From what account does payroll receive its money?

by Regina Brrockmueller
(Moreno Valley, CA)

I want to find out from what account does payroll get its credit money debiting what account to pay its employees?

Comments for From what account does payroll receive its money? Click here to add your own comments

Feb 10, 2010 Accounting Records On Payment Of Payroll by: Ana Orwel Dear Regina, please find my answer to your question. Payroll which is due by the business to its emloyees is a liability, therefore it is accounted on the credit side of account devoted to account for payrola payable and is reflected on the liability and equity side of the balance sheet. When business pays salaries to its employees, the following entry is made: D Payroll (Salaries payable - liability) XXXX C Cash (if salaries are paid from petty cash of business, which is rare) XXXX C Bank (cash in bank)XXXX So when payrol is paid, we have to decrease laibility by debiting it and we have to decrease cash balance (in bank or petty cash) be cediting one of these accounts. Credit entry is amde on the asset (cash) account to reflect decrease in the balance of the particular asset category. X Close Editor Feb 10, 2010 Rating Submitted by: Ana Orwel Title Comment Dear Regina, please find my answer to your question. Payroll which is due by the business to its emloyees is a liability, therefore it is accounted on the credit side of account devoted to account for payrola payable and is reflected on the liability and equity side of the balance sheet. When business pays salaries to its employees, the following entry is made: D Payroll (Salaries payable - liability) XXXX C Cash (if salaries are paid from petty cash of business, which is rare) XXXX C Bank (cash in bank)XXXX So when payrol is paid, we have to decrease laibility by debiting it and we have to decrease cash balance (in bank or petty cash) be cediting one of these accounts. Credit entry is amde on the asset (cash) account to reflect decrease in the balance of the particular asset category. Cancel Delete Delete & Ban Updating Comments page...

Click here to add your own comments Join in and write your own page! It's easy to do. How? Simply click here to return to Current Assets Accounting

Want more information on accounting? Learn Accounting Basic with our Accounting Basic Video Course. This is a detailed video course, helping you to learn accounting in a step by step manner. You can watch videos, you can print out video presentations, in this course you will find plenty of explanations and practical examples, which are essential to learn and understand accounting.

Start mastering your accounting skills with Accounting Basic Video Course. Click here to learn more...

What Next?

Subscribe to our RSS feed

Leave Accounting Forum and return to bookkeeping-financial-accounting-resources.com Home page