unpaid wages, under accruals?

[mlwl8521]

I am reading about Balance sheet design and there is a comment here that states that

1. Accruals are part of current liabilities

2. An example of accruals are unpaid wages, or unpaid taxes.

I agree with #1 , but not #2. I thought accruals were reserved for short-term debts that were both A) unpaid and B) rare incidents or at least not expected with normal business operations.

If wages are supposed to be paid on a fixed and timely schedule, then does that mean they can’t be considered accruals?

[S2000magician]

@mlwl8521

I am reading about Balance sheet design and there is a comment here that states tha

1. Accruals are part of current liabilities

2. An example of accruals are unpaid wages, or unpaid taxes.

I agree with #1 , but not #2. I thought accruals were reserved for short-term debts that were both A) unpaid and B) rare incidents or at least not expected with normal business operations.

A) Correct.

B) Not remotely correct.

@mlwl8521

If wages are supposed to be paid on a fixed and timely schedule, then does that mean they can’t be considered accruals?

If you incur wages in December, but pay them in January (and your fiscal year is a calendar year), then you’ll have accrued wages payable as of the balance sheet date. No big deal.

[mlwl8521]

oh i see

When I heard “unpaid wages”, I was thinking of borderline wage-theft and I couldn’t believe that an accounting system would encourage that.

Perhaps the headlines are affecting my interpretations!

http://www.washingtonpost.com/opinions/catherine-rampell-punish-wage-theft-as-severely-as-robbery/2014/04/17/234bf84a-c648-11e3-9f37-7ce307c56815_story.html

[S2000magician]

That’s hilarious!