Wages accounting

Question 1

What does the wages control account show

Answer 1

Has every transaction required for payroll.
Should balance off at 0 at the end

Question 2

What is the wages expense account

Answer 2

Shows the full cost of employing the staff
Gross pay + employer expenses (national insurance / pension

Question 3

What does the HMRC account show in wages

Answer 3

Shows amount owed to HMRC for PAYE and national insurance (employer and employee)

Question 4

What does the pension account show

Answer 4

Full amount owed to pensions (employee +employer)

Question 5

What are the four accounting entries you must make for payroll

Answer 5

Employee total expense
Net pay to employees
Amount owed to HMRC
Amount owed to pensions

Question 6

How do you account for gross pay (total expense of employment)

Answer 6

DR Wages expense
CR Wage control account

Question 7

How do you account for net pay paid to employees (money the actually received)

Answer 7

DR Wages control account
CR Bank

Question 8

How do you account for total amount owed to HMRC (employee + employer)

Answer 8

DR Wages control account
CR HMRC Account

Question 9

How do you account for total owed to pensions (employee + employer)

Answer 9

DR Wages control
CR Pension