Here are some possible case-study multiple choice

questions on payroll accounting. Each question has four

options and the correct answer is marked with an asterisk

(*). The rationales for the answers are also provided.

1. A company pays its employees on a biweekly basis. The

pay period ends on Friday, December 31, 2023, and the

paychecks are distributed on Wednesday, January 5, 2024.

How should the company record the payroll expense and

liability for the pay period?

a) Debit payroll expense and credit cash on December 31,

2023.

b) Debit payroll expense and credit cash on January 5,

2024.

c) Debit payroll expense and credit payroll liability on

December 31, 2023, and debit payroll liability and credit

cash on January 5, 2024.*

d) Debit payroll expense and credit payroll liability on

January 5, 2024.

Rationale: The company should record the payroll expense

and liability in the same period that the employees

performed the work, regardless of when they are paid.

Therefore, option c is correct.

2. A company has a defined benefit pension plan for its

employees. The company's actuary estimates that the

present value of the future benefits earned by the

employees in 2023 is $500,000. The company contributes

$400,000 to the pension fund in 2023 and the actual return

on the pension fund assets is $50,000. The company's