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22 May, 14:54

An adjustment includes an increase to Salaries and Wages Expense of $5,000; a decrease to Salaries and Wages Payable of $3,000; and a decrease to Cash for $8,000. Which explains this adjustment? A : The adjustment is an accrual of $3,000 in Wage and Salary Expense. B : The adjustment reflects $5,000 payment of wages and salaries for the current period and $3,000 for wages and salaries accrued previously. C : The adjustment is an accrual of $3,000 and deferral of $5,000. D : The adjustment reflects total wage and salary expenses this period of $8,000.

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  1. 22 May, 17:47
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    B : The adjustment reflects $5,000 payment of wages and salaries for the current period and $3,000 for wages and salaries accrued previously.

    Explanation:

    As with debit to salary and wages expense account, reflects the expense in nature of salary for the period, if paid in the period itself it is debited against cash, else if not paid and carried forward then it is debited against salary and wages payable.

    Once a liability is created based on accrual concept, then the liability is decreased only in the period in which it is finally settled.

    This, clearly means in the current situation the expense for the period is $5,000 and that for the previous period paid in current year = $3,000.
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