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At the end of the period we must make an adjusting entry for accrued salary expense to balance the adjusted trial balance make sure we
At the end of the period we must make an adjusting entry for accrued salary expense to
balance the adjusted trial balance
make sure we don't spend the cash owed to employees
reconcile the cash account
report all our salary expense of the period
The unpaid salary expense is our
asset owed from employees
expense in the future
liability to employees
If we fail to make this adjustment, we
overstate both expenses and liabilities
overstate expenses
overstate liabilities
understate both expenses and liabilities
understate expenses
understate liabilities
As a result we would
overstate cash and expenses
overstate net income and retained earnings
understate cash and expenses
understate net income and retained earnings
on our financial statements.
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