Under the accrual method of accounting, this account reports the amount of holiday pay, vacation pay, and sick day pay that the delivery employees have earned during the accounting period indicated in the heading of the income statement. In effect, the company is accruing this expense when the employees are working—by debiting this account and crediting a liability account, such as Holiday, Vacation, Sick Days Payable. When employees take time off with pay for holidays, vacation or sick days, the liability account is debited.
Since this account involves the delivery function of the business, this expense should be reported in the same section of the company’s income statement as the delivery salaries and wages are reported.
Featured Review
"I am a partner in a small family accounting firm in Pennsylvania. I became a PRO user so I could review and refresh on the basics, as well as new items and regulations that pop up every other day. I love the way each subject is organized for easy access and review. I can go in, read the materials, and take an exam at the end to help solidify the concepts in my mind. It's always helpful to be able to go back and refresh my memory as I age and tend to concentrate in only specific areas of accounting. I have also benefited from the website by being able to review material when clients have questions or any particular situations that need further research on my part." - Steve
Join PRO or PRO Plus and Get Lifetime Access to Our Premium Materials
Read all 2,645 reviewsWe now offer 10 Certificates of Achievement for Introductory Accounting and Bookkeeping: