When a Firm Has Wages Earned but Not Yet Paid

question 57

Multiple Choice

When a firm has wages earned but not yet paid at the end of a financial reporting period,what must it do to recognize the liabilities and expenses?

• A)It must credit the asset accounts for the appropriate payroll amounts.
• B)It must pay its employees for the wages earned as of that date.
• C)It must wait until the next financial period to record the payroll data.
• D)It must create an adjusting entry to recognize the payroll accrual.

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Definitions:

United States

A federal republic in North America comprising 50 states, a federal district, five major self-governing territories, and various possessions.

Treaty of Paris

A historic agreement that ended the American Revolutionary War in 1783, acknowledging the United States of America as an independent nation.

Territories Acquired

Refers to regions or lands gained by a country either through purchase, conquest, or treaty, adding to the nation's domain.

Wake Island

A strategic atoll in the Pacific Ocean used as a military base and refueling stop, notable for its role in World War II and subsequent American military history.