Assume That No Reversing Entries Are Made by This Firm

question 20

Multiple Choice

Assume that no reversing entries are made by this firm. If wages of $11 200 were accrued by it at the end of the year and the first payment of wages in the subsequent year was $101 600 how would this payment be recorded?

• A) Debit salaries payable $11 200; debit salaries expense $90 400; credit cash $101 600
• B) Credit salaries payable $11 200; debit salaries expense $112 800; credit cash $101 600
• C) Debit salaries payable $11 200; debit salaries expense $101 600; credit cash $112 800
• D) Debit salaries expense $90 400; credit cash $90 400

---

Definitions:

Working Capital

The difference between a company's current assets and its current liabilities, indicating short-term financial health.

Discount Rate

The interest rate used to discount future cash flows to their present value, often utilized in determining an investment's worth.

Future Cash Inflow

Expected receipts of money to a business in the future, which can result from sales, investments, or financing.

Discount Rate

A specific rate used in the method of discounted cash flow analysis for calculating the present value of money flows anticipated in the future.