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UI Post-UTME Financial Accounting 2024 (Model questions) Question 8

Question 8

Final Accounts of a Sole Trader

At the end of a trading period, wages will be

  1. A.debited to trading account andshown as a current liability
  2. B.credited to profit and loss Account and shown as a current liability
  3. C.credited to trading account and shown as a current asset
  4. D.debited to profit and loss account and shown as a current liability
Show the answer and explanation

Answer: A (debited to trading account andshown as a current liability)

Explanation

Wages paid to workers who make or handle the goods are debited to the trading account; salaries go to the profit and loss account. Any wages still owing at the end of the period appear in the balance sheet as a current liability.