Lol...!!

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Menka Asnani (Article Trainee) (49 Points)
Replied 14 November 2013

Wages a/c Dr. 1000 To Wages payable a/c 1000

Kumar (Student) (211 Points)
Replied 14 November 2013

For any entry you pass, see the effect of entry on balance sheet..B/S has to tally anyhow

Anything that increases the liability side of Balance sheet is credited and vice versa..

Wages payable will be comes on liability side of B/S so obviously it will be credited..

Wages do not appear in B/S..but it is debited to P&L..and indirectly P&L comes in capital which is in B/S..

So decrease in P&L means decrease in capital and hence decrease in liabiilty side of B/S..and so wages is debited

Thus net effect of balance sheet remains same..

Hope it will help you in other entries as well..just see how it effects the balance sheet..

DDDDDD (.) (176 Points)
Replied 15 November 2013

What happen to CCI members? Why you ppl are posting same reply again and again? 30+ persons posted an answer which they have studied during their 12th standard. Unbelievable!!

Their are lot of CA level questions left unanswered in CA Clubindia. I request the CCI members to spend their valuable time in replying to those queries.

Samrendra (Asst. Manager- Internal audit) (226 Points)
Replied 17 November 2013

Dear Kumar,

First of all agreed from your point that every entry effect the balance sheet directly or indirectly. This is due to dual accounting concept. But you neeford to understand why do we need Balance Sheet and Income Statement.

INCOME STATEMENT reflects profit earned from business during reporting period

BALANCE SHEET reflects total assets (classified under diffrent forms Long term Short term etc ) and liability need to be pay.

Now coming to question.... Wages payable is liability to owner which he need to pay in coming years whereas wages reduced indirectly reduced owners funds.

Treat the transaction as transfer of amount from owners fund to unpaid liability which need to be paid in future.

Its like that you have some money in your wallet knowing that in coming days you have to pay some money to clear your dues.