Question

Where do payroll related transactions include in the financial statements? Name the financial statements and provide some of the accounts that appeared in those statements.   

Answer 1

In Income statement they are shown as expense under following accounts:-

1. Wages and salary expense.

2. FICA tax expense.

3. Unemployment expense.

4. Health insurance expense

In balance sheet they are shown as liability under following accounts:-

1. FICA tax payable.

2.Federal income withholding payable.

3. State income withholding payable.

4.Payrol payable

In cash flow statement they are shown as operating activity with the account name employee pay, further divided into wages expense, salary expense etc.

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