If a fiRm Accrues the Payroll Due but Not Paid

question 37

Multiple Choice

If a firm accrues the payroll due but not paid at the end of a financial period, what should it do on the first day of the next financial period?

• A) It should create a reminder about the accrual to ensure accuracy of computations on the next pay date.
• B) It should make a note to create the reversing entry at the end of the next financial period.
• C) It should disburse the accrued pay to the employees.
• D) It should create a reversing entry in the General Journal.

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Definitions:

Ownership Transfer

The process by which ownership rights of a property or business are transferred from one party to another.

Unlimited Liability

Unlimited Liability means that the owners of a business are personally responsible for all of the debts of the business, without any limit on the amount for which they might be liable.