Wages payable at the end of the period if not yet paid should be recorded as?

• A. Debit Wages Expense; Credit Wages Payable (a liability).
• B. Debit Wages Payable; Credit Wages Expense.
• C. Debit Bank; Credit Wages Payable.
• D. Debit Wages Revenue; Credit Wages Payable.

Answer: (A)

This question tests how to record wages that have been earned but not yet paid. When wages are incurred, you recognize the expense in the current period and, because you haven’t paid yet, you record a liability for the amount owed.

The correct entry is to debit Wages Expense to show the cost incurred this period and credit Wages Payable to reflect the obligation to pay employees later. This aligns with accrual accounting: expenses are recognized when incurred, and liabilities are increased with a credit.

Other options would either move money the wrong way or misclassify the transaction. For example, debiting Wages Payable would reduce the liability and isn’t appropriate when the wage cost is being recognized; debiting Bank would imply cash has already moved, which isn’t the case; debiting Wages Revenue would incorrectly treat wages as revenue.