What account 6520 is for
When an organisation accrues wages, a debt arises not only to the employee: a debt for contributions also arises to the state trust funds. Where does the accrued but not yet transferred amount sit? Under paragraph 278, account 6520 summarises the organisation's debt to the funds for contributions. This page explains not the amount of the debt but the way it is recorded: the amount of contributions is set by legislation.
Group 6500 has two sub-accounts (paragraphs 276–278):
| Sub-account | What is recorded |
|---|---|
| 6510 "Insurance payments" | Debt for insuring property and employees |
| 6520 "Payments to state trust funds" | Debt to the funds for contributions |
A liability account: what it means
In the chart of accounts, 6500 has type "P" (liability). Under paragraph 3 of NAS No. 21, on a liability account the balance and the increase in a liability are shown on the credit side and the decrease on the debit side. Here:
- a contribution is accrued: the debt grows, 6520 is credited;
- a contribution is transferred: the debt falls, 6520 is debited;
- the credit balance at month end shows the amount not yet transferred to the funds.
Under paragraph 279, debt amounts are shown on the credit of 6500 in correspondence with expense accounts, and the payment on the debit of 6500 in correspondence with cash accounts.
What is recorded on the credit
All rows of the tables in which 6520 is credited (the debit depends on the type of activity):
| Situation | Debit | Source |
|---|---|---|
| Contributions to the funds from wages relating to equipment installation | 0710-0720 | para. 66, row 5 |
| Debts to the funds included in the cost of capital investments | 0810-0890 | para. 75, row 15 |
| Contributions charged to the costs of primary production | 2010 | para. 120, row 16 |
| Costs of the unified social payment relating to auxiliary production | 2310 | para. 126, row 15 |
| Costs of the unified social payment relating to general production overheads | 2510 | para. 130, row 12 |
| Costs of the unified social payment relating to production spoilage | 2610 | para. 132, row 7 |
| Costs of the unified social payment relating to the costs of service units | 2710 | para. 135, row 16 |
| Social insurance contributions from the wages of workers engaged in the disposal of fixed assets | 9210 | para. 394, row 10 |
| Contribution to state trust funds at the employee's expense (debit 6710) | 6710 | para. 280, row 4 |
| Contribution to state trust funds at the employee's expense (debit an expense account) | expense accounts | para. 280, row 5 |
What is recorded on the debit
On the debit of 6520 (or of the range 6510–6520/6510–6530) the decrease is shown by four rows:
- transferring accrued amounts to the funds: Cr 5110-5530 (paragraph 280, row 6);
- settling debts for payments to insurance and funds: Cr 5110 (paragraph 226, row 19);
- final settlements of payments to state trust funds against advances paid earlier: Cr 4510-4520 (paragraph 195, row 2);
- transferring the debt on a deferred tax payment to 7240: Cr 7240 (paragraph 325, row 7; the debit shows 6410 and 6510–6530).
What to watch out for
- Each fund separately. Under paragraph 279, analytical accounting for 6500 is kept separately for each state trust fund of which the organisation is a payer.
- Advances are in another account. Amounts transferred as advances are recorded in 4520; at final settlement they are closed against 6520 (paragraph 195).
- 6710 and 6520 are linked. Review payroll entries together with the 6710 page: paragraph 280, row 4 links both accounts (practical tip).
- Reconcile at month end. The credit balance of 6520 must equal the amount not transferred to the funds and standing as a payable. Compare the balance with the payment orders and calculations (practical tip).
Main journal entries 14
Debit and credit are as in the model table of Appendix 2 to NAS No. 21. The transaction text briefly restates the table row.
| Transaction | Debit | Credit | Source |
|---|---|---|---|
| Contributions to the funds accrued on wages relating to equipment installation work | 0710–0720 | 6520 | NAS No. 21, para. 66, row 5 |
| Debt to the funds accrued for inclusion in the cost of capital investments | 0810–0890 | 6520 | NAS No. 21, para. 75, row 15 |
| Contributions charged to the costs of primary production | 2010 | 6520 | NAS No. 21, para. 120, row 16 |
| Cost of the unified social payment relating to auxiliary production accrued | 2310 | 6520 | NAS No. 21, para. 126, row 15 |
| Cost of the unified social payment relating to general production overheads accrued | 2510 | 6520 | NAS No. 21, para. 130, row 12 |
| Cost of the unified social payment relating to production spoilage accrued | 2610 | 6520 | NAS No. 21, para. 132, row 7 |
| Cost of the unified social payment relating to service units accrued | 2710 | 6520 | NAS No. 21, para. 135, row 16 |
| Social insurance contributions made from the wages of workers engaged in the disposal of fixed assets | 9210 | 6520 | NAS No. 21, para. 394, row 10 |
| Contribution to state trust funds made at the employee's expense (debit 6710) | 6710 | 6520 | NAS No. 21, para. 280, row 4 |
| Contribution to state trust funds made at the employee's expense (debit an expense account) | Xarajatlarni hisobga oluvchi hisobvaraqlar | 6520 | NAS No. 21, para. 280, row 5 |
| Accrued amounts transferred to the state trust funds | 6520 | 5110–5530 | NAS No. 21, para. 280, row 6 |
| Debt for payments to insurance and state trust funds settled from the settlement account | 6510–6520 | 5110 | NAS No. 21, para. 226, row 19 |
| When a tax payment is allowed to be deferred for several years, the debt is transferred to 7240 | 6410, 6510–6530 | 7240 | NAS No. 21, para. 325, row 7 |
| Final settlement of payments to funds and insurance: advance payments closed | 6510–6520 | 4510–4520 | NAS No. 21, para. 195, row 2 |
Example
Nur Mebel LLC (a fictitious furniture workshop) made the following entries on state trust funds during a month. The debt amounts are taken for illustration only: in practice the amount of contributions is calculated under legislation.
| No. | Transaction | Dr | Cr | Amount, soums |
|---|---|---|---|---|
| 1 | Contributions accrued for primary production workers | 2010 | 6520 | 4,000,000 |
| 2 | Contributions accrued for general production staff | 2510 | 6520 | 600,000 |
| 3 | Contribution at the employee's expense (debit an expense account: 9420 "Administrative expenses") | 9420 | 6520 | 800,000 |
| 4 | Contribution to the funds made at the employee's expense | 6710 | 6520 | 500,000 |
| 5 | Transferred to the funds from the settlement account at the bank | 6520 | 5110 | 5,000,000 |
Source of the entries: 1 is para. 120, row 16; 2 is para. 130, row 12; 3 is para. 280, row 5; 4 is para. 280, row 4; 5 is para. 280, row 6.
Calculation for 6520:
| Indicator | Amount, soums |
|---|---|
| Balance at the start of the month | 0 |
| Credit turnover (1, 2, 3, 4) | 4,000,000 + 600,000 + 800,000 + 500,000 = 5,900,000 |
| Debit turnover (5) | 5,000,000 |
| Credit balance at the end of the month | 900,000 |
Check: 5,900,000 − 5,000,000 = 900,000 soums has not yet been transferred to the funds. Next month this amount is closed on the debit of 6520 against Cr 5110, and the balance must be visible in the analytical card of 6520 for the relevant fund (example prepared by the author).