When a Firm Has Wages Earned but Not Yet Paid

question 57

Multiple Choice

When a firm has wages earned but not yet paid at the end of a financial reporting period,what must it do to recognize the liabilities and expenses?

• A)It must credit the asset accounts for the appropriate payroll amounts.
• B)It must pay its employees for the wages earned as of that date.
• C)It must wait until the next financial period to record the payroll data.
• D)It must create an adjusting entry to recognize the payroll accrual.

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Definitions:

Development Costs

These are the expenses associated with the research and development of new products or services, often considered in the valuation of a company.

Removable Ore

Ore that can be extracted and processed from a mine site for a profit.

Original Condition

The state of an asset or item as it was initially acquired or received, before any modifications, repairs, or restoration.

Impairment Loss

The amount by which the carrying amount of an asset exceeds its recoverable amount, leading to a decrease in the asset's value on the financial statements.