Outstanding Expense Account Such accounts are created when we are bound to pay expense because we have got some services from other individuals and firms.
When the balances in nominal accounts are cleared out at the end of the year, their balances may be transferred directly into the retained earnings account, or they may first be transferred into an income summary account, and immediately transferred from there to the retained earnings account.
To create a nominal account Creating a nominal account adds it to the current set of accounts.
Calculations done on these variables will be futile as there is no numerical value of the options.
Here earnings are received before the services are provided to the party.
The next account we will open will reflect the business growth and show the amount of profit that has been retained in the business to help fund its growth.