Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Payroll and Payroll Taxes

Financial Accounting

9. Current Liabilities

Payroll and Payroll Taxes

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Multiple Choice

The employer should record payroll deductions as:

liabilities until they are remitted to the appropriate agencies

assets on the balance sheet

expenses on the income statement

revenues in the period incurred

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Verified step by step guidance

Understand the nature of payroll deductions: Payroll deductions are amounts withheld from employees' paychecks for taxes, benefits, or other obligations. These amounts are not the employer's money but are owed to external agencies or entities.

Recognize the accounting treatment: Since payroll deductions represent amounts that the employer is obligated to pay to third parties, they are classified as liabilities until they are remitted to the appropriate agencies.

Clarify why they are not assets: Assets represent resources owned by the company that provide future economic benefits. Payroll deductions do not meet this definition because they are obligations, not resources.

Explain why they are not expenses: Expenses are costs incurred by the company to generate revenue. Payroll deductions are not costs incurred by the employer but rather amounts withheld from employees' paychecks.

Understand why they are not revenues: Revenues represent income earned by the company from its operations. Payroll deductions are not income but liabilities owed to external parties.