What is recorded in the Wages and Salaries Expense account?

Definition of Wages and Salaries Expense

The account Wages and Salaries Expense (or separate accounts such as Wages Expense or Salaries Expense) are used to record the amounts earned by employees during the accounting period under the accrual basis of accounting.

Example of Wages and Salaries Expense

Assume that a new service business begins in December and has a staff of 6 hourly-paid employees who are paid each Friday for the hours they worked during the previous week. As of December 31, the hourly-paid employees have earned $3,000 of wages for which they will be paid on the first Friday in January. In order to comply with the matching principle, the account Wages and Salaries Expense must include the $3,000 of wages in order to match the December wages expense with the December revenues. As a result, the December's income statement will present an accurate picture of December's profits and the balance sheet will report the liability for the wages owed as of December 31.

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