Which of the following shows how a payment made to settle an accrued expense, such as the salaries payable, will affect a company's financial statements?
A. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text{-FA}$
B. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$
C. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text{-QA}$
D.$\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text{-IA}$
A) Option A
B) Option B
C) Option C
D) Option D

Question

Which of the following shows how a payment made to settle an accrued expense, such as the salaries payable, will affect a company's financial statements? 
A. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text{-FA}$
B. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad$
C. $\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text{-QA}$
D.$\quad - \quad\quad\quad - \quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad\quad \text{-IA}$
A) Option A 
B) Option B 
C) Option C 
D) Option D

Quizplus · Accepted Answer

When a payment is made to settle an accrued expense such as salaries payable, it will decrease the amount of the liability on the balance sheet (Option C, a decrease in the Salaries Payable account). This will also decrease the company's total liabilities and increase its equity, meaning that retained earnings will increase. The income statement will also show a decrease in the expense account related to the accrued expense, which in this case would be Salaries Expense (Option C, a decrease in the Salaries Expense account). Overall, the company's net income will increase due to the decrease in the expense, and its retained earnings will increase due to the decrease in the liability.

Which of the Following Shows How a Payment Made to Settle