What Effect Does the Payment of Employee Salaries Have on the Accounting

question 228

Multiple Choice

What effect does the payment of employee salaries have on the accounting equation?

• A) Assets and shareholders' equity decrease.
• B) Liabilities and shareholders' equity decrease.
• C) Assets decrease and liabilities increase.
• D) Assets increase and liabilities decrease.

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Definitions:

Required Accounting Return

A target return a project or investment must achieve in accounting terms, such as return on investment or return on equity, to be considered viable.

Depreciated Straight-line

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts, representing its gradual loss of value.

Payback

The period of time it takes for an investment to generate an amount of money equal to the initial cost of the investment.

Time Value

The belief that money available now is worth more than an identical amount in the future because of its potential earning power.