Accounting Fundamentals Certification (AFC) Practice Test

Question: 1 / 400

What is the balance type for Wages Payable?

Debit Balance

Credit Balance

Wages Payable is classified as a liability on the balance sheet, representing the amount a company owes to its employees for work that has been performed but not yet paid. As a liability, Wages Payable inherently carries a credit balance. This means that it is increased with credits when wages are incurred and decreases with debits when those wages are paid out.

In accounting, all liabilities, including Wages Payable, typically maintain a credit balance because they represent obligations that must be settled in the future. A debit balance would indicate an asset or a decrease in the liability, which does not apply to Wages Payable during its normal course of operation. Thus, the classification of Wages Payable with a credit balance is correct, aligning with the principles of double-entry accounting where liabilities are recorded on the right side of the accounting equation.

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No Balance

Negative Balance

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