Employees of the General Fund of Scott City Earn Ten

question 80

Multiple Choice

Employees of the general fund of Scott City earn ten days of vacation for each 12 months of employment. The city permits employees to carry the vacation days forward as long as they wish. During the current year employees earned $800,000 of vacation benefits, of which the city estimates $500,000 will be taken in the next year and the balance will be carried forward. Assuming that the city maintains its books and records in a manner that facilitates the preparation of fund financial statements, which of the following entries should be made in the general fund to record the vacation pay earned during the current period?

• A) Debit Expenditures $800,000; credit Vacation pay payable $800,000.
• B) Debit Expenditures $500,000; credit Vacation pay payable $500,000.
• C) Debit Vacation expense $800,000; credit Vacation pay payable $800,000.
• D) No entry required.

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Definitions:

Human Resource Managers

Professionals responsible for overseeing an organization's human resources department, focusing on policies, processes, and hiring to sustain a productive workforce.

Accounting Equation

The fundamental equation of double-entry bookkeeping: Assets = Liabilities + Shareholder's Equity, used to ensure that a company's financial statements are balanced.

Stockholder

An individual or entity that owns one or more shares of stock in a corporation, making them partial owners of the company.

Assets Increase

A situation where the value or volume of a company's assets rises due to acquisition or appreciation.