Payroll clearing account is the account which is used for payment the salary to employees. In this account, only total estimated future salary will be added. Any employee can clear their check from this account when his salary will due. This account is useful for big companies and organisations who have thousands of employees for their work.
Benefits of Payroll Clearing Account
It is just like a bank account which is made separately from main bank account. So, it is the less chance of compromising the main bank account. First of all total salary is estimated. Then only same salary fund is transferred in this PCA. When this PCA will reach zero balance, new fund will be transfer in this account.
Disadvantages of Payroll Clearing Account
PCA is not suitable for small business organisation. Small business organisation needs only main bank account for recording all transactions. So, with payroll clearing account, there will be more work load on employees.
Recording System of Payroll Clearing Account
When fund will come in PCA.
PCA account Dr.
Main Bank Account Cr.
When Fund will out from PCA
Employee's salary Account Dr.
PCA account Cr.
Benefits of Payroll Clearing Account
It is just like a bank account which is made separately from main bank account. So, it is the less chance of compromising the main bank account. First of all total salary is estimated. Then only same salary fund is transferred in this PCA. When this PCA will reach zero balance, new fund will be transfer in this account.
Disadvantages of Payroll Clearing Account
PCA is not suitable for small business organisation. Small business organisation needs only main bank account for recording all transactions. So, with payroll clearing account, there will be more work load on employees.
Recording System of Payroll Clearing Account
When fund will come in PCA.
PCA account Dr.
Main Bank Account Cr.
When Fund will out from PCA
Employee's salary Account Dr.
PCA account Cr.
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