During 2018, the First Year of Operations, Silver, Inc

question 21

Multiple Choice

During 2018, the first year of operations, Silver, Inc., pays salaries of $175,000.At the end of the year, employees have earned salaries of $20,000, which are not paid by Silver until early in 2019.What is the amount of the deduction for salary expense?

• A)If Silver uses the cash method, $175,000 in 2018 and $0 in 2019.
• B)If Silver uses the cash method, $0 in 2018 and $195,000 in 2019.
• C)If Silver uses the accrual method, $175,000 in 2018 and $20,000 in 2019.
• D)If Silver uses the accrual method, $195,000 in 2018 and $0 in 2019.
• E)None of these is correct.

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Definitions:

Negligence Or Mismanagement

Failures in duty or improper handling of responsibilities, often leading to harm or loss, due to carelessness or lack of competence.

Breach Of Trust And Confidence

This legal term refers to an act that undermines the trust and confidence between parties in a relationship, particularly in employment, where an employer significantly violates an implied term of mutual trust and confidence.

Shareholder Votes

The process by which shareholders express their preferences or make decisions on corporate matters, typically at annual meetings.

Employment Contracts

Legal agreements between employers and employees specifying the terms of employment, including duties, compensation, and duration of the employment.