US GAAP ASC 710

Payroll Expense Accrual

End-of-period liability journal entry accruing unpaid wages earned by employees before pay date.

Detailed Definition & Statutory Context

Payroll Expense Accrual is governed by US GAAP ASC 710 standards across corporate payroll administration, statutory tax withholding, and general ledger labor accounting. Rigorous compliance with Payroll Expense Accrual prevents IRS Form 941 deposit penalties and FLSA wage-and-hour litigation.

Statutory Formula & Equation

            Payroll Accrual = Earned Unpaid Wages + Accrued Employer FICA/FUTA Taxes
          

General Ledger / Payroll Journal Entry Standard

            Debit: Gross Payroll Expense / Employer Tax Expense

            Credit: FICA Taxes Payable / Federal Income Tax Payable / Net Pay Cash

Common Operational Pitfalls

Excluding non-discretionary bonuses from FLSA overtime regular-rate calculations.
Failing to cap Social Security tax withholding once employee earnings exceed the $168,600 wage base.
Misclassifying non-exempt hourly employees as exempt salaried workers.

Used in these Payroll Calculators

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Authoritative Statutory Source

Source: https://www.fasb.org/ ↗