The employees of Kostner Financial Services Inc.worked the last two weeks of December.They received their paychecks on January 2.Which of the following accounts should appear on the balance sheet as of December 31 according to the matching principle?

Question

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According to the matching principle, expenses should be recognized in the same period as the related revenues. In this case, the employees worked in December but were paid in January, so the salaries expense should be recognized in December and a corresponding salaries payable account should be recorded on the balance sheet as of December 31. Accounts payable and prepaid expenses do not apply in this scenario as no goods or services were purchased on credit and no expenses were paid in advance.

The Employees of Kostner Financial Services Inc