U.S. GAAP Codification of Accounting Standards Guide by AccountingINFO.com

Generally Accepted Accounting Principles
in the United States

Accounting for Compensated Absences

Principles of Accounting, U.S. GAAP Financial Reporting Guide

Accounting by Topic, Accounting Terms Dictionary

Accounting for Compensated Absences

Statement of Financial Accounting Standards No. 43
        "Accounting for Compensated Absences"
        Issued in November 1980

What are Compensated Absences?

     Compensated absences mean
           --> employee absences for which employees will be paid

     Examples of compensated absences
           --> vacation, illness, holidays

When is an expense recognized for such payments?

     Expenses are recognized
          --> in the period when employees provide services
                to be qualified for compensated absences.

     If employees did not use all of such compensated absences
          --> a liability is accrued for unused portion.

     Liability is accrued when all of the following conditions are met:

           a. Services already rendered (by employees)
           b. Rights that vest or accumulate
           c. Payment is probable
           d. Amount can be reasonably estimated.

     Vested rights
           --> not contingent on an employee's future service
           --> should be paid when an employee leaves

     Accumulate
          --> unused (but earned) rights to be carried forward to future periods

U.S. GAAP Codification

Accounting Topics

Inventory Valuation Methods

Depreciation Methods

Revenue Recognition Principle

Accrual Basis vs. Cash Basis Accounting

Basics of Journal Entries

Ratios for Financial Statement Analysis

Overview of Financial Statements