The Employees of Dew Drop Inn Get Paid Every Friday

question 65

Multiple Choice

The employees of Dew Drop Inn get paid every Friday for a 5-day workweek (Monday through Friday) .The total payroll is $5,000 per day of work.If the accounting period ends on Friday of a given week,what effect will this have on the company's accounting system?

• A)Decrease Cash by $25,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
• B)Increase Salaries payable by $25,000 and increase shareholders' equity by recognizing Salaries expense for the same amount.
• C)Increase Salaries payable by $25,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.
• D)Decrease Cash by $5,000 and decrease shareholders' equity by recognizing Salaries expense for the same amount.

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