Understanding wages in the general ledger
Overview
There are only two ways to treat the financial effects of wages in the general ledger. At the time of each wages posting, all postings from wages are either (1) amounts you pay right now, those go to bank and the expense or (2) obligations to make payments later, those go to a liability and the expense.
At some time after paying wages, you have to pay out some of the obligations that have been building up, such as when people take long service leave. Those transactions are always cash book payments and in general ledger terms post to the bank and to the liability account.
Examples of postings at time of paying weekly/monthly wages
| Wages Item | Pay now | Pay later | Post to bank | Post to liability | Post to expense |
|---|---|---|---|---|---|
| Super | No | Yes | No | Accrued Super | Superannuation |
Examples of later cash book payments against accrued obligations created from earlier from weekly/monthly wages
| Item | Pay now | Pay later | Post to bank | Post to liability |
|---|---|---|---|---|
| Staff member takes long service leave | Yes | No | Yes | Accrued Super |
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