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In this growing competitive world, every organization needs to retain its loyal and trustworthy staff members and make a timely payment towards wages and salaries to its workers and employees. Timely payment not only motivates and built the confidence of the workers and employees but also encourages them to achieve the organization’s short-term and long-term goals.
Journal Entry for wages paid in cash
This entry can be recorded in the books of accounts by using two different approaches of accounting. They are;
1. Traditional Accounting Approach
| Particulars | L.F. | Amount | Nature of Account | Accounting Rule |
| Wages a/c | XXX | Nominal | Debit- All expenses and Losses | |
| To Cash a/c | XXX | Real | Credit- What goes out of the business. |
(Being paid wages in cash)
2. Modern Accounting Approach
| Particulars | L.F. | Amount | Nature of Account | Accounting Rule |
| Wages a/c | XXX | Expense | Debit- The Increase in Expense | |
| To Cash a/c | XXX | Asset | Credit- The Decrease in Asset. |
(Being wages paid in cash)
Example
On 4th March, Anna Ltd. makes a payment towards wages amounting to 40,000 in cash. Journalise the following transaction in the books of Anna Ltd.
In the Books of Anna Ltd.
| Date | Particulars | L.F. | Amount | Nature of Account | Accounting Rule |
| 4th March | Wages a/c | 40,000 | Expense | Debit- The Increase in Expense | |
| To Cash a/c | 40,000 | Asset | Credit- The Decrease in Asset. |
(Being wages paid in cash)
