What effect do payroll entries have on a ﬁrm's accounting system?
A) They reduce the ﬁrm's liabilities.
B) They increase the ﬁrm's assets.
C) They increase the owners' equity.
D) They increase the ﬁrm's expenses.

Question

Quizplus · Accepted Answer

Payroll entries result in an increase in expenses for the firm, as it incurs costs related to employee compensation. This may include salaries, wages, employer taxes, benefits, and other related costs. It does not directly affect the firm's liabilities or assets, but it may indirectly impact them by affecting the firm's net income and cash flow. It does not increase owners' equity, as that is typically impacted by investments or profits earned from business operations.

What Effect Do Payroll Entries Have on a ﬁRm's Accounting