In 2015, Milford Corporation Determined That It Overstated Salaries Payable

question 70

Multiple Choice

In 2015, Milford Corporation determined that it overstated salaries payable and salaries expense by $20,000 in 2014.In 2015, which of the following accounts will have to be credited to correct this error?

• A)Salaries and Wages Payable.
• B)Salaries and Wages Expense.
• C)Retained Earnings.
• D)Income Summary.

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Definitions:

Long-Run Equilibrium

A state in an economy or market where, given the long-term flexibility of prices and adjustment of all input factors, supply equals demand and all firms earn normal profits.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.

Average Total Cost

The total cost of production divided by the total output, representing the cost per unit of output.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, leading to competition based on product differentiation.