Accrued Payroll

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Accrued payroll refers to the total employee compensation and payroll-related costs that a company owes but has not yet paid at the end of a financial period. This includes salaries, wages, bonuses, commissions, and employer-paid payroll taxes that have been earned by employees but are scheduled for payment after the accounting period closes.

Recognizing these costs ensures that payroll expenses are reported in the period the work was performed, which supports accurate financial reporting and compliance. At Mercans, our approach to global payroll is rooted in precision and alignment with accounting standards, so companies can maintain a clear and audit-ready record of all payroll activities.

Accrued Salary Journal Entry

An accrued salary journal entry is used to record unpaid employee wages that have been earned during a specific period but will be paid in the next period. It ensures salary expenses are captured in the correct accounting window, which is essential for financial integrity.

To record the accrued salary:

The salary expense is debited to show it has been incurred.
The liability is credited to indicate the amount owed to employees.

This entry allows organizations to close their books with all salary obligations accounted for, even if payday is yet to come. Once the payment is made, the liability account is reversed, and the cash account is updated to reflect the payout.

Accrued Payroll Journal Entry

Accrued payroll journal entries go beyond just base salaries. They include all earned compensation and employer obligations, such as:

Wages and overtime
Employer payroll taxes
Benefits or bonuses already earned
Commissions due but not yet paid

In the journal, the business records both the expense and the liability. This entry helps ensure that financial records reflect the actual labor costs for that period, regardless of payment timing. For large organizations, especially those operating across multiple regions, accurate payroll accruals are critical for global compliance and audit readiness.

Accrued Salary Expense

Accrued salary expense refers specifically to the cost of employee wages that have been earned but not yet disbursed. These are recorded in the financial system to reflect true labor costs at the end of a month, quarter, or year.

Examples include:

Salaries for days worked past the last pay cycle
Overtime performed in the final week of the month
Bonuses that were earned based on performance milestones

Recognizing these expenses ensures financial statements are not misleading, and that all liabilities are visible before payments are made. For global companies managing complex payroll schedules, accurate salary accruals are vital for maintaining transparency and budget accuracy.

Accrued Payroll Definition

Accrued payroll is defined as the total value of employee compensation and associated payroll costs that have been incurred but not yet paid by the company. These costs are recorded in financial statements as liabilities until payment is completed.

This includes:

Employee wages
Employer-paid payroll taxes
Benefits earned during the period
Any other compensation due

The purpose of recording accrued payroll is to comply with the accrual basis of accounting, where expenses are reported when incurred, not when paid. This ensures that companies accurately report labor costs and maintain consistent financial records across all operating entities.

Accrued Payroll Taxes

Accrued payroll taxes are the portion of payroll-related taxes that the employer is responsible for but has not yet paid. These are recorded as liabilities on the balance sheet until the payments are made to the appropriate tax authorities.