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

Question

Quizplus · Accepted Answer

Payroll entries typically increase the firm's expenses by reflecting the cost of employee salaries, wages, and benefits. Therefore, the correct choice is D. The other options are not affected by payroll entries: A) assets are not impacted directly by payroll entries, B) payroll entries do not reduce the firm's liabilities, and C) owners' equity is not affected by payroll entries unless the employees are also owners of the company.

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