Why is correct payroll calculation so important? Payroll is usually the largest or among the largest expenses for an employer, it is heavily regulated by state and federal law, and employee morale, productivity, and quality of life depend on payroll being timely and accurate (Warren et al., 2021). Conducting payroll incorrectly can lead to significant problems both financially and legally. Why can't vacation pay and regular pay be combined? Vacation pay is calculated as a liability at the end of each pay period or recorded as an adjusted entry at the end of the year (Warren et al., 2021). Vacation pay and regular pay cannot be combined for this reason, which is to say that vacation pay is allocated and set aside but it is unknown when it will be used, thus it is best to keep them separate and record actual use only as it happens. Why do we have to record product warranty liability when only a small percentage of goods are ever repaired or replaced? To answer it simply, it is better to shoot high than to shoot low, meaning that the possibility of warranty expenses should be anticipated as a safety to the company