Payroll - Wages Control Account

Question 1

Gross Pay

Answer 1

Gross pay is pay before any deductions

Gross Wages already includes employees National Insurance, tax, pension and trade union fees.
You need to add Employers National Insurance and Employers Pension

Question 2

Net Pay

Answer 2

How much the employee actually receives - amount paid to them.

Question 3

Wages Expense

Answer 3

Is how m7uch it costs to employ everyone in the organisation.
Not just wages/salaries
Also includes other costs such as income tax

Question 4

Wages Expense Calculation

Answer 4

= Gross Pay + Employer Contribution (National Insurance + Pension)

Question 5

Gross Pay Calculation

Answer 5

= Net Pay + Income Tax + Employees contribution (National Insurance and Pension)

Question 6

Net Pay Calculation

Answer 6

= Gross Pay - Income Tax - Employee contributions (National Insurance and Pension)

Question 7

Amount owed to HMRC Calculation

Answer 7

= All National Insurance (Employee + Employer) + Income tax

Question 8

Payroll Accounts - Credits and Debits

Answer 8

Wages Control = Liability = CR
Wages Expense = Expense = DR
HMRC = Liability = CR
Pension = Liability = CR