When a fiRm Has Wages Earned but Not Yet Paid

question 17

Multiple Choice

When a firm has wages earned but not yet paid at the end of a financial reporting period, what must it do to recognize the liabilities and expenses?

• A) It must credit the asset accounts for the appropriate payroll amounts.
• B) It must create an adjusting entry to recognize the payroll accrual.
• C) It must pay its employees for the wages earned as of that date.
• D) It must wait until the next financial period to record the payroll data.

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