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Hi SIr,
can u explain how share of operating expenses in joint operations is added to payables in financial position?
Hi,
The payable reflects the amount owed by one party to the other for their share of the expenses incurred. As they have incurred more expenses in the operation as they have more of a shareholding then to record the greater share they need to recognise the additional expense and therefore owe money to the other venturer to recognise this extra amount.
Think of it as a friend has paid the full bill for eating out on a night at a restaurant. You need to reciognise your share of the bill and therefore owe the money to your friend.
Thanks
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