Wages represent the payment employers provide to their workers in exchange for their services rendered during a specific period. This form of compensation is often calculated on an hourly, daily, or weekly basis and can vary depending on the terms of employment and the nature of the work. In contrast to salary, which is typically a fixed annual amount divided into regular intervals, wages often depend on the hours worked or tasks completed.

For example, an hourly-waged worker might earn $20 per hour, and if they work 40 hours a week, they would receive $800 for that week. Wages can also include additions such as overtime pay for hours worked beyond the usual schedule and may be subject to deductions like income tax and social security contributions.

Understanding and accurately accounting for wages is crucial in business financial management, particularly during month-end close activities where all payroll entries must be properly reconciled in the balance sheet. This ensures compliance and provides a clear financial picture for stakeholders.