Need Help

[jenfarrell]

I am new to a company that uses cash accounting methods. They have about 130 employees who accumulate vacation and are paid out vacation when they leave if they leave in good standing. How should I account for this vacation?

 

[kirby]

First be absolutely sure they are on pure cash method. To do so, look at balance sheet and see if you see any accrued liabilities. If none - then they are indeed on cash basis. If on cash basis then you record the vacation expense when you pay the employee's wages while the employee is out on vacation. and also record expense when you pay out their vacation when they leave the company.