At December 31,2010,McToil,Inc.owes its employees $20,000 for work performed in 2010.Payday is not until the first week in January 2011.What is the effect of the December 31,2010 adjusting entry on the company's total assets?

Question

Quizplus · Accepted Answer

Recording the owed wages as an expense for the work performed in 2010 increases liabilities (wages payable) but does not affect total assets, as it is an adjustment of existing obligations rather than a transaction involving the exchange or use of assets.