailed explanation-2: -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).

Detailed explanation-3: -Prepaid expenses appearing in trial balance will be shown in asset side of the balance sheet.

Detailed explanation-4: -Salaries paid is shown on the debit side of the Profit and Loss Account but outstanding salaries (when given in additional information) is shown on the Liabilities side of the Balance Sheet and is added to salaries in the Profit and Loss Account.

Detailed explanation-5: -Outstanding salary is shown as both a liability and by adjusting it in the Statement of Profit and Loss.

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