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Outstanding salaries at year end appear as:
AAsset on Balance Sheet
BIncome on Profit & Loss A/c
CLiability on Balance Sheet
DCapital reserve in books
Answer & Solution
Correct answer: C. Liability on Balance Sheet
1. Salaries unpaid at year end are added to salaries paid in P&L.
2. The unpaid portion is a current liability on the Balance Sheet.
3. They are not assets, income, or reserves.
_Source: ICAI BoS Foundation Paper 1, Ch 7 U1 "Final Accounts", §1.2 ¶5_
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