Salary and wages is debited toa)Trading Accountb)Profit and Loss Accountc)P/L Appropriation accountd)Balance SheetCorrect answer is option 'B'. Can you explain this answer?

Question

Answer

Salary is debited to pl account and wages is debited to trading
as salary is given for the employees it comes to company or personal expense of the company so it should be recorded in profit or loss account and wages is given to labour or workers it comes to factory so it comes under factory expenses

Answer

As salary is indirect expense and wages is direct expense and salary is written first so it is considered as indirect expense and these are debited to profit and loss account

Answer

Explanation:

Salary and wages are considered as expenses incurred by a business entity in order to compensate its employees for their work. These expenses are recorded in the accounting books and need to be appropriately classified in the financial statements.

In this case, the salaries and wages are debited to the Profit and Loss Account because they are considered as operating expenses for the business. The Profit and Loss Account is an important financial statement that summarizes the revenues and expenses of a business during a specific accounting period. It helps in determining the net profit or loss of the business.

The following points explain why salary and wages are debited to the Profit and Loss Account:

1. Expense classification: Salaries and wages are considered as operating expenses because they are incurred in the normal course of business activities. These expenses are necessary to generate revenue and are directly related to the day-to-day operations of the business.

2. Matching principle: The Profit and Loss Account follows the matching principle, which states that expenses should be recognized in the same period as the revenues they help generate. By debiting salaries and wages to the Profit and Loss Account, the expenses are matched against the revenues earned in the same accounting period.

3. Profit determination: By debiting salaries and wages to the Profit and Loss Account, the total expenses are increased, resulting in a decrease in the net profit. This reflects the true financial position of the business and helps in determining the profitability of the business.

It is important to note that the Trading Account is used to determine the gross profit or loss of a business by calculating the difference between the net sales and the cost of goods sold. Salaries and wages are not directly related to the cost of goods sold and therefore, are not debited to the Trading Account.

Similarly, the P/L Appropriation Account is used to distribute the net profit among the partners or shareholders of the business. Salaries and wages are not related to the distribution of profit and therefore, are not debited to the P/L Appropriation Account.

Lastly, the Balance Sheet is a statement that shows the financial position of a business at a specific point in time. It includes assets, liabilities, and owner's equity. Salaries and wages are considered as expenses and are not included in the Balance Sheet.

Therefore, the correct answer is option 'B' - Profit and Loss Account.

Answer

As the salaray and wages are of revenue nature,they are debited to profit and loss account.

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