What is a Wage Expense?
Wage expense is the total compensation a company pays its employees during a particular accounting period.
How Does a Wage Expense Work?
The compensation a company pays its employees is treated as an expense on its income statement. The wage expense line item generally includes fixed salaries as well as hourly pay. Large companies that follow accrual accounting rules record the wage expense amount incurred during the accounting period in question. Conversely, smaller companies that follow the rules of cash accounting report only those wages actually paid during a period.
Why Does a Wage Expense Matter?
It's important to note that for manufacturing companies, the wage expense figure specifically excludes compensation paid to employees with a direct manufacturing role. These employees' compensation is reported under a company's cost of goods sold (COGS) line item.
Personalized Financial Plans for an Uncertain Market
In today’s uncertain market, investors are looking for answers to help them grow and protect their savings. So we partnered with Vanguard Advisers -- one of the most trusted names in finance -- to offer you a financial plan built to withstand a variety of market and economic conditions. A Vanguard advisor will craft your customized plan and then manage your savings, giving you more confidence to help you meet your goals. Click here to get started.
Read This Next
Moving averages define the trend and provide support or...Read More →
In recent years, there has been a surge in investment property sales. With real estate prices dropping in the...Read More →
To reduce your estate tax bill, you have 4 choices: 1. Leave it to your spouse. In general, any assets left to your spouse are exempt from estate tax. That's good. But...Read More →