It is the year end, but not the pay period end. How will this affect the balance sheet?
A) Assets will be decreased.
B) Liabilities will be increased.
C) Owner's equity will be increased.
D) Net Income will be increased.

Question

Quizplus · Accepted Answer

Year-end without coinciding with the pay period end means that wages earned but not yet paid will increase liabilities in the form of accrued wages payable. This reflects the company's obligation to pay employees for work performed up to the year-end, even though the payment will be made in the next period.

It Is the Year End, but Not the Pay Period