I thought accrued salaries were like unpaid salaries.
But apparently that is wrong. Can someone clarify?
But apparently that is wrong. Can someone clarify?
Can someone please explain 'Accrued Salaries'???
- Thread starter TechBoyJK
- Start date
The salary from December would show up as salary payable, which is a liability. It would not show up as an expense. From the employees side it would show up as salary receivable, which is an asset.
already paid? I thought it was unpaid salary that has been accruing and needs to be paid and is seperate from expected salary payments. (like leftover salary from a few months back).
BoomerD
No Lifer
- Feb 26, 2006
- 65,627
- 14,020
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Accrued salaries are salaries that have been earned but not yet paid. They create a liability.
http://www.principlesofaccount...hapter%203.htm#ACCRUED SALARIES
http://www.principlesofaccount...hapter%203.htm#ACCRUED SALARIES
Accrued salary is an adjusting entry to Salary Payable.
i.e. I accrue salary that is payable next month and I place it as salary expense credit, increase salary payable, decrease retained earnings.
Next month I will decrease cash and salary payable to keep the AE in check.
Otherwise I could have simply paid the salary's on a cash basis and not had to worry about decreasing RE and increase SP. It is simply the accrual method screwing with the AE.
In a perfect world you would adjust it every day (i.e. 1/30 of total salaried payroll to salary payable) but since that is cost prohibitive, you do it at the end of the month and the second pay period for the month gets carried over.
This is an accounting concept at this point though, since companies have gone to 14-29 for accruing expenses and 15-30 for paying paychecks this becomes an expense that rarely happens.
The more important thing to look at for a fundamental balance sheet analysis is "Bonus Payable," as for some firms this can be a large amount and companies are supposed to recognize bonus payable when it is "substantially likely" the bonus will be earned.
i.e. I accrue salary that is payable next month and I place it as salary expense credit, increase salary payable, decrease retained earnings.
Next month I will decrease cash and salary payable to keep the AE in check.
Otherwise I could have simply paid the salary's on a cash basis and not had to worry about decreasing RE and increase SP. It is simply the accrual method screwing with the AE.
In a perfect world you would adjust it every day (i.e. 1/30 of total salaried payroll to salary payable) but since that is cost prohibitive, you do it at the end of the month and the second pay period for the month gets carried over.
This is an accounting concept at this point though, since companies have gone to 14-29 for accruing expenses and 15-30 for paying paychecks this becomes an expense that rarely happens.
The more important thing to look at for a fundamental balance sheet analysis is "Bonus Payable," as for some firms this can be a large amount and companies are supposed to recognize bonus payable when it is "substantially likely" the bonus will be earned.
CPA
Elite Member
- Nov 19, 2001
- 30,322
- 4
- 0
tech, you were close. The expense is not recognized in January, it's recognized in December.
Slightly more in depth, you would generally reverse the December entry in January as your payment of the accrued wages would go straight to expense, not the liability (but that's just accounting trail).
Slightly more in depth, you would generally reverse the December entry in January as your payment of the accrued wages would go straight to expense, not the liability (but that's just accounting trail).
CPA, did you hear the CPA is going back to 4 parts all at once instead of this rinky dink take 1 part every 2 months until you pass bs.
Maybe now we can finally get some more CPA's that actually understand accounting.
Maybe now we can finally get some more CPA's that actually understand accounting.
The countercyclical approach. MN is going to a strict take all 4 parts and say that changing it was a huge mistake.
Should be more like the CFA once a year everyone in a big room. Fail take it again next year.
Should be more like the CFA once a year everyone in a big room. Fail take it again next year.
From our conversations JS, it didn't seem like the CPA would help you much. Seemed like CAIA, CFA, MSF, CQF would be more beneficial.
I don't work on wall st. I'm just knowledgeable on it as a hobby and the fact that I have a lot of friends in ibanking and structured finance. I do accounting and FP&A for private industry.
and yes, CPA license is technically worthless to me in practice because i'm not a preparer or in audit. but it's purely for resume purposes.
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