Final answer:
When wages payable are paid, the company's liabilities decrease and its cash balance decreases too. The Wages Payable account is credited and the Cash account is debited. This action settles the debt without affecting the income statement since the expense was previously recognized.
Step-by-step explanation:
When the wages payable that resulted from adjustments at the end of a period are paid in a future period, the effect on accounts is a decrease in the company's liabilities and a decrease in its cash or bank balance. The Wages Payable account, a liability account, is credited to indicate that a debt has been settled, and the Cash account, an asset account, is debited to reflect the outflow of cash.
An example of this would be: If a company has wages payable of $1,000, upon payment, its Cash account is debited for $1,000, and Wages Payable account credited for $1,000, thereby removing this liability from the balance sheet. It is important to note that this transaction does not affect the company's income statement as the expenses related to these wages have already been recognized in the period when they were incurred.