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Compute what effect of transactions under accrual accounting

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Problem 1: Employees of a firm are entitled to receive a monthly salary totaling $100,000. The firm immediately pays $50,000 of the salary it owed to employees on the last day of that month. What is the effect of these transactions under Accrual Accounting and Cash Accounting for the current period?

Option 1: In Cash Accounting, the salary expense is $100,000; in Accrual Accounting the salary expense is $100,000.

Option 2: In Cash Accounting, the salary expense is $100,000; in Accrual Accounting the salary expense is $50,000.

Option 3: In Cash Accounting, the salary expense is $50,000; in Accrual Accounting the salary expense is $100,000.

Option 4: In Cash Accounting, the salary expense is $50,000; in Accrual Accounting the salary expense is $50,000.

Reference no: EM132615585

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