What are the effects on the accounting equation from the adjustment for salaries and wages incurred,but not yet paid,during the accounting period?
A)Total liabilities will increase and total stockholders' equity will increase.
B)Total liabilities will decrease and total stockholders' equity will increase.
C)Total liabilities will decrease and total stockholders' equity will decrease.
D)Total liabilities will increase and total stockholders' equity will decrease.

Question

Quizplus · Accepted Answer

Although the amount due to employees will not be paid until after the accounting period ends,the expense relates to work done (and revenues generated)during the accounting period,so the expense recognition principle ("matching")requires an adjustment be made to accrue the wages incurred and owed by the company.Salaries and Wages Expense will increase and Salaries and Wages Payable,a liability,will increase.The increase to Salaries and Wages Expense will decrease net income and,as a result,it will also decrease total stockholders' equity.

What Are the Effects on the Accounting Equation from the Adjustment