how will you treat wages outstanding in final account if appears in trial balance
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Wages outstanding will be added along with the respective wages in Trading account
And we know that expenses is liability to firm So, It will be shown in the liability side of balance sheet.
Let's explore more about Outstanding Expenses :
Expenses which have been incurred during the year and whose benefits has been derived during the year , but the payment has not been made are called outstanding or acquired expenses.
The fold effect of the above adjustment will be :
- Outstanding expenses will be added alone with the respective expenses and shown on the debit side trading and Profit and loss account.
- Outstanding expenses will be shown on the liability side of the Balance sheet.
Whenever the outstanding expenses at the end of the year are paid in the next year. The entry to record payment is as follows :
Outstanding expenses a/c Dr
To cash / bank a/c
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