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Current Liabilities and Payroll Accounting
Current Liabilities and Payroll Accounting
Reporting Uncertainty
Formula
Working Capital = Current Assets – Current Liabilities
Current Ratio
This ratio permits us to determine the liquidity of different sized companies and small/individual
companies at different times.
Determining the
Payroll
Determining the payroll involves computing three amounts: (1) gross earnings, (2) payroll
deductions, and (3) net pay
Type of pay Hours Rate Gross earnings
Overtime 5 18 $90
NET PAY
Academy Company determines net pay by subtracting payroll deductions from
gross earnings
Discuss additional fringe benefits associated with
employee compensation
Date Details Dr Cr
31 Nov Vacation Benefits 150 000
Payable
Cash 150 000
• Postretirement benefits
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