Category

2.3. Payroll Accounting

Theory

00:00 What is payroll accounting;
00:30 Introduction to payroll accounting;
00:58 Key components of payroll;
01:24 How to record payroll in accounting;
01:46 Salary-related liabilities;
02:11 Why payroll accounting matters.

Key Terms & Definitions

Payroll Accounting — The systematic process of calculating, recording, and managing employee compensation and related obligations.

Gross Pay (Gross Salary) — Total earnings before any deductions, including base salary, bonuses, and allowances.

Deductions — Amounts subtracted from gross pay, including taxes, social security, pension, and voluntary contributions.

Net Pay (Net Salary) — The final amount paid to the employee after all deductions.

Salary Expense — The total cost of employee compensation recorded as an expense in accounting.

Payroll Liabilities — All amounts the company owes but has not yet paid, including taxes, net salaries, and benefits.