There are different kinds of transactions that happen in the context of payroll. All payroll transactions are recorded in the accounting journal. Payroll transactions can be basically categorized into expenses, liabilities, and assets. The nature of payroll entries may vary from one transaction to another. A transaction can range from taxes payable to specific deductions, such as retirement contributions. Gross wages and salaries are also one of the basic payroll entries. Some of the other transactions include payroll payable, federal income withholding payable, state income withholding payable, etc.
It is strongly recommended that the debits and the credits are recorded along with any other specific transaction. Remember, at the end of the accounting process, all the debits in total and all the credits in total should be equal to each other. It is also interesting to note that some accounts are increased or decreased by credits. Similarly, other accounts can be increased or decreased by debits. In a nutshell, while working on payroll accounting, you have to basically deal with expenses, liabilities, and assets. Let’s briefly look into them one by one.
Expenses can be defined as the amounts that you have already paid. Note, they get increased by debits. In other words, when the payment is made to an employee, an expense gets gained and thus you need to increase the expense account. Similarly, credits increase liabilities while decreasing the assets. Accounting services in Sydney are experienced to support payroll accounting in your business.
