Outstanding salaries is shown as___________?
Correct answer: D. Both B. and C. above
- A. An Asset in the Balance Sheet
- B. A Liability
- C. By adjusting it in the P & L A/c
- D. Both B. and C. above
Explanation
Outstanding salaries are an unpaid present obligation, so they appear as a liability. They are also added to salary expense in P&L to record the amount relating to the current period, making both B and C correct.
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About Financial Statements
Financial statements present a business's financial performance and position through the income statement, statement of financial position, cash flow statement and changes in equity. Questions involve preparing and interpreting these statements, adjusting entries, depreciation, closing inventory, accrued and prepaid items, and distinguishing profit from cash flow.
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