The journal entry a company uses to record accrued vacation privileges for its employees at the end of the year is

Question

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Accrued vacation pay is a liability for the company because it represents an obligation to pay employees for unused vacation time. Therefore, the company should debit the Vacation Pay Expense account, which increases the expense for the year, and credit the Vacation Pay Payable account, which increases the liability for the accrued vacation pay.

The Journal Entry a Company Uses to Record Accrued Vacation