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OUTSTANDING EXPENSES OR ACCRUED EXPENSES OR EXPENSES OWING OR UNPAID OR DUE

These expenses are related to the current year but remain unpaid. As they are the expenses of the current year, so they must be debited and charged from the profit and loss account of the current year. The expenses remained unpaid so far during the current year, so they are the liability of the firm. For example, the firm pays $ 5,000 wages per month to its workers. Wages are paid on the 1st day of every month, i.e., wages for the month of March, 2003 will be paid on April l, 2003, the wages for October, 2003 will be paid on November 1, 2003 so the wages of December, 2003 will be paid on January l, 2004. The accounting period ends on 31st December, 2003 but only $ 55,000 have been actually paid on account of wages. Wages for the month of December, 2003 is still to be paid. It is outstanding. It is a liability. It has to be paid.

Treatment in final accounts. Outstanding expenses account may be available at two places. It may be given in the Trial balance or it may be mentioned outside the Trial balance, i.e., adjustments. If outstanding salaries or wages owing account have been mentioned in the trial balance, they will be shown at the liabilities side only (accounts appearing in the trial balance are shown only at one place in the final accounts).

In case, outstanding expenses are in the adjustment, they will be shown at two places (all items appearing in the adjustments are shown at two places). Outstanding expenses will be added to the concerned expense at the debit side of trading or profit and loss account such as outstanding wages will be added to wages account at the debit side of trading account and outstanding salaries will be added to salaries account at the debit side of profit and loss account. Outstanding expenses will also he shown at the liabilities side of the balance sheet.