At the end of an accounting period, wages have been earned by employees but remain unpaid. Which adjustment is appropriate?
Correct answer: A. Debit wages expense and credit wages payable
- A. Debit wages expense and credit wages payable
- B. Debit wages payable and credit wages expense
- C. Debit cash and credit wages payable
- D. Debit wages expense and credit cash
Explanation
The expense belongs to the period in which employees performed the work, so wages expense is debited. The unpaid amount is recognised as a current liability called wages payable.
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Accounting principles explain the rules used to record, classify and report business transactions. Coverage includes the accounting equation, double-entry system, accrual and cash bases, matching and prudence concepts, consistency, going concern, business entity, and the difference between capital and revenue items.
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