Types Of Compensation For Employees - 1453 Words

Types of Compensation Natalie A. Szczep August 15, 2015 Intermediate Accounting II Keiser University Abstract There are many different forms of compensation that employers pay to their workers. The accounting treatment of these various forms of pay are different depending on the type, frequency and amounts of compensation due. Each type of compensation also has different disclosures required, advantages and disadvantages based on the accounting rules. The following pages will take a closer look at three forms of compensation: base wages, vacation pay, and bonuses. Salaries expense is the most basic type of compensation to be accounted for. Salary is compensation paid to an employee for services rendered to a company. The entries recorded to pay salaries are entered based on the pay cycle of the company, whether it is weekly, biweekly, monthly or bimonthly, etc. These pay cycles do not always coincide with the issuing of financial statements, and the income statement must show total expenses for that period. Expenses for salaries are accrued, to show that the amounts have been earned, even if the pay date occurs after the end of the accounting period and therefore, the issuing of the income statement (Averkamp, 2015). The accrual for salaries expense is classified as a current liability on the balance sheet per the FASB code 210-10-45-8c (Asc.fasb.org, 2015). So, the accounting treatment and classifications are fairly straightforwardShow MoreRelatedThe Concept of Pay-for-Performance1595 Words   |  6 PagesPay-for-Performance, the effec tive use of this compensation system poses difficulties for the Legal Profession and for other industries that must compete for client dollars. 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