Accounting Equation of Salary Outstanding ₹2000

The accounting equation is a fundamental principle of accounting that shows the relationship between assets, liabilities, and owner's equity. The equation is as follows:

Assets = Liabilities + Owner's Equity

Assets:
Assets are resources that a company owns and has control over to generate future economic benefits. Examples include cash, accounts receivable, inventory, equipment, and property.

Liabilities:
Liabilities are obligations that a company owes to others, usually in the form of debts. Examples include accounts payable, loans payable, salaries payable, and taxes payable.

Owner's Equity:
Owner's equity represents the residual interest in the assets of a company after deducting liabilities. It includes capital, retained earnings, and other reserves.

Salary Outstanding ₹2000:
Salary Outstanding is a liability that a company owes to its employees for the work done but not yet paid for.

In this case, the salary outstanding is ₹2000, which means that the company owes this amount to its employees.

Accounting Equation with Salary Outstanding:
To incorporate the salary outstanding of ₹2000 into the accounting equation, we can write:

Assets = Liabilities + Owner's Equity
Cash + Salary Expense + Other Assets = Accounts Payable + Salary Outstanding + Other Liabilities + Owner's Equity

The salary expense represents the amount of salaries paid during the accounting period, while the salary outstanding represents the amount of salaries owed but not yet paid.

As a result, the accounting equation shows that the company's assets are equal to its liabilities and owner's equity, and the salary outstanding of ₹2000 is included in the liabilities section.

Open a seperate column of outstanding expenses in labilities side and add 2000 on that column also minus 2000 from capital column.