Payroll liabilities
Payroll liabilities are unpaid amounts arising from payroll, including net pay due to employees, deductions withheld for third parties and employer contributions due. Keep the categories clear even if a payroll control account summarises them. Recognise each liability when the related obligation arises and remove it when paid. A liability can remain at year end even though the staff expense has already been recognised.
Worked example
After gross pay of $10,000, deductions of $2,000 and employer contributions of $1,000 are recorded, paying employees $8,000 leaves $3,000 payable to third parties.
Common mistake
Do not clear the entire payroll liability merely because employees have received their net pay.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | F1 | Direct | July 2027–August 2028 |
| ACCA | F2 | Supporting | July 2027–August 2028 |
| ACCA | K1 | Direct | July 2027–August 2028 |
Related terms
Also called: Payroll payable