If a ﬁrm accrues the payroll due but not paid at the end of a ﬁnancial period, what should it do on the ﬁrst day of the next ﬁnancial period?
A)It should create a reminder about the accrual to ensure accuracy of computations on the next pay date.
B)It should make a note to create the reversing entry at the end of the next ﬁnancial period.
C)It should disburse the accrued pay to the employees.
D)It should create a reversing entry in the General Journal.

Question

Quizplus · Accepted Answer

Creating a reversing entry on the first day of the next financial period negates the accrual made at the end of the previous period, simplifying the accounting process once the payroll is actually disbursed.

If a ﬁRm Accrues the Payroll Due but Not Paid