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:

Dividend Payment

A portion of a company's earnings distributed to shareholders, usually on a regular basis.

Stock Ownership

Stock ownership refers to the possession of shares in a corporation, which represents a claim on part of the company's assets and earnings.

Residual View

In corporate finance, this concept suggests that dividends should be paid from the residual or remaining equity after all project investments with positive NPV have been funded.

Dividends

Payments made by a corporation to its shareholder members, representing a portion of the corporate profits.