Provide adjusting entry for accrued salaries of $600 at year-end.

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Prepare for the Fundamentals of Accountancy, Business, and Management (FABM) 1 Exam. Study efficiently with multiple choice questions and detailed explanations. Enhance your knowledge and succeed in your exam with confidence.

Multiple Choice

Provide adjusting entry for accrued salaries of $600 at year-end.

Explanation:
Accrued salaries represent wages earned by employees but not yet paid. Under accrual accounting, expenses are recorded when incurred and a corresponding liability is recognized. So the adjusting entry increases the expense and creates a liability for the amount owed. Specifically, you debit Salaries Expense for 600 to reflect the cost of labor for the period, and you credit Salaries Payable for 600 to record the obligation to pay later. This does not involve cash at year-end. When payment is actually made, you would debit Salaries Payable and credit Cash for 600.

Accrued salaries represent wages earned by employees but not yet paid. Under accrual accounting, expenses are recorded when incurred and a corresponding liability is recognized. So the adjusting entry increases the expense and creates a liability for the amount owed. Specifically, you debit Salaries Expense for 600 to reflect the cost of labor for the period, and you credit Salaries Payable for 600 to record the obligation to pay later. This does not involve cash at year-end. When payment is actually made, you would debit Salaries Payable and credit Cash for 600.

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