Salary to the employee comes under expense or liabilty to the
co? how?
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Answer Posted / bharathi
When company paid salary to the employees it should be
treated as indirect expenses it will reflect in profit and
loss account.
The following entries to be passed in the books
Salary A/c
To Cash A/c
When Company not paid (to be paid) to the employees then it
should be treated as liability (because company has to pay
the salary to the employees - so it should be treated as
liability) it will reflect in Balance Sheet under the
coloumn Current Liabilities.
The Following entries to be passed in the books
Salary A/C dr (P&l a/c)
To Salary Payable A/c ( liability a/c)
(provision made for salary)
Once salary paid to the employees then the following entry
to be passed
Salary Payable A/c Dr.
To Cash/ Bank A/c
(Now the liability is nil) (provision which we have made is
cleared now)
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outstanding expenses are the expenses that "unpaid"at the end of the accounting period e.g.salaries rent so they all come to under nominal accounts which is debt all expenses and losses and credit all gains since they are unpaid hence they must be credited
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