Foundation Unit 2 NVQ (Making and recording payments question)

[junior1987]

Hi all, have been studying unit 2 now for a few weeks, however something is troubleing me.... Whilst posting figures from the cashbook to wages/salaries control account you then have to post PAYE, NIC's and pensions to the PAYE/NIC A/C but it is on the credit side. Please could someone try to explain why it is a credit posting??
Thanks in advance

[sarahwilson]

Because NIC & PAYE are a liability, they are money the business owes to HMRC as a result of employing someone.

I was very confused by it all as well!!

This may help you -

Debit
Expenses
Assets
Drawings

Credit
Liabilities
Income
Capital

[junior1987]

So basically becuase its a liability until it is paid off? I understand a company would have 19 days to pay it?

[Jan]

PAYE/NI paid monthly to HMRC by the 19th of each month- so you would then debit PAYEE/NI liability and credit bank

Hope this helps

[Sebangem]

:001_smile:

[claire0507]

Hi,

I'm having the same problem at the moment we habve switched from sales to purchases and I'm getting the two mixed up when it comes to posting them into the ledgers. My tutor uses the word pearls to help remind her of which side things should be posted to.

Purchases
Expenses
Assets

Revenue
Liabilities
Sales

It you imagine this when you are posting in the ledgers hopefully it may help!!!