Accruals

You can use payroll to create general ledger payroll accruals for all company expenses when a pay period spans two accounting periods.

Entries that are created by the Accrue Payroll action are identified as auto-reversing entries in the general ledger.

When you use the General Ledger application, the auto-reversing indicator makes it possible for the general ledger posting to occur in the current period. The indicator can also initiate a reversal in the next accounting period when you post the entries for the payroll cycle. The application creates entries for wages and company-paid payroll taxes.

The application assumes eight-hour working days when calculating the accrual. The accrual for salaried employees is based on the employee's job code or the annual hours entered on Employee. To perform an accrual for salaried employees, determine the hourly rate. Divide the annual salary by the annual hours, and then multiply by the FTE (Full Time Equivalent) factor. For employees not associated with a job code, the report uses the annual hours defined for the company in the calculation.

The Accrue Payroll and Close Payroll actions are exclusive of each other, but both actions can be used to create accruals.

• If an accrual is required for the last few days of the month, use the Accrue Payroll action.
• If you use the Accrue Payroll action, do not use the Percent Posted, Previous Period Time Record, or Previous Period Ledger Date fields in specific situations. Do not use these fields when running the Close Payroll action in that cycle or the next cycle that follows when the accrual reversal occurs. When you follow this process, the reversal of the accrual in the next month happens automatically.

These exceptions exist for accruals:

• The application creates wage expense distributions for overtime time records by work period from Overtime Calculation. Because the application creates only one time record with the work weekend date, the wage expense distributions are split by percent of wages.

• Wage expense distributions for voids are based on the void date.

• Wage expense distributions for manual payments, created with no time record date defined, are based on the payment date.

• Wage expense distributions for manual payments, created with time record dates defined, are based on the time record dates.

• Wage distributions for adjustments are based on the adjustment date.

• Other expense distributions, such as company-paid deductions, are based on a percent of wages.