Question

The adjusting entry a company would record for the amount of wages incurred but not yet paid will cause which of the following?

a) Increase liabilities
b) Decrease stockholders' equity

Answer 1

The adjusting entry for wages incurred but not yet paid will a) increase liabilities and b) decrease stockholders' equity.

Step-by-step explanation:

The adjusting entry a company would record for the amount of wages incurred but not yet paid will a) increase liabilities and b) decrease stockholders' equity.

This is because the company has incurred an expense (wages) but has not yet paid for it, so it needs to recognize the liability (amount owed) for the unpaid wages.

This increases the company's liabilities and decreases the stockholders' equity because both are affected by the increase in unpaid expenses.