How does the accrual of wages impact financial statements?
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An accrual of wages expense would produce what effect on the balance sheet?
a. Increase liabilities and increase equity
b. Decrease liabilities and increase equity
c. Increase expenses and increase liabilities
d. Decrease assets and decrease liabilities
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Solution Summary
Students often have trouble figuring out how transactions or business events impact the financial statements. This problems guides them through this process using wages and the example.
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Answer:
Rationale: The entry to accrue wages is:
debit: Wage Expense
credit: ...
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