Question

Show the treatment of outstanding expenses and accrued income in final accounts with the help of imaginary figures​

Answer 1

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Outstanding expenses will be added with respective expenses. And accrued income also added with the respective income.

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 2 fold effect of this adjustment will be;

• Outstanding expenses will be added alone with the respective expenses and shown on the debit side of trading and Profit and Loss account.

• Outstanding will be shown on the liability side of the Balance sheet.

Accrued income :

An income which has been earned but not received during the accounting year is called accrued income.

The 2 fold effect of accrued income will be ;

• Accrued income will added along with the respective income and shown on the credit side of trading and Profit Loss account.

• It will be shown on the asset side of the Balance sheet.

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