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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

Why is it necessary to make an adjustment if wages for work performed for the pay period Monday through Friday are paid on Friday and the accounting period ends on a Wednesday?

To determine

Explain the reason for adjusting the wages for the accounting period ending on Wednesday, if the weekly wages are paid on Friday.

Explanation

Adjusting entries: Adjusting entries are those entries which are recorded at the end of the year, to update the income statement accounts (revenue and expenses) and balance sheet accounts (assets, liabilities, and owners’ or stockholders’ equity) to maintain the records according to accrual basis principle.

Reason for adjusting wages expense:

  • ■ Wages expense for the accounting period, Monday to Wednesday requires adjustment as it is the expense incurred but not yet paid...

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