Question

Outstanding wages appearing in the Trial Balance are shown on the:

• A. Debit side of the Profit & Loss Account
• B. Debit side of Trading Account
• C. Liabilities side of the Balance Sheet
• D. None of these

Hint:

Outstanding expenses are always shown on the Liabilities side of the Balance Sheet since they represent obligations that are yet to be paid.

Answer 1

The Correct Option is C

Step 1: Understanding Outstanding Wages.
Outstanding wages means the wages which are payable but not yet paid. Since these represent future obligations, they are considered as liabilities.
Step 2: Position in Financial Statements.
Outstanding wages do not appear on the debit side of the Profit & Loss Account or the Trading Account. Instead, they are shown on the liabilities side of the Balance Sheet.
Step 3: Analyzing the Options.
(A) Debit side of the Profit & Loss Account: Incorrect, as wages are expenses but outstanding wages are liability.
(B) Debit side of Trading Account: Incorrect, it does not relate to trading account.
(C) Liabilities side of the Balance Sheet: Correct, because outstanding wages are future obligations.
(D) None of these: Incorrect, since (C) is the correct choice.
Step 4: Conclusion.
Hence, the correct answer is (C) Liabilities side of the Balance Sheet.