3. OUTSTANDING ASSETS
There may be an expenditure
already incurred for which the corresponding
benefit could not be made available for the
business during the period or some portion of
this pertains to the period subsequent to the date
of balance sheet.
5. Like the outstanding assets,
outstanding liabilities should also be included in
the Profit and Loss Account. If it is not done, the
final accounts will not reveal the correct position
of profit and loss and also of financial affairs of
the business concern.
7. To calculate correct profits or losses of
the current year, provision should be made for all
liabilities for rent, rates and taxes. If it is not done,
the Profit and Loss Account will not reveal correct
position. This is a liability for expenses payable which
become due for payment during current year.
8. The auditor’s duty is to
inspect the relevant accounts in the ledger,
demand notes, receipts, etc., and find out what
period is covered. The accounts should be
adjusted for the amount, which has become due
but not yet paid.
Wages and Salaries
Other Liabilities
Apportionment of Expenditure between Capital
and Revenue