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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Definitions:

Gram

A metric unit of mass equal to one-thousandth of a kilogram.

Pint

A unit of volume measurement used chiefly in the U.K. and the U.S., equal to half a quart or approximately 568 milliliters in the U.K. and 473 milliliters in the U.S.

Pt

Refers to the chemical element Platinum with the atomic number 78, known for its use in catalysts and jewelry.

Fluid Ounce

A unit of volume used primarily in the United States to measure liquids, equivalent to approximately 29.57 ml.