Do you know about outstandings? follow about standings below!

a. Outstanding charges
At the balancing date there are in most concerns a number of charges incurred but not entered in the books. Thus, if the date to which accounts are being drawn up is, say, 31st December, it is unlikely that invoices for supplies received on that day – perhaps for some days previously – have been entered in the accounts. Until, therefore, such charges are entered the accounts will understate: (a) liabilities, and (b) either expenditure on capital or (where fixed assets have been delivered) expenditure on capital account. Outstanding invoices for goods delivered or services rendered by the date of balancing must therefore be listed and entered in the accounts as adjusting entries.

b. Outstanding credits
Similarly, goods despatched, representing sales to customers, or services rendered up to the balancing period must be brought into the accounts by debiting debtors and crediting the appropriate income accounts.

c. Goods in transit
It may be noted, in passing, that whilst Company A will credit its sales account with goods despatched to Company B on, say 31st December, Company B (which will not receive such goods until, at earliest, 1st January), will not charge the cost of such goods in its accounts until the following period of account.
The point is of particular importance in drawing up a consolidated statement of the affairs of a group of companies where sales are made between members of the group. Of wider social interest is the fact that any statistical analysis of total company results for a particular period or at a particular point of time is likely to be inaccurate to the extent that it ignores the cost of goods in transit at that point of time.

d. Book-keeping entries
The most efficient method of dealing with outstandings in the books is to open two or more special accounts for the purpose, usually known as Debtors Suspense Accounts and Creditors Suspense Accounts.