Wages expense is an expense account, whereas wages payable is a current liability account. A current liability is one that the company must pay within one year. The company presents its expense accounts on the income statement and its liability accounts on the balance sheet.
To account for wages expense, the bookkeeper or accountant debits the account for the amount of labor costs during the relevant period. When you have a debit, there must be a corresponding credit, or credits, to make the accounting equation balance.
The company then credits several payable accounts for taxes it owes to FICA, the state and federal governments, the health insurance provider, the k custodial company and wages payable. At the end of the year, the company will present this account on its balance sheet as a liability.
Christine Aldridge is a financial planner who has been writing articles related to personal finance since Retained Earnings are part, and capital goods and deducting all the liabilities debts, wages, and salaries, loans, creditors. As noted earlier, expenses are almost always debited, so we debit Wages Expense, increasing its account balance. Since your company did not yet pay its employees, the Cash account is not credited, instead, the credit is recorded in the liability account Wages Payable.
The justification for these entries is that in the first entry the salary is being due and in the second entry, the salary is eventually being paid to the person. As the amount is going out from the salary payables account, it has been debited and the account of Ram who is receiving the salary has been credited.
Salary payable is a current liability account containing all the balance or unpaid wages at the end of the accounting period. The amount of salary payable is reported in the balance sheet at the end of the month or year, and it is not reported in the income statement. The initial journal entry for prepaid rent is a debit to prepaid rent and a credit to cash. A journal entry is a record of the business transactions in the accounting books of a business.
A properly documented journal entry consists of the correct date, amounts to be debited and credited, description of the transaction and a unique reference number. A journal entry is the first step in the accounting cycle. Direct costs are expenses that can be directly tied to the production of a product and can include direct labor and direct material costs.
Raw materials and the cost of labour used during the manufacture of the product are good examples of direct expenses that are easily traced back to the product. Depending on the business you run, wages or salaries may also be viewed as direct expenses. Direct expenses are most often variable costs. The accrued rent receivable account is considered a current asset, since rent is typically due within the next year.
It is usually split into two different line items: common stock par value and additional paid-in capital. Paid-in capital can be a significant source of capital for projects and can help offset business losses. What are simple journal entries? In double-entry bookkeeping, simple journal entries are types of accounting entries that debit one account and credit the corresponding account. A simple entry does not deal with more than two accounts. Withheld amounts represent liabilities, as the company must pay the amounts withheld to the appropriate third party.
The amounts do not represent expenses of the employer. The employer is simply acting as an intermediary, collecting money from employees and passing it on to third parties. Required deductions. These deductions are made for federal income taxes, and when applicable, state and local income taxes.
The amounts withheld are based on an employee's earnings and designated withholding allowances. The employer withholds income tax amounts based on the allowances designated by each employee and tax tables provided by the government. In addition to income taxes, FICA requires a deduction from employees' pay for federal social security and Medicare benefits programs. This deduction is usually referred to as FICA taxes.
FICA taxes are withheld by the employer and are deposited along with federal income taxes in a financial institution.
0コメント