CMA Intermediate · Cost Accounting · Employee Costs
Under the Cost Accounting Standard on Employee Cost (CAS 7), which of the following is treated as a component of employee cost?
The employer's contribution to provident fund is part of employee cost because it is a statutory benefit given in return for services rendered. Dividends are profit appropriations and penalties are not employment costs. TDS is just a deduction from gross pay already counted.
- ADividend paid to employees who hold company shares
- BEmployer's contribution to provident fund for factory workersCorrect
- CIncome tax deducted at source from employees' salaries and deposited with the government
- DPenalty paid for violation of a labour law
Explanation
Employee cost covers remuneration and benefits given to employees, including the employer's contribution to provident fund. Dividend on shares is an appropriation of profit, TDS is only a deduction from pay already included in gross salary, and penalties are not a cost of employment.
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