If a Firm Accrues the Payroll Due but Not Paid

question 44

Multiple Choice

If a firm accrues the payroll due but not paid at the end of a financial period,what should it do on the first day of the next financial period?

• A)It should create a reversing entry in the General Journal.
• B)It should disburse the accrued pay to the employees.
• C)It should create a reminder about the accrual to ensure accuracy of computations on the next pay date.
• D)It should make a note to create the reversing entry at the end of the next financial period.

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Definitions:

Tax Imposed

A compulsory financial charge or some other type of levy placed upon a taxpayer by a governmental organization to fund government spending and various public expenditures.

Consumer Surplus

The gap between what a consumer is prepared to spend on a good or service and the price they actually end up paying.

Market Equilibrium

A condition or state in an economy where supply and demand are equal, leading to stable prices and quantities.

Units Bought

The quantity of a product that consumers purchase at a given price.