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

question 11

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 the government-wide 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:

Income Effect

The change in an individual's consumption resulting from a change in real income, impacting purchasing power and spending habits.

Substitution Effect

occurs when consumers replace more expensive items with less costly alternatives as their relative prices change.

Diminishing Marginal Utility

A concept in economics stating that as a person increases consumption of a product, there is a decline in the marginal utility (satisfaction or benefit) that person derives from consuming each additional unit of that product.

Calorie Counts

The measurement of energy provided by food and drink, important for managing dietary health and weight control.