The Employees of Able Company Have Worked the Last Two

question 6

Multiple Choice

The employees of Able Company have worked the last two weeks of Year 1,but the employees' salaries have not been paid or recorded as of December 31,Year 1.The adjusting entry that Able should make to accrue these unpaid salaries on December 31,Year 1 is:

• A)debit to Salaries Expense and credit to Cash.
• B)debit to Salaries Expense and credit to Salaries Payable.
• C)debit to Salaries Payable and credit to Salaries Expense.
• D)no entry is required until the employee is paid next period.

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Definitions:

Probabilities

A measure representing the likelihood or chance of certain events occurring, expressed as a number between 0 and 1.

Uncertainty

A lack of definite knowledge or predictability about outcomes, often factored into decision-making and risk assessments.

Present Value Index

An index computed by dividing the total present value of the net cash flow to be received from a proposed capital investment by the amount to be invested.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of investments.