State University, a Public University, Has a Policy of Granting

question 29

Multiple Choice

State University, a public university, has a policy of granting faculty members a one-year paid sabbatical leave after a period of seven years continuous employment. The leave is for further study, research, or public service. A particular faculty member earns $90,000 per year. Assuming that the college maintains its books and records in a manner that facilitates the preparation of fund financial statements and assuming that any appropriate accruals have been made, what is the appropriate entry to record the employee's salary paid while on sabbatical leave?

• A) Debit Expenditures $90,000; Credit Cash $90,000.
• B) Debit Expenses $90,000; Credit Cash $90,000.
• C) Debit Sabbatical leave payable $90,000; Credit Cash $90,000.
• D) No entry required.

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Definitions:

Credit Sales

Sales transactions where payment is delayed, extending credit to the purchaser.

Sales

The total amount of goods or services sold by a company within a specific period, reflecting the primary source of its revenue.

Nominal Annual Cost

The cost associated with a financial transaction or investment, expressed as a yearly rate without adjustment for inflation.

Net Days

This term signifies the number of days within which a payment is due after an invoice has been received.