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“Wages”, “Prepaid wages”, and “Wages payable”. Analyse their meaning, their differences and how they are connected...

“Wages”, “Prepaid wages”, and “Wages payable”.

Analyse their meaning, their differences and how they are connected with the balance sheet or income statement of the company

Business   Accounting   
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Answer #1

Wages ::

Wages are the amount that has to be paid for the workers/employees for using their services. They are expensed in the income statement.

Prepaid wages ::

Prepaid wages are the wages paid in advance to the workers. They are recorded as assets in the balance sheet till their services are used.

Wages payable ::

Wages payable are the amounts that are owed to the employees for the work they have already done in prior periods. They are reported as a current liability in the balance sheet.
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