Question 2

• Salaries and Wages

  Compensation paid to employees for their work in an organization
• Recording salaries and wages in the General Journal

  1. Debit "Salaries and Wages Expense" account

  2. Credit "Cash" (if paid immediately) or "Accounts Payable" (if not paid immediately)
• Posting to the Ledger


  Entries from the General Journal are posted to appropriate ledger accounts (e.g. "Salaries and Wages Expense," "Cash," "Accounts Payable")
• Payroll Deductions

  • Deductions such as income tax, social security contributions, pension contributions, and health insurance premiums are withheld from employees' salaries and wages
  • These deductions are liabilities until remitted to the appropriate authorities or funds
• Employee Benefits

  • Bonuses
  • Commissions
  • Overtime pay
  • Fringe benefits (e.g. health insurance, retirement plans)
• Financial Reporting

  Total salaries and wages paid during a specific period is reported in the Income Statement as part of operating expenses<|>Payroll-related liabilities are reported in the Balance Sheet
• Proper management and recording of salaries and wages are essential not only for financial reporting but also for compliance with tax regulations and labor laws
• This process ensures that employees are compensated accurately and that the financial statements reflect the true costs associated with the organization's workforce