In order to improve the collective and individual welfare of employees, a special fund is formed in accordance with relevant regulations for employee welfare expenditures. This kind of fund is a common accounting method adopted by Chinese enterprises under the special financial system. 1993 after the reform of the accounting system, this method was abolished. According to the old system, enterprise employee welfare fund should have cost and after-tax profit, and its scope of use is mainly employee collective and individual welfare funds. For example, the employee welfare expenses of industrial enterprises mainly come from: (1)1%of the total wages payable, deducting food subsidies and various funds (employee welfare expenses extracted by non-staff personnel and those who have been sick for more than 6 months are included in non-operating expenses); (two) according to the return of infrastructure loans and special loans to a certain proportion of profits from the formation of profits; (3) It is formed by the after-tax profit of the enterprise in proportion. Its scope of use includes: (1) the expenses of enterprise employees and their immediate family members, the wages of medical staff, medical expenses, medical expenses of employees injured on business, etc. (2) Employee collective welfare design expenditure; (three) the difference between the salary expenses of the staff in the bathroom, barber shop, nursery and kindergarten after deducting various incomes; Expenditure on purchasing and repairing canteen utensils; (four) the start-up expenses and loss subsidies for agricultural and sideline production; (five) subsidies for the living difficulties of employees and other expenses paid by the employee welfare fund in accordance with state regulations. The formation and use of employee welfare funds should be accounted for in the employee welfare fund subsidiary account belonging to the special fund account. According to the principle of earmarking, "employee welfare fund" should be earmarked and stored in a special account.

The "employee welfare expenses" are similar in accounting form to the "welfare expenses payable" in the current accounting system, but they are essentially different in nature. The former is a special fund for equity, and the latter is a current liability. Secondly, the former should follow the financial system of earmarking, while the latter should not have such unreasonable restrictions.