What is Costing in Oracle Payroll?

What is Costing in Accounting?

Determining the costs of products, processes, projects, etc. in order to report the correct amounts on the financial statements. The employees of a company are also a cost to the company, hence the salaries paid to the employees are costed and recorded on the company financial statements.

Example:

Let’s assume that there is a company BIG ERP, under which we have departments IT and HR.

The total no of employees working in the company BIG ERP is 100. Out of which 80 are working in IT and 20 are working in HR department.

Every month the total salaries paid to the employees in IT department is around 200000 and employee in HR department is around 50000.

Following account codes have been given to the departments:

Department Name	Account Code
BIG ERP	X
IT	Y
HR	Z

Now when costing of employees salaries is done, we will see the account codes as per below table:

Account Code	Credit Account Code	Debit Account Code	Amount
IT	X	Y	200000
HR	X	Z	50000

When these details are recorded on the financial statements of the company, we can know from which account the salaries to the employees of the department has been paid.

Oracle Payroll Accounting Basics

Please find the very basics of accounting in Oracle Payroll Module

Earning Elements

Debit or Credit	Account Type
Debit	Balancing Account
Credit	Actual Account

Deduction Elements

Debit or Credit	Account Type
Debit	Actual Account
Credit	Balancing Account

Information Elements

Debit or Credit	Account Type
Debit	Balancing Account
Credit	Actual Account

Please find the below example in detail

The Actual Account and Balancing Account codes are as follows

Department Name	Account Code	Balancing Account
BIG ERP		X
IT	Y
HR	Z

In oracle payroll we are using the element Basic Salary to pay salary of an employee and Unpaid Leave element to deduct the salary for the unpaid leaves of the employees.

When the costing is run the following will be the results

Cost Code for Basic Salary Element

Debit or Credit	Account Type
Debit	Y
Credit	X

Cost Code of Unpaid Leave Element

Debit or Credit	Account Type
Debit	Z
Credit	X