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CSEET · Fundamentals of Accounting · Accounting for Non-Profit Organizations

Sunrise Sports Club paid salaries of Rs 48,000 during the year. Salaries outstanding were Rs 4,000 at the beginning and Rs 7,000 at the end of the year. What amount is debited to the Income and Expenditure Account for salaries?

The salaries expense is Rs 51,000. The cash paid of Rs 48,000 includes Rs 4,000 belonging to the previous year, which is deducted, and Rs 7,000 of current-year salaries remain unpaid, which is added. Expenses are shown on an accrual basis.

  1. ARs 51,000Correct
  2. BRs 45,000
  3. CRs 55,000
  4. DRs 48,000

Explanation

Expense for the year = payment 48,000 - opening outstanding 4,000 + closing outstanding 7,000 = 51,000. Check: the Rs 4,000 paid relates to last year, so current-year payment is 44,000, plus Rs 7,000 still owed gives 51,000. Rs 45,000 wrongly reverses both adjustments.

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