If there is a credit balance in the Payroll Payable at the end of the accounting period,it represents
A)the amount by which applied payroll was greater than actual payroll.
B)the amount by which actual payroll was greater than applied payroll.
C)labor costs which have not been paid.
D)an amount that should be charged to Cost of Goods Sold.

Question

Quizplus · Accepted Answer

A credit balance in Payroll Payable indicates that the company owes money to its employees for their services rendered but has not yet paid them. This represents labor costs which have not been paid. Option A and B are incorrect as they imply a difference between applied and actual payroll, which is not related to the credit balance in Payroll Payable. Option D is incorrect as Cost of Goods Sold relates to the cost of producing goods sold by a company and not payroll expenses.

If There Is a Credit Balance in the Payroll Payable