A Liability for Compensated Absences Such as Vacations, for Which

question 37

Multiple Choice

A liability for compensated absences such as vacations, for which it is expected that employees will be paid, should

• A) be accrued during the period when the compensated time is expected to be used by employees.
• B) be accrued during the period following vesting.
• C) be accrued during the period when earned.
• D) not be accrued unless a written contractual obligation exists.

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Definitions:

Accrued Salaries

Salaries that have been earned by employees but have not yet been paid or recorded in the company's accounts.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity, presenting the financial results over a specific period.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholders' equity at a specific point in time, providing a basis for computing rates of return and evaluating its capital structure.

Daily Wages

Compensation based on the number of days worked, typically paid to temporary or contract workers.