Canada Corporation has hired a new sales manager to start work next month.She will earn $65,000 per year plus a bonus to be determined at year-end.At the time of the hiring, how would the event be recorded?
A)An increase in assets and an increase in salaries payable.
B)An increase in expenses and an increase in salaries payable.
C)A decrease in retained earnings and an increase in salaries payable,
D)It would not be recorded.

Question

Quizplus · Accepted Answer

At the time of hiring, no financial transaction has occurred that affects the financial statements. Accounting principles require recognition of expenses and liabilities when they are incurred, not when employment agreements are made.

Canada Corporation Has Hired a New Sales Manager to Start