Skip to content

CSEET · Fundamentals of Accounting · Preparation of Final Accounts for Sole Proprietorship

Anita's trial balance shows salaries paid Rs 60,000. Salaries outstanding at year end are Rs 5,000 and salaries paid in advance are Rs 3,000 for the next year. What amount is debited to the Profit and Loss Account for salaries?

The Profit and Loss Account is debited with Rs 62,000. Salaries paid of Rs 60,000 are increased by Rs 5,000 outstanding and reduced by Rs 3,000 paid in advance for the next year, so only the current year's expense is charged.

  1. ARs 62,000Correct
  2. BRs 68,000
  3. CRs 58,000
  4. DRs 63,000

Explanation

Expense for the year = 60,000 + 5,000 outstanding - 3,000 prepaid = 62,000. Rs 68,000 adds the prepaid amount instead of deducting it.

Did you get it right without looking?

One question tells you little. A timed set on Preparation of Final Accounts for Sole Proprietorship shows your real accuracy, how long you take and where you lose marks.

Practise Preparation of Final Accounts for Sole ProprietorshipFree diagnostic mock

More Preparation of Final Accounts for Sole Proprietorship questions