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outstanding salaries........

SHUVRO ( (WANT TO LEARN) ) (175 Points)

24 April 2010

how do u classify outstanding salaries as and why?

1. nominal account

2.personal account

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(Guest)

Outstanding salaries is a Personal A/c.. To be more clear, its representive personal A/c...

Why is it so??

See salary is an exp. which is payable to employees. when its not paid , we call it as salary payable or outstanding salaries... So when its not paid how you as an Accountant or other users of statements will knw to whom the salary is payable... Its this reason which makes us to record all the salary payable to employees under one head called outstanding salary... This in turn becomes a representative of all the names of employees to whom salary is payable... Hence, its representative personal a/c... which represents all the employees to whom salary is payable

Its therefore also shown as a liabilty in B/s... In a large size firm, that salary payable will have notes to the B/s.. This notes will show all the names of employees to whom salary is payable...

Hope you have understood....

SHUVRO ( (WANT TO LEARN) ) (175 Points)
Replied 24 April 2010

thnk u faiz 4 ur answer

plz tell me the applicability of golden rule to the following journal

salaries a/c dr

to outstanding salaries

looking 4wrd 4 ur comments

(Guest)

For Salary A/c to be Dr. ----- follow nominal A/c rule,( Dr. all expenses,losses, gains and income)

For o/s salary to be Cr ----- Follow personal A/c rule ( Cr the giver of the benefit)

i know why this question is asked by you... Bcz u got confused in relation to the rule of personal A/c... Here i have highlighted the inner meaning of rule... It means employees have given you benefit by working for you... So its the benefit which is recd by u from employee.... Hence that a/c is credited as per personal a/c rule.

In personal a/c .... the other aspect says Dr.the reciever of the benifit....Apply this in case of prepaid items...

Hopefully your doubt is cleared , if not revert back again without any hesitation.....

2 Like

(Guest)

Now you link my both replies to get your doubt clarified...

Any confusion in relation to above., feel free to ask...

CA Himanshu Bansal (Risk Manager) (2345 Points)
Replied 24 April 2010

Originally posted by : Faiz Ahmed
	For Salary A/c to be Dr. ----- follow nominal A/c rule,( Dr. all expenses,losses, gains and income) For o/s salary to be Cr ----- Follow personal A/c rule ( Cr the giver of the benefit) i know why this question is asked by you... Bcz u got confused in relation to the rule of personal A/c... Here i have highlighted the inner meaning of rule... It means employees have given you benefit by working for you... So its the benefit which is recd by u from employee.... Hence that a/c is credited as per personal a/c rule. In personal a/c .... the other aspect says Dr.the reciever of the benifit....Apply this in case of prepaid items... Hopefully your doubt is cleared , if not revert back again without any hesitation.....