Definition
The accounting term used to describe the payroll taxes that are due to government authorities, but not yet paid, is accrued payroll taxes. Recording expenses when they are incurred, and revenues when they are generated, is known as the matching principle.
Explanation
Typically, accrued payroll taxes include FICA, along with FUTA tax, which will be deducted from each employee's gross earnings. Accruing payroll taxes adjusts for the timing between the creation of the liability, and the payment of the tax.
Since accrued payroll taxes are usually payable within one fiscal period, they are recorded on the balance sheet as a current liability.
Related Terms
Also known as a statement of financial position, the balance sheet is used to show the financial health of a company at a particular point in time. The balance sheet consists of assets, liabilities, and owner's equity in the company. It is one of the four key financial statements issued by public companies.
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The financial accounting term liability is used to describe the debt of a corporation that results from a transaction involving the transfer of an asset or the provision of a service. Liabilities are reported on a company's balance sheet.Moneyzine EditorNovember 6th, 2024
The financial accounting term current liabilities are generally defined as any debts that must be paid within one year or one operating cycle, whichever is longer. Current liabilities are a subcategory of liabilities, which appear on a company's balance sheet.Moneyzine EditorNovember 6th, 2024
The term accrued liabilities refers to unpaid expenses resulting from contractual agreements with another party. Accrued liabilities appear as a current liability on a company's balance sheet, and include items such as income taxes, the company's share of payroll taxes, property taxes, and compensated absences.Moneyzine EditorJanuary 3rd, 2024
Also referred to as "payables," this is the accounting term used to describe balances owed to trade partners for materials, supplies, goods and services that were purchased on credit. Accounts payable recognizes the timing difference between the company's receipt of the benefit or asset, and the payment for this expense.Moneyzine EditorNovember 6th, 2024
The financial accounting term accrued expense refers to costs incurred during an accounting period, but not yet paid for in cash by a company in that same accounting period.Moneyzine EditorNovember 6th, 2024
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