Gross wages of $5,000 accrued but not paid to employees at the end of 20B should be recorded by the employer in a journal entry that includes which of the following?
A)A debit of $5,000 to Wages payable.
B)A credit of $5,000 to Cash.
C)A debit of $5,000 to Wages expense.
D)A debit of $5,000 to Cash.

Question

Quizplus · Accepted Answer

The accrual basis of accounting requires that expenses be recognized when they are incurred, regardless of whether or not they have been paid. Since the gross wages of $5,000 have accrued but not yet been paid, they should be recorded as a debit to Wages Expense and a credit to Wages Payable. Option A is incorrect because it suggests that Wages Payable should be credited, when in fact it is a liability. Option B is incorrect because it suggests that cash has been paid, when in fact it has not. Option D is incorrect because it suggests that cash is being debited when no cash has been paid out.

Gross Wages of $5,000 Accrued but Not Paid to Employees