If a Firm Accrues the Payroll Due but Not Paid

question 44

Multiple Choice

If a firm accrues the payroll due but not paid at the end of a financial period,what should it do on the first day of the next financial period?

• A)It should create a reversing entry in the General Journal.
• B)It should disburse the accrued pay to the employees.
• C)It should create a reminder about the accrual to ensure accuracy of computations on the next pay date.
• D)It should make a note to create the reversing entry at the end of the next financial period.

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Definitions:

Purely Competitive Industry

A market structure characterized by many sellers offering identical products, where no single seller can influence the market price.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase at different prices.

Perfectly Elastic

Describes a scenario where the quantity demanded or supplied changes infinitely in response to any change in price.

Marginal Revenue

The additional revenue generated from selling one more unit of a good or service; crucial for determining the optimal level of output for profit maximization.