What is the correct way to enter payroll on a cash basis?
Answer Payroll is always on a cash basis except at yearend. Meaning, if the difference between cash and accrual is cash basis is when you actual spend or received monies and accrual is when you apply the income or expense when you incur the income or expense. Therefore payroll is always on an as paid basis again except at yearend. The only time you would accrue would be at the end of the fiscal period and then you would only accrue those days in the current fiscal year from the first paycheck of the next fiscal year. For example if your biweekly payroll runs from December 27, 2008 to January 16, 2009 and your fiscal period ends on December 31, 2008, if you were using the accrual method you would accrue 3 days (December 29th, 30th, and 31st) into fiscal year 2008 and reverse it in 2009. But, be careful because as far as employees are concerned for reporting purposes, the pay is always counted by the paydate not by the pay period. If you on the cash basis, those 3 days in December will s
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