Driver Salary 2020-21

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This discussion clarifies the correct accounting entry for a driver's salary paid from May 2020 to March 2021. While a single year-end entry is technically correct, it's best practice to record salary expenses monthly as they accrue. This ensures accurate financial reporting and reflects the ongoing liability to the employee.

Amandeep Singh

Amandeep Singh (Querist)
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12 April 2021 Dear Sir,

We have hire a driver in May 2020. His fix salary up to March 2021 is Rs.77000/- ( eleven month @7000/-)
below entry in books of accounts in march month is correct or wrong.
Salary Account Dr.77000/- Indirect exp. ( Driver Salary 11 months)
Salary payable Cr. 77000/- ( Current Liability)

CMA Poornima Madhava

CMA Poornima Madhava (Expert)
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12 April 2021 The entry is correct but instead of a single entry for the whole year, it is better to make monthly entries i.e. as and when the salary accrues to the employee.

CA AnKiT BoHrA (AB)

CA AnKiT BoHrA (AB) (Expert)
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13 April 2021 exactly make monthly entry and is the driver is working without any salary for so long... and if paid then book the salary directly on monthly basis na

Amandeep Singh

Amandeep Singh (Querist)
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15 April 2021 Thank you Madam
Thank you Sir

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