The Star Mobile Phone company estimates that the amount of monthly salaries on which four weeks annual leave is payable is $208 000. What is the correct accounting entry to accrue annual leave at the end of the month?

Question

Quizplus · Accepted Answer

Accrued annual leave creates an expense, therefore the correct accounting entry is to debit the annual leave expense account and credit the annual leave payable account. Option A is incorrect as it only credits the bank account. Option B is incorrect as it only credits the annual leave expense account. Option D is incorrect as accrual accounting requires the recognition of expenses when they are incurred, therefore an accounting entry is required to record the expense.

The Star Mobile Phone Company Estimates That the Amount of Monthly