What effect does recognizing accrued wages expense at the end of the accounting period have on the accounting equation?

Question

Quizplus · Accepted Answer

Recognizing accrued wages expense means that an expense has been incurred but not yet paid for. This increases the company's liabilities as it owes money to its employees. Simultaneously, there is an equal decrease in shareholders' equity to balance the accounting equation. Therefore, the correct choice is B where liabilities increase and shareholders' equity decreases.

What Effect Does Recognizing Accrued Wages Expense at the End