A: Outstanding salaries are salaries that are due and have not yet been paid. For example, the staff of ABC Corporation have worked for the month of April. It is now the 3rd of May and they still have not been paid, so the salaries are “payable” or “owing” or “outstanding” (all the same thing).

To account for unpaid wages, accumulate the number of hours worked by employees for the period after the last pay period and through the end of the reporting period. Multiply these hours worked by the wage rate for each employee to derive gross pay.

Outstanding wages is classified as a personal account and not a nominal account. This account represents the accounts of all those persons to whom wages have not been paid and hence, are outstanding. Therefore, it is termed as “Representative Personal Account” or simply personal account.

Under the accrual basis of accounting, unpaid wages that have been earned by employees but have not yet been recorded in the accounting records should be entered or recorded through an accrual adjusting entry which will: Debit Wages Expense. Credit Wages Payable or credit Accrued Wages Payable.

Outstanding rent is the representative personal account because it represents the outstanding expenses to a person. Hence, it is classified as a personal account.

Below is the journal entry for outstanding expenses: Expense A/C. Debit. Debit the increase in expense. To Outstanding Expense A/C.

Outstanding expenses are those expenses which have been incurred during the current accounting period and are due to be paid, however, the payment is not made. Such an item is to be treated as a payable for the business. Examples – Outstanding salary, outstanding rent, outstanding subscription, outstanding wages, etc.

They are an obligation for the business and therefore treated as a liability. The accounting rule applied is “credit the increase in liability” and “debit the increase in expense” (modern rules of accounting).

That is, the double effect of the adjustment is: 1. Outstanding Salary of Rs 1,000 is added to Salary Account and is debited to Profit and Loss Account. 2. Outstanding Salary is a liability and shown in Balance Sheet (liability).

Nominal account

Enter “Salaries Payable” as the description. Enter the salaries payable amount (net pay) in the debit column. On the next line, enter “Cash” in the description column. Enter the amount you paid to your employees in the credit column.

If u receive your salary, it’s an income and so it’s said salary is being credited(into your bank account). In accordance to banks, they apply the credit to increment /increase(here in your bank account) and debit is known as decrement (suppose you have paid in by your debit card).

Wage expense is a variable-rate cost, which depends on the type of wage (e.g., a time wage, piece wage, or contract wage). Salary expense is a fixed-rate cost and depends on each employee’s salary contract terms.

salary paid in advance is initially recorded as an asset because it provides some future economic benefit and is charged at the time when the actual benefit is realized in the succeeding accounting period.

The company can make the journal entry for advance salary by debiting the advance salary account and crediting the cash account. This journal entry does not affect the income statement.

A salary advance is when your employer agrees to give you a portion or the entirety of a future paycheck before your usual payday. Salary advances involve a private loan agreement that exists between you and your employer.

Salary advance loans is a short-term loan that is extended to salaried professionals. It can be used for any purpose such as medical expenses, covering huge expenditures, or any other emergency. A loan is an amount borrowed for long-term financial needs – a form of debt that is repaid over a long period of time.

How to Calculate Taxable Income on Salary?