A Company Made No Adjusting Entry for Accrued and Unpaid

question 100

Multiple Choice

A company made no adjusting entry for accrued and unpaid employee salaries of $9,000 on December 31. The entry to record the adjusting entry should have been:

• A) debit Salary Expense, $9,000; credit Cash, $9,000
• B) debit Salary Expense, $9,000; credit Fees Earned, $9,000
• C) debit Salary Expense, $9,000; credit Prepaid Salary, $9,000
• D) debit Salary Expense, $9,000; credit Salaries Payable, $9,000
• E) debit Salaries Payable, $9,000; credit Salary Expense

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Definitions:

Purely Competitive

Refers to a market configuration in which numerous companies offer the same products, with no single company having the power to affect the market's pricing.

Short-Run Equilibrium

A state in which market supply and demand balance out at a specific price level, usually considered within a timeframe where some factors are fixed.

Zero Economic Profits

A situation where a firm's total revenues exactly equal its total costs, leading to no net profit or loss after considering both explicit and implicit costs.

Normal Profits

An economic condition where a firm's total revenue is equal to its total costs, allowing it to cover all its opportunity costs.