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Salary and PF entry

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Kishore Nuthalapati

Accountant for multiple small entities

154 Points Posted on 03 December 2022

Hi sir/Madam

For a house keeping services proprietor firm

Could you please clarify below of my queries
1. Is salary a direct expense or indirect expense
2.classification of Employee pf contribution and Employer PF Contribution (Expense and Liability)

Thanks for your help

Replies (2)

Quick Summary

This discussion clarifies the accounting treatment for housekeeping service firms. It explains that wages are considered direct expenses, while salaries are indirect. Furthermore, it details how employee PF contributions are treated as company expenses, and the employer's contribution is classified as a liability owed to the government.

Yasaswi Gomes new

Finance

3326 Points Posted on 03 December 2022

Wages are direct and salaries are indirect cause they are not related to production or revenue generators.

the format is like this

By Basic salary

By allowances

By EPF/EPS/ESIC a/c

By Admin charges towards EPF

===========================================================

To EPF/EPS/ESIC payable

To Professional tax payable

To TDS payable

To Labor welfare fund payable

To Salaries payable

To Admin charges payable

To allowances payable

prasad Nilugal

GST Practitioner & Accounts

8996 Points Posted on 03 December 2022

1) Salary will be Indirect expenses
2) PF Contribution towards employees will be expenses to Company
PF Contribution of employees will be Liability to pay in Govt Account.