Salaries Expense Is A Decrease Or An Increase In Equity

Is Salaries Expense A Decrease In Equity?

Yes, Salaries Expense is a decrease in Equity under Accounting Equation as it is an expense account incurred to produce revenue. So, it will decrease the equity. Actually, these expenses are incurred for many purposes such as for the smooth working of business operations conducted by employees during the business hours i.e., a marketing staff manages the complaints of customers, making plans to increase sales, etc. So, these are profitable activities conducted for the purpose of earning revenue for the business and considered as expenses for the business to earn revenue for the period.

Is Salaries Expense An Increase In Equity?

No, as it is an expense account which decreases owner’s equity or equity account. So, it is incurred to earn revenue to increase equity when the business earns profits or income in future by selling goods or services to customers on profit.

So, we can say that Salaries Expense is a decrease in equity but not an increase in equity or owner' s equity.