Hello! FUTA is a current liability. Generally, a company will charge payroll taxes to a current liability account until they are paid. A company does not pay the taxes during every pay period. As a result, these taxes must be accrued. A corporation will have an entry for salary expense which is to record the employee "checks" and one entry for payroll expense. The payroll expense entry will look like:
Payroll tax expense 1,245
F.I.C.A. Taxes Payable 765
As you can see, these are all payables and recorded as a current liability. Once the amount is remitted to the government, the liability is eliminated.
I hope this helps!
Originally Posted by complexsimplicity
Just a quick question for anyone working in the business field. I'm stuck on a question for one of my assignments(I'm majoring in accounting) and I just can't figure out the answer.
Is FUTA(Federal Unemployment taxes) a current liability or a long-term liability? Is it even a liability? Sorry if this may seem like a silly question, I've just been studying so hard, the easiest questions are starting to become the hardest ones to me...
I would be happy if at least one person could answer. It would be nice if there is a website you could refer me to for additional information if possible. Thanks in advance!