X Co's employees carry out work to the value of $7500. They are paid $4500 immediately with the balance to be settled in the next accounting period. Under the cash approach to profit measurement the amount of wages expense that will be recorded in the current period is:

Question

Quizplus · Accepted Answer

Under the cash approach, expenses are recognized when cash is disbursed. As $4500 has already been paid, it will be recorded as wages expense in the current period. The remaining balance will be recorded as an expense in the next accounting period when it is paid. Therefore, the answer is B ($4500).

X Co's Employees Carry Out Work to the Value of $7500