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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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When a credit is made to federal income taxes withholding payable account related to taxes withheld from an employee, the corresponding debit is made to

a. Wages Expense

b. Taxes Expense

c. Taxes Payable

d. Cash

To determine

Concept introduction:

Liabilities:

Liabilities are the obligation of the business or amount payable by the business. Liabilities can current or long term. Current liabilities are liabilities payable within the short term or business cycle of the company, for example Accounts payable for purchases and utilities payable. Long term liabilities are liabilities payable in a long period/ years, for example long term loan.

To choose:

The correct debit account title for the taxes withheld from the employee.

Explanation

Explanation for correct answer:

Tax Payable is credited at the time of withholding the income tax from employee’s salary. Hence the correct option is c.

Explanation for incorrect answers:

a. Tax Payable is credited at the time of withholding the income tax from employee’s salary; hence it’s not the correct option...

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