Before an adjusting entry to accrue employee salaries is made, Salaries Expense and Salaries Payable are both understated.

Question

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Salaries Expense and Salaries Payable are both understated because the salaries earned by employees have not yet been recorded in the accounting records. The adjusting entry will increase Salaries Expense and increase Salaries Payable, correcting the previous understatement.

Before an Adjusting Entry to Accrue Employee Salaries Is Made