Accounting for labour costs, Cost Accounting

Accounting for Labour costs

We will contain an overview of accounting for labour costs as:

a) Gross Earnings

It is illustrated as item A that appears like a credit in the wages account and like a debit in the wages analysis control. The gross earnings are analyzed to illustrate the several deductions leaving net pay and indirect and direct wages also are charged to a range of account codes

b) PAYE tax

It is illustrated as item C that is credited to a PAYE tax account before being paid to the US revenue Authority via the employer. Item X illustrates the payments from the bank account or credit and the clearing of the PAYE tax account or Debit

c) National Hospital  Insurance Fund or NHIF Deductions

The national insurance deduction of employee is credited to a national insurance account as Item D. In addition the employer creates a national insurance contribution for all employees. It is illustrated as item F that is debited to an expense account and credited to the national insurance account. Net insurance or D+F is paid to the national Inland Revenue. After that item Y illustrates the entries, which clear the national insurance accounts or Debit and record bank payment or Credit. The national insurance of employee is a business overhead expense.

d) Other deductions

It involves such items like pension contributions and trade union subscriptions. The initial deductions from employees are credited in deductions account or Item E before payment is created to the suitable fund.

e) Net pay

This is illustrated as item B that is the balancing figure in the wages account or debit and while payment is made, this is illustrates in the bank account or credit

f) Direct Wages

Item T illustrates the credit to wages analysis control and the debit to job or product accounts. Individual accounts would be maintained for all job or product in addition to overall control account.

g) Indirect Wages

This is a simple analysis transaction that is debited to overhead departmental account or expense accounts.

Posted Date: 2/5/2013 6:38:12 AM | Location : United States







Related Discussions:- Accounting for labour costs, Assignment Help, Ask Question on Accounting for labour costs, Get Answer, Expert's Help, Accounting for labour costs Discussions

Write discussion on Accounting for labour costs
Your posts are moderated
Related Questions
The following information has been prepared for XYZ Ltd by their assistant accountant. The risk free rate of interest on government securities in 2008 is 7.3% Required:

Keira Knightley Company buys a piece of equipment for $36,442 that will last for 7 years. The equipment will generate cash flows of $7,000 per year and will have no salvage value a


Alternative to Total Overhead Variances There is an easier approach to overhead variances.  In this approach, the overheads are NOT sub-divided into their fixed and variable e

If the net income under marginal costing is #100,000, calculate absorption costing, if opening and closing inventories are #20,000 and #15,000

A 20-year bond pays a coupon of 8 percent per year (coupon paid semi-annually). The bond has a par value of $1000. What will the bond sell for if the nominal YTM is: a) 10 per

Judy's mother, Sarah, died on July 2, 2006, leaving Judy her entire estate. Included in the estate was Sarah's residence (325 Oak Street, Cincinnati, OH 45211). Sarah's basis in th

Cost Benefit Approach - Terms Used in Cost Accounting Is the primary criterion for selecting with alternative accounting approaches? There is a direct relationship in a co

3. Definitions of manufacturing concepts  Interstate Manufacturing produces brass fasteners and incurred the following costs for the year just ended:  Materials and supplies us

The enhancing qualitative characteristic of understandability means that information should be understood by a those who are experts int eh interpretation of financial informat