What are Wage Expenses?

As the name indicates wage expenses are the expenses associated with the wages of the non-manufacturing employees. Wage expense is delivered to the employees on the hourly biases or in the form of monthly or weakly salaries depending upon the pay structure of a business. Some of the businesses also include the cost of social benefits delivered to the employees in their wage expense. They also include the expense of payroll tax in their wage expense entry. Wage expense is always recorded in the income statement in the form of the line item.

The recording of the wage expense in income statement is different in both the accrual and the cash accounting. In accrual accounting wage expense is recorded as soon as the work is performed weather the amount of wage is paid or not on the other hand in cash accounting the wage expense is recorded at the time when it is actually paid to the employees.

Wage expense is not the expense that is paid to the manufacturing employees as the amount paid to the manufacturing employees is added to the cost of the manufactured goods and is not considered as the wage expense. The wage expense and the salary expense are two individual accounts that are used to store the gross wage expense or gross salary expense. The gross amount of wages and salaries means the amount that is recorded before paying the payroll tax and the withholding expense of the business. In balance sheet the wage expense that is not paid yet is considered to be a liability as it is the money that is owed by the company to their employees. If the wage expense is prepaid which is rare then it is recorded as an asset in the balance sheet.

 

 

Other Related Accounting Articles:

Recommended Books !



Or

Download E accounting book in MS-word format for just 20 $ - Click here to Download


Latest Comments
  1. Pink February 10, 2016

Leave a Reply

Your email address will not be published. Required fields are marked *