The adjusting entry to record accrued salaries has what effect on the basic accounting equation?
A)Increases liabilities,decreases stockholders' equity
B)Increases liabilities,increases stockholders' equity
C)Decrease assets,decreases stockholders' equity
D)Decrease assets,increases stockholders' equity
E)Decrease liabilities,decrease assets

Question

Quizplus · Accepted Answer

The adjusting entry to record accrued salaries increases the liability for salaries owed but not yet paid, which is an increase to the liabilities side of the equation. However, since the salaries have already been earned by the employees, but not yet paid, there is no corresponding increase in assets, and thus stockholders' equity decreases.

The Adjusting Entry to Record Accrued Salaries Has What Effect