Question

Paid $3,120 for salaries due employees, of which $1,700 is for August and $1,420 is for July salaries payable:

A) As an expense in August
B) As an expense in July
C) Split between expenses in July and August
D) As a revenue item

Answer 1

Salaries expenses should be split between July and August based on when the services were performed, with $1,420 for July and $1,700 for August, following the matching principle in accounting.

Step-by-step explanation:

The question pertains to the recording of salaries expenses for financial accounting purposes. The correct answer would be C) Split between expenses in July and August. This is because each month should record the expenses that relate to it under the matching principle in accounting. Hence, $1,700 would be recorded as an expense for August, and $1,420, which had been previously recorded as July salaries payable, would be recognized as an expense for the month of July when the service was actually performed by the employees.