{m}.{s}.1Computerised systems

Payroll systems are very often computerised. Payslips and reports will be produced from the computer. Such systems may, or may not, be integrated with the nominal ledger. In an integrated system, the journal entries that we have looked at to record the wages or salaries will be posted automatically to the nominal ledger.

In setting up the computer system various nominal account numbers must have been defined so that the system knows where to make the postings.

e.g. 3310 : HM Revenue & Customs creditor account.

Man at computer

{m}.{s}.2Computerised systems- Wages control account

In addition to the accounts that we have used so far, a computer system will normally use a Wages control account.

When the net pay is calculated by the system, this will be credited to the Wages control.

Note that, at this point, we have just calculated the wages, we have not yet paid them. As they are due to be paid, however, they are currently a liability, as shown by the credit balance in the Wages control account. This represents the amount that we are due to pay to the employees.

When the payment is actually made, the Bank will be credited, the debit now being to the Wages control.

As long as the right amount has been paid, the balance in the Wages control account will now be cleared.

Note that, as its name suggests, this is a control account within the accounting system. It is providing a check that the right amounts of wages have been paid and that wages payments are being properly included in the deduction system.

Wages control account
    Net Pay Calculated XX
       
       
      

[{m}.{s}a]

Wages control account
Net Pay Paid XX Net Pay Calculated XX
       
       
      

[{m}.{s}b]