Before an adjusting entry is made to accrue employee salaries, Salaries Expense and Salaries Payable are both understated.

Question

Quizplus · Accepted Answer

Salaries Expense is understated because the expense has been incurred but not yet recorded. Salaries Payable is also understated because the employees have earned the salaries but have not been paid yet. Accruing employee salaries with an adjusting entry will correct these understated accounts.

Before an Adjusting Entry Is Made to Accrue Employee Salaries