Just checking my setup before I enter any more data. I have not done spend money just a payslip.
On Summary, Payslip appears on balance sheet as + in employee clearing account and PAYG (which I see as correct) and - under Equity - Retained earnings. Also appears as + under salaries & wages expense on P&L summary. Business is a sole trader and I am using cash accounting. I understand the balance sheet must ‘balance’ but don’t understand why the retained earnings is being used for this.
On Balance sheet summary ‘Drawings’ also appears under Equity, an account I will allocate any private portion of expenses to. What is the difference between drawings & retained earnings?
Also, is it necessary create subaccounts under employee clearing acount for each employee?