Accrued wages represent the wages the company owes for days worked but have not been paid.

• A. Wages payable
• B. Accrued wages
• C. Salary expense
• D. Accrued revenue

Answer: (B)

Accrual accounting recognizes expenses when they are incurred, not when cash is paid. When employees have worked for days but haven’t been paid yet, the company has incurred a wage expense and also owes that money to employees. This obligation shows up on the balance sheet as a current liability. The term used to describe this specific unpaid wage liability is accrued wages, which matches the scenario precisely. It’s the liability side of the transaction; wages payable is essentially the same idea, but the statement defines it with the term accrual. Salary expense describes the cost itself on the income statement, not the unpaid obligation, and accrued revenue refers to revenue earned but not yet collected.