It is the year-end, but not the pay period end

Accounting Dec 16, 2020

It is the year-end, but not the pay period end. How will this affect the balance sheet?

a) Assets will be increased.

b) Liabilities will be increased.

c) Owner's equity will be increased.

d) This has no effect on the period end balance sheet.

Expert Solution

Answer: b) Liabilities will be increased.

If it is the year-end, but not the pay period end, most probably liabilities will be increased. Different year-end and pay periods would cause expenses incurred to be unpaid as of year-end because they will not be paid until the pay period (which is probably on the next month).

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