What will be the accounting treatment of outstanding expenses in the Income and Expenditure A/c.(A) Added in main or concerned head(B) Subtracted from main head(C) Shown in Balance-Sheet as Liability(D) Will not be shown in Income and Expenditure A/c(E) Shown in Receipt and Payment A/c onlyChoose the correct answer from the options given below:
- A(A) and (C) Only
- B(B) and (C) Only
- C(D) and (C) Only
- D(E) and (A) Only
Solution & Step-by-step Explanation
Under the accrual system used to prepare the Income and Expenditure Account, outstanding expenses for the current year must be:Added to the respective expense head (A) to reflect the total expense incurred.Presented concurrently as a current liability in the Balance Sheet (C).Thus, statements (A) and (C) are correct.