Multiple Choice
Which of the following is the primary purpose of using a journal in accounting when you need to locate a transaction that was previously entered?
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2. Transaction Analysis
Journal Entries: Debits and Credits
Multiple Choice
When recording the journal entry to pay employees for wages earned, which account is typically credited?
A
Accounts Receivable
B
Cash
C
Salaries Payable
D
Wages Expense
Verified step by step guidance1
Understand the context of the transaction: Paying employees for wages earned involves reducing the company's cash balance and recognizing the expense or liability associated with wages.
Identify the accounts involved: The accounts typically involved in this transaction are 'Cash' (an asset account), 'Wages Expense' (an expense account), and potentially 'Salaries Payable' (a liability account).
Determine the impact on each account: Paying wages reduces the company's cash balance, so 'Cash' is credited. The expense for wages is recognized, so 'Wages Expense' is debited. If wages were previously recorded as a liability in 'Salaries Payable,' this account would also be debited to reduce the liability.
Apply the double-entry accounting principle: For every debit, there must be an equal credit. In this case, the credit is to 'Cash,' and the debit is to 'Wages Expense' or 'Salaries Payable,' depending on whether the wages were previously recorded as a liability.
Record the journal entry: Debit 'Wages Expense' or 'Salaries Payable' and credit 'Cash' to reflect the payment of wages. Ensure the amounts match the actual payment made to employees.
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