how to treat this and comes under which account travelling expenses were overdrawn by employees to the extent of Rs. 2000
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In above mentioned transaction, two A/C will be affected and these are Profit and Loss accounts and Asset side of the balance sheet.
Explanation:
- Travelling expense is written on the debit side of the Profit and Loss A/C but over drawn of the expense is deducted from the travelling expenses of Rs 2000 which is deducted from the total travelling expense A/C. (It will give the credit balance)
- On the asset side of the balance sheet overdrawn of travelling expenses will be written under the receivables head.
- When the actual expenses will be accrued, it will be written in the expense A/C.
- It is also known as Outstanding expense Accounts.
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