An unpaid electricity bill of Rs 5,000 at the end of the year requires an adjusting entry. It will:
A. Debit Electricity A/c, Credit Outstanding Expense
B. Debit Outstanding Expense, Credit Electricity A/c
C. Debit P&L A/c, Credit Cash
D. Debit Cash, Credit Electricity A/c
Answer: Option A
Solution (By JKSSB Mock Tests)
Recognizing the expense (Debit Electricity A/c) and creating the liability (Credit Outstanding Electricity Expense).
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