On December 31, 2016, $2,500 of Salaries Have Been Earned

question 24

Essay

On December 31, 2016, $2,500 of salaries have been earned but not yet paid to employees. If the business failed to make an adjusting entry on December 31, 2016, indicate the effect on assets, liabilities, equity, and net income.

Understand the circumstances under which accounting principles can be changed and the justification required for such changes.

Grasp the significance of cost constraint in relation to the value of information provided in financial statements.

Understand the basic concepts and purpose of accounting.

Identify the internal and external users of accounting information.

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Definitions:

Common Information Effect

The Common Information Effect is a group dynamic phenomenon where members tend to focus and give more importance to information that everyone in the group knows, rather than unique data held by few.

Explicitly Told

Information or instructions that are conveyed in a direct, clear, and unambiguous manner, leaving no room for misinterpretation or inference.

Discussing Information

The process of sharing and deliberating on data, facts, and knowledge among a group of people.

Socioemotional Interactions

Exchanges between individuals that involve emotional support, social connection, and the expression of feelings.