Where do worker compensation insurance costs get reported on the financial statement?
If you are wondering where to record the worker compensation insurance costs, you’ve come to the right place.
Workers’ compensation insurance costs, also referred to as workers’ comp, appear on the income statement and the balance sheet.Workers’ compensation insurance costs associated with sales and office staff should be reported as an expense, which shows up on the income statement and impacts retained earnings on the next balance sheet.
In manufacturing, you would include the costs of final manufactured goods. When that inventory gets sold the workers’ comp shows up in the costs of goods sold. If you prepay worker’s comp insurance cost then they would show up as a current asset under prepaid insurance. Any workers’ compensation premiums that have been incurred but not yet remitted to the insurance companies should be reported as the current liability.