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Answer Posted / k phalguna rao
out standing rent is acutally expenses for that particular
financial year it effects net profit, but it was not paid
in the same year so it is showing as out standing rent so
first we debit rent a/c hence your net profit decrease but
your assets (Cash) balance is same because we are not paid
in this period so we have to credit rent out sanding a/c
therefore your net profit decresed but rent out standing
show in libility side
Note: we can tranfer our assets and liabilities for the
next financial year but we cann't transfer expenses or
profits
Ex: Rent payable for the month of 31st march for Rs. 1000/-
for the f/y 2009-10
on 31.03.2010
Rent a/c Dr. 1000
To Rent outstanding a/c (liability) 1000
suppose we have paid the o/s rent on 10.04.10
outstanding rent a/c dr 1000
To Cash/Bank a/c 1000
in the financial year 2010-11 balance sheet o/s rent
(liability)decrease and cash/bank (Assets) decresed for
1000/- each side
| Is This Answer Correct ? | 32 Yes | 5 No |
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