Question

multiple choice question
by the end of the accounting period, employees have earned salaries of $500, but they will not be paid until the following pay period. which of the following is the proper adjusting entry?
debit salaries expense for $500.
credit salaries expense for $500.
debit salaries payable for $500.
credit unearned revenues for $500.

Explanation:

Under accrual accounting, expenses are recognized when incurred, not when paid. The $500 in salaries is an incurred expense, so we debit Salaries Expense to record the expense. We also would credit Salaries Payable (a liability) to recognize the amount owed, but this is the only correct component listed in the options. The other options are incorrect: crediting Salaries Expense would reduce an expense (wrong, as we need to recognize it), debiting Salaries Payable would reduce a liability (we need to increase it), and Unearned Revenues is unrelated to accrued salaries.

Answer:

A. Debit Salaries expense for $500.