(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