Question

wages outstanding shown in additional information to be adjusted in *
1 point
P& L,B/S LIAB. SIDE
TRADING A/C and b/s liab. side
trading a/c and b/s asset side​

Answer 1

QUESTION :

Wages outstanding shown in additional information to be adjusted in

(a) Profit & Loss Account and Balance Sheet Liabilities Side.

(b) Trading Account and Balance Sheet Liabilities Side.

(c) Trading Account and Balance Sheet Assets Side.

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ANSWER :

Wages outstanding shown in additional information to be adjusted in

(a) Profit & Loss Account and Balance Sheet Liabilities Side.

(b) Trading Account and Balance Sheet Liabilities Side. ✓

(c) Trading Account and Balance Sheet Assets Side.

• ✪ Wages outstanding shown in additional information to be adjusted in Trading Account and Balance Sheet Liabilities Side.

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EXPLANATION :

Outstanding expenses appear in the adjustment will be shown at two places while preparing the final accounts. On the one hand, the outstanding expenses will be added to the concerned expenses on the Debit side of either Trading account or Profit and Loss Account and on the other hand, it will be shown on the Liabilities side of the Balance sheet.

• ➟ Wages is considered as Direct Expenses and shown in the Trading Account. Outstanding wages is concerned with Wages and hence it will also be shown in the Trading Account.

• ➟ When outstanding wages appear in the adjustment or shown in the additional information, it will be adjusted in two places, i.e, Trading Account and Balance Sheet.

• ➟ Firstly, the amount of outstanding wages will be added to the amount of wages in the Debit side of the Trading Account and secondly it will be shown in the Liabilities side of the Balance Sheet.