Question

A company pays its employees every Friday. This year, the company’s year ends on a Wednesday....

A company pays its employees every Friday. This year, the company’s year ends on a Wednesday. If it does not to accrue salaries for the week, how will the financial statements be affected? net income will be overstated; assets will be overstated; liabilities will not be affected net income will be understated; assets will not be affected; liabilities will be overstated net income will be understated; assets will be understated; liabilities will not be affected net income will be overstated; assets will not be affected; liabilities will be understated

Business   Accounting   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

We pass following entry when we accrue salaries

Debit Credit
Salary & wage expense XXXX
Salaries & wages payable XXX

Salary & wage expense is reported in income statement thus not accruing it will overstate the income (as expense are understated)

Salaries and wages payable is a balance sheet item(liabilities)thus liabilities will be understated

There will be no affect on assets .

So

  1. Net income will be overstated
  2. liabilities will be understated
0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
What is the effect on the financial statements when a company fails to accrue wages expense...
What is the effect on the financial statements when a company fails to accrue wages expense at year-end? (a) Net income is overstated and liabilities are understated. (b) Expenses are understated and stockholders' equity is understated (c) Expenses and liabilities are both overstated. (d) Net income is overstated and liabilities are properly reported.
Smyth Company pays its employees every Friday for a 5-day workweek (Monday through Friday). The employees...
Smyth Company pays its employees every Friday for a 5-day workweek (Monday through Friday). The employees earn $5,000 per day of work. The most recent workweek began on Monday, October 6, 2005. The accounting period ends on Thursday October 9, 2005, and the company will issue paychecks totalling $25,000 on Friday, October 10, 2005. The entry into the journal of Billie Smyth Company on Thursday, October 9, 2005 would include a: A. Debit to wages expense for $25,000. B. Debit...
A company pays its employees $3,700 each Friday, which amounts to $740 per day for the...
A company pays its employees $3,700 each Friday, which amounts to $740 per day for the five-day work week that begins on Monday. If the monthly accounting period ends on Thursday and the employees worked through Thursday, the amount of salaries earned but unpaid at the end of the accounting period is: Multiple Choice $1,480. $2,220. $740. $3,700. $2,960.
The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll...
The employees of Neat Clothes work Monday through Friday. Every other Friday the company issues payroll checks totaling $26,000. The current pay period ends on Friday, July 3. Neat Clothes is now preparing quarterly financial statements for the three months ended June 30. What is the adjusting entry to record accrued salaries at the end of June? Multiple Choice Salaries expense 5,200 Salaries payable 5,200 Prepaid salaries 7,800 Salaries payable 7,800 Salaries expense 18,200 Prepaid salaries 7,800 Salaries payable 26,000...
A company pays each of its two office employees each Friday at the rate of $200...
A company pays each of its two office employees each Friday at the rate of $200 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is: Multiple Choice Debit Unpaid Salaries $1,200 and credit Salaries Payable $1,200. Debit Salaries Expense $800 and credit Salaries Payable $800. Debit Salaries Expense $1,200 and...
A company pays each of its two office employees each Friday at the rate of $210...
A company pays each of its two office employees each Friday at the rate of $210 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is: Multiple Choice Debit Unpaid Salaries $1,260 and credit Salaries Payable $1,260. Debit Salaries Expense $840 and credit Cash $840. Debit Salaries Expense $840 and credit...
A company pays each of its two office employees each Friday at the rate of $300...
A company pays each of its two office employees each Friday at the rate of $300 per day for a five-day week that begins on Monday. If the monthly accounting period ends on Tuesday and the employees worked on both Monday and Tuesday, the month-end adjusting entry to record the salaries earned but unpaid is: Multiple Choice Debit Unpaid Salaries $1,800 and credit Salaries Payable $1,800. Debit Salaries Payable $1,200 and credit Salaries Expense $1,200. Debit Salaries Expense $1,200 and...
A calendar year company plans to pay its December gas bill in January. As of December...
A calendar year company plans to pay its December gas bill in January. As of December 31, no adjusting entry has been recorded. As a result, the balance sheet is accurate, but the income statement is understated net income is understated and liabilities are overstated net income is overstated and liabilities are overstated net income is understated and liabilities are understated the income statement and the balance sheet are both accurate because the bill won't be paid until January net...
Analyzing and Computing Accrued Wages Liability and Expense Demski Company pays its employees on the 1st...
Analyzing and Computing Accrued Wages Liability and Expense Demski Company pays its employees on the 1st and 15th of each month. It is March 31 and Demski is preparing financial statements for this quarter.Its employees have earned $96,000 since the 15th of March and have not yet been paid. How will Demski's balance sheet and income statement reflect the accrual of wages on March 31? What balance sheet and income statement accounts would be incorrectly reported if Demski failed to...
On May 1, 2017, a company purchased a one-year insurance policy for $1,560. The policy was...
On May 1, 2017, a company purchased a one-year insurance policy for $1,560. The policy was renewed for another year on May 1, 2018, for $1,680. The company recorded both payments as expenses when paid. What is the effect of this on the company’s 2018 calendar year net income and year-end assets? A : Net income is overstated by $40 and assets are overstated by $560. B : Net income is understated by $40 and assets are understated by $560....
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT