chahanagautam47
Answered

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How is paid wages and outstanding wages treated in accounting equation.​

Sagot :

Parrain

Answer:

Paid wages will reduce the net income as an expense. Net income becomes Retained earnings which are added to Equity. Paid wages will therefore reduce the Equity in the accounting equation.

Outstanding wages however, will be transferred to a liability account to show that the company owes those wages. This will therefore increase the liabilities in the accounting equation.

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