Question

Trial balance shows a salary paid of 8200 and in adjustment it 800 rs is outstanding for salary

Answer 1

Answer:

The outstanding salary is added along with the salary on the debit side in Profit and loss Account. And shown on the liability balance of Balance sheet.

Adjustment will be :

In Profit and Loss account ;

( Debit side )

Salary - 8200

Add : O/s - 800 - 9000

In Balance Sheet ;

( Liability Side )

Salary Outstanding - 800

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 the above 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 expenses will be shown on the liability side of the balance sheet.