Favorite Outstanding Salary In Profit And Loss Account

Outstanding salaries are first added to salaries account and then these are shown in liabilities side of balance sheet.

Outstanding salary in profit and loss account. Rent paid for 11 months. Rent Received in advance. It must be added to the wages account in the trading and profit and loss Ac.

The credit entry of 145000 is the gross profit for the period. Step 1 Journal entry for salary paid in cashcheque Salary AC. For example the staff of ABC Corporation have worked for the month of April.

In contrast the balance sheet aggregates multiple accounts. Solved Example for You. Therefore these expenses are shown in expenses side of profit and loss account.

Outstanding salaries are shown as. Because trading and profit loss ac is prepared as per accrual basis. Prepaid Expenditure ac is a personal account and an equivalent of a debtor.

In this example all accounts are closed and transferred to the trading account. It is a liability liquidated by payment. Outstanding salaries amounted to Rs.

Outstanding Expenses refer to the expenses relating to current year but whichhave not been paid during the current year. All the expenses and income belonging to an accounting period is recorded in tat particular period only whether it has been paidreceived in cash or not Outstanding expense means expense has been incurred but not yet paid. Profit and Loss Account.