Construction Accounting And Financial Management (4th Edition)
4th Edition
ISBN: 9780135232873
Author: Steven J. Peterson MBA PE
Publisher: PEARSON
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Textbook Question
Chapter 8, Problem 1DQ
What is the difference between an allowance and a reimbursement? How does this difference affect labor burden?
Expert Solution & Answer
To determine
Differentiate allowance and reimbursement and its effect on labor burden.
Explanation of Solution
The allowances are paid to cover the out of pocket expenses of the employee; whereas the reimbursements are made to cover the actual expense of the employee. The allowances are subject to employment and income tax; whereas reimbursements are non-taxable.
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