Which of the Following Statements Is Correct Regarding the Adjustment

question 3

Multiple Choice

Which of the following statements is correct regarding the adjustment for salaries and wages accrued but not paid at the end of the accounting period?

• A)Salaries and Wages Payable will decrease by the amount of the unpaid wages.
• B)Salaries and Wages Expense will be recorded as a credit for the amount of the unpaid salaries and wages.
• C)Salaries and Wages Payable will be recorded as a debit for the amount of the unpaid salaries and wages.
• D)Salaries and Wages Expense will increase by the amount of the unpaid salaries and wages.

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Definitions:

SFAS No.123

An accounting standard issued by the Financial Accounting Standards Board (FASB) related to the expensing of stock options, specifying how companies should account for stock-based compensation.

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at a predetermined price within a specific time frame.

APB No.25

An accounting principle that dealt with stock-based compensation and required companies to record an expense for issued options.

Vesting Period

The period of time an employee must work before gaining full access to their benefits or compensation plans, such as pension plans or stock options.