A payroll journal records information about wages, salaries, payroll taxes, benefits, and other HR-related data. It allows for easy review and evaluation of a company’s performance, reduces data entry errors, and separates payroll information from regular accounting information. HR departments prepare journal entries for each payroll period, which are then included in the company’s general ledger. Payroll information is included in a company’s financial statement.
A payroll journal is a special accounting journal that contains information relating to the human resources department of the company. Businesses use a payroll journal to record information about wages, salaries, payroll taxes, benefits, and other information. Specialized journals allow companies to separate information to easily review and evaluate their company’s performance. Companies with several dozen or hundreds of employees can use a number of payroll magazines to break down information by specific groups and/or types of information.
The payroll journal offers three significant benefits for companies. Businesses can divide classes of work, save time publishing information to the general ledger, and reduce data entry errors. Many companies separate their types of work into accounting journals and accounting records. This allows the company to maintain specific records relating to the type and number of employees employed to complete specific business functions. The basic separation of the diary includes salary and hourly employees. Additionally, these journals can also separate employees by division, department, or other specific information.
Human Resources departments are typically responsible for maintaining a company’s payroll information. HR managers and employees track information about hours worked by each individual in the company, commissions or bonuses, benefits, and other information. Using a payroll journal allows HR managers to review this information separately from the company’s other accounting information. The human resources department usually prepares journal entries for each payroll period and publishes this information in the payroll journal. Once the payroll journal is complete for the entire accounting period, HR managers will turn over this information to their accounting department for inclusion in the company’s general ledger.
Data entry errors can be reduced by companies using a payroll journal. Payroll journals can be reconciled separately from the company’s general ledger. This reconciliation ensures that only payroll information is included in the journal. Businesses that include regular accounting information with payroll information can create a difficult and time-consuming process when reviewing payroll information. Owners, directors, and executive-level managers may also wish to review payroll information separately from regular accounting information.
Payroll information is included in a company’s general ledger to ensure that all information from the special journal is included in the company’s financial statement. Information about payroll is included in a company’s income statement and balance sheet. The income statement includes information relating to salary charges for the current year. The balance sheet includes information relating to wages payable or benefits owed. Benefits owed usually relate to information such as employer contributions to health care or retirement plans.
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