Question

ahmad company hired a new driver at the monthly salary of 1,800$. will this event be recorded in the jornal?

Answer 1

Transactions or Events should be recorded in the books in two ways one is Cash basis and the other is Accrual basis. In Cash basis, transaction is recorded when the cash is paid or received and in Accrual basis, transacitions (Expenses) are recorded when it become due and not on time of payment.

In the given situation, Just hiring an employee doesnot create any obligation of liability to company to pay salary for that month. The dirver's monthly salary will become due at the end of the month (when the service for the month is completed).

Here on the date of hiring this driver, ahmad company is not going to pay any amount of salary in full or in advance. if any payment is made , the same thing is recorded as per cash basis or otherwise liability to pay salary is created on month end.

Therefor there is no requirement to record this event in journal.