If Accrued Salaries Were Recorded on December 31 with a Credit

question 106

Multiple Choice

If accrued salaries were recorded on December 31 with a credit to Salaries Payable, the entry to record payment of these wages on the following January 5 would include:

• A) A debit to Cash and a credit to Salaries Payable.
• B) A debit to Cash and a credit to Prepaid Salaries.
• C) A debit to Salaries Payable and a credit to Cash.
• D) A debit to Salaries Payable and a credit to Salaries Expense.
• E) No entry would be necessary on January 5.

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Definitions:

Issue Price

The issue price is the price at which a company's securities, such as stocks or bonds, are first offered for sale to the public when they are issued.

Journal Entry

The record of a financial transaction in an accounting journal, showing the accounts and amounts debited and credited.

Adjusting Entries

Entries necessary at the end of the accounting period to measure all revenues and expenses of that period and update assets and liabilities.

Effective-Interest Method

A technique used in accounting to amortize the discount or premium on bonds payable over the life of the bonds more accurately than the straight-line method.