How do you record accrued wages?

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Multiple Choice

How do you record accrued wages?

Explanation:
When wages are earned but not yet paid, you recognize both the expense for the period and a liability for what you owe. Debiting Wages Expense increases the expense, and crediting Wages Payable increases the liability you owe to employees. Since cash hasn’t been paid yet, there’s no cash outflow to record. Later, when you actually pay, you would debit Wages Payable and credit Cash to reduce the liability and reflect the cash payment. This entry keeps the financial statements accurately showing the cost of wages in the period and the obligation still outstanding.

When wages are earned but not yet paid, you recognize both the expense for the period and a liability for what you owe. Debiting Wages Expense increases the expense, and crediting Wages Payable increases the liability you owe to employees. Since cash hasn’t been paid yet, there’s no cash outflow to record. Later, when you actually pay, you would debit Wages Payable and credit Cash to reduce the liability and reflect the cash payment. This entry keeps the financial statements accurately showing the cost of wages in the period and the obligation still outstanding.

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