(a) Give reasons for including outstanding liabilities in the Balance Sheet
(b) How do you record an income generating activity of a bar in a not-for-profit-making organization:
Explanation
a. Outstanding liabilities are included in the Balance Sheet in order to :
(i) recognize the full amount of liabilities in the Balance Sheet;
(ii)show the true financial position of the organization at any given time;
(iii)avoid misleading the users of the accounting information.
b. The procedures for recording an income generating activity of a bar in a not-for-profit-making organization:
(i) Record all purchases relating to the activity.
(ii) Record all expenses relating to the activity.
(iii) Record sales generated from the activity.
(iv) Value the closing stock