Salaries And Wages

Question 1

What type of accounts are salaries and wages to the business

Answer 1

They are expenses to the business thus they fall under owners equity

Question 2

What is the gross salary

Answer 2

The total salary agreed as per to contract before any deductions are made

Question 3

What are the deductions which are a legal requirement

Answer 3

PAYE and UIF

Question 4

What is the net salary

Answer 4

This is the salary that is paid to the employee after deductions have been made on the gross salary

Question 5

What type of account are deductions to the business

Answer 5

They are liabilities

Question 6

What are the contributions which are a legal requirement

Answer 6

The UIF and the skills development levy

Question 7

What type of account are contributions

Answer 7

Expenses

Question 8

What type of account is the net salary

Answer 8

Liability (this is because you still owe it to the employee)

Question 9

What type of account is the gross salary

Answer 9

An expense

Question 10

What is the accounting equation for deductions

Answer 10

Debit salaries (expense) -A
Credit creditors for salaries  +L
            SARS- PAYE +L
            (Name) pension fund +L
            (Name) medical aid fund +L
            SA union fund +L
            UIF +L

Nb! All deductions are liabilities

Question 11

What is the accounting equation for contributions

Answer 11

Debit UIF contribution
(Name) pension fund contribution
(Name) medical aid fund contribution
Skills development levy
-O and +L
Credit subsequent fund
Eg UIF contribution will be debited and UIF Will be credited

Question 12

What is the accounting equation for payments

Answer 12

Debit:
 Creditors for salaries 
SARS-PAYE
UIF
(Name) pension fund 
(Name) medical aid fund 
Sa union fund 
Skills development levy fund 

Nb! For UIF, Pension and Medical aid if there is both a deduction and contribution you add both amounts to get the total amount going to the fund

Nb! -A -L