Are Employees Assets, Expenses, Or A Liability For A Business
Employees are the person that works for someone on the bases of salary or wages. These people play an essential role in the business operation.
Are Employees Assets
In accounting terms, employees are not assets because assets are something that a company owns and have legal ownership to it but the employees are human beings that cannot be controlled and owned.
An employee is an expense for a business whether it helps in production or sales generating. As we know that employees are human beings that a company can not control and when they leave or quit their job they take their skills and training along with them.
As per the General Accepted Accounting Principles (GAAP), the companies are required to present detailed information about their capital investments while there is no requirement for human capital.
The cost and benefit of the equipment are easy to estimate than the cost and benefit of employees and their training for using the equipment. The equipment cost is recorded in the statement of financial position while the employees’ cost is recorded in the statement of profit loss.
What Are The Importance Of Employees In A Company
Employees play an essential role in the development and success of the company. The followings are the major importance of employees in a company.
- Employees play an essential role in the production of the company
- Employees are considered the first customer of a business
- Employees represent the company and their brand in the market
- They help to grow a business with their skills and knowledge
- The success of a company for a long period is depended on their employees
- Employees play an essential role in generating profit and worth for the company
FAQs
Are employees an expense for a business?
The cost such as hiring, wages, and salary of an employee is recorded as an expense in the income statement.
Are employees a liability for a business?
When the wages and salary of employees are not paid on time it is recorded as a liability in the statement financial position of a company.
Why employees are not considered as an asset?
Employees are not considered an asset because they cannot be controlled or owned.