Question

At the end of the accounting period on December 31, 2022, Rose Industries records wages payable of $42,500. For the same accounting period, Romero Industries does not need to record wages payable. Why?

Answer 1

Answer:

Accrual basis of accounting requires all income (earned and unearned), expenses (incurred and not incurred) be recorded.

If for Rose Industrie's payday comes before the end of the accounting period, it is required that the accrued wages from the payday till end of accounting period be presented. So for example if the payday is 7 days before December 31, 2022, the accrued wages from those 7 days will be recorded in the Wages Payable account.

In the case of Romero industries, if the payday falls on December 31, 2022, they will not be expected to report Wages Payable as the company has not accrued any wages as at that date

Explanation: