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Salary payable to an employee Rs. 50,000/-. Which account is to be credited?
  • a)
    cash A/c
  • b)
    Salaries A/c
  • c)
    outstanding Salaries A/c
  • d)
    None
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
Salary payable to an employee Rs. 50,000/-.Which account is to be cred...
Outstanding Salary A/c - will be credited.   The reason stated below: When Salary is due & to be paid to employee  means its outstanding Salary & Payable. Its liabilities for company.   The Original entry is required to pass on the end of month or Due date; such as:   Salary A/c   Dr $50,00  To Salary Payable / Outstanding Salary. ( Cr) $50,00 
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Salary payable to an employee Rs. 50,000/-.Which account is to be cred...
Which account is to be credited for salary payable?

The correct account to be credited for salary payable to an employee is 'Outstanding Salaries A/c'. This is because the employee has not yet received the salary and it is still outstanding.

Explanation:

Outstanding Salaries A/c is a liability account, which is used to record the amount of salaries that have been earned by the employees but have not been paid yet. It is a current liability and is shown on the balance sheet under the head 'Current Liabilities'.

When an employee has earned a salary but has not been paid yet, it is recorded as a credit entry in the Outstanding Salaries A/c. Therefore, when the salary is paid, the Outstanding Salaries A/c is debited and the Cash/Bank A/c is credited.

In this case, since the salary is payable to an employee, it is still outstanding and has not been paid yet. Hence, the Outstanding Salaries A/c should be credited with the amount of Rs. 50,000/-.

Conclusion:

In conclusion, when an employee's salary is payable, the correct account to be credited is the Outstanding Salaries A/c as it represents the amount of salaries that have been earned by the employees but have not been paid yet.
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Salary payable to an employee Rs. 50,000/-.Which account is to be credited?a)cash A/cb)Salaries A/cc)outstanding Salaries A/cd)NoneCorrect answer is option 'C'. Can you explain this answer?
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