It is an undeniable fact that if a firm possesses staffs, it must be responsible for payroll and additional advantages for its personnel. Managing these can be difficult and time-consuming for some firms in Malaysia. Thus, it is advisable to employ an accounting firm in Johor Bahru to ease the process of running a business.
The payroll-related elements include the following:
– Wages, gross salaries, commissions, bonuses and overtime pay
– Time off for vacations, holidays, and sick days which are paid by the employer
– Payroll taxes which are not deducted from staffs which are paid by the employer
– Payroll taxes deducted from staffs’ gross pay
– Various other employer expenditures such as medical insurance and so on
When a firm uses the accrual basis of accounting to generate its financial statements, it needs to report all wages, which consists of salaries, bonuses, as well as commissions which have been gotten by the firm’s staffs (Also see Steps to Start a Successful Business). Typically, this needs an accrual adjusting entries so that the firm’s balance sheet (Also see Difference Between Balance Sheet and Statement of Affairs) shows a present liability for the incomes that the workers have gotten yet the firm has not paid to them at the very last moment of the accounting period.
Accrual Basis of Accounting as well as Matching Principle
As the firm’s financial statements should show the accrual basis of accounting, the correct way of stating a firm’s expenditures are:
1. Match expenditures to the corresponding incomes if there is a cause-and-effect connection. For instance, a trader’s income statement should be complementary to the cost of goods they have sold in the accounting period that the firm has gained the sales revenues.
2. Report the cost as an expenditure on the income statement in the time interval that it is expired or consumed if the cause-and-effect connection is not present, yet there is a future value which can be estimated
3. Report the cost as an expenditure in the time interval that it was incurred if a cost do not have future value
The correct way of stating the salaries, wages, bonuses commission, and so on of the dealer’s staffs on its financial statements (Also see Financial Reporting Standard 1: Presentation of the Financial Statements) are:
-Report amounts of the staffs’ earnings that the dealers have already incurred during the present accounting period as expenditures (Also see Facts About Expending and Capitalising Cost) on the dealer’s current income statement, no matter the amounts are paid in an earlier or a later accounting period.
-Report the amounts of the staffs’ earnings which is not paid at the very last moment of the accounting periods a present liability on the dealer’s balance sheet.