Basics of Payroll System
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Transcript of Basics of Payroll System
Chapter 12 Payroll Accounting
What Youll LearnExplain the importance of accurate payroll records. Compute gross pay using different methods. Explain and compute employee-paid withholdings. Compute net pay. Prepare payroll registers. Explain the methods of distributing payroll funds. Prepare an employees earnings record. Define the accounting terms introduced in this chapter.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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Payroll SystemBy Shahzad Asghar Arain MIS/GIS Expert 0334-9564004 [email protected]
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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Chapter 12, Section 1 Calculating Gross Earnings
What Do You Think?
What kinds of earnings might contribute to an employees gross earnings?
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Main Idea
Gross earnings is the total amount an employee earns in a pay period.
You Will Learnthe two main functions of a payroll system. the different methods of computing gross pay.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Key Termspayroll pay period payroll clerk gross earnings salary wage time card electronic badge readers commission piece rate overtime rateShahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Using a Payroll System
A payroll is a list of employees and payments due to each employee for a specific pay period. Businesses with many employees can have a payroll clerk. A well-designed payroll system achieves the following goals: The collection and processing of all information needed to prepare and issue payroll checks. The generation of payroll records needed for accounting purposes and for reporting to government agencies, management, and others.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Computing Gross Pay
The amount of money an employee earns in a pay period is called gross earnings, or gross pay. Employees are grouped into different pay categories to help the employer compute the gross pay: salary hourly wage commission salary plus commission or bonus piece rate
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Salary
A common method of paying employees is by salary, a fixed amount of money paid each pay period regardless of the number of hours worked.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Hourly Wage
Another common method of paying employees is the hourly wage, an amount of money paid at a specified rate per hour worked. Employees are sometimes required to use a time card to record hours worked. Some businesses use electronic badge readers to track employees work hours.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Commission
Sales employees are often paid a commission, a percentage of the employees sales.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Salary Plus Commission or Bonus
Some sales employees are paid a base salary plus a commission or bonus based on their sales.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Piece Rate
Employees receive piece rate when they are paid for each item they produce.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Overtime Pay
Employers are generally required to pay overtime when employees work more than 40 hours per week. The overtime rate, as set by the Fair Labor Standards Act of 1938, is 1.5 times the employees regular pay rate. Salaried employees are sometimes entitled to overtime pay as well.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Key Terms Reviewpayroll A list of the employees and the payments due to each employee for a specific pay period. pay period The amount of time over which an employee is paid. payroll clerk An employee responsible for preparing the payroll. gross earnings The total amount of money an employee earns in a pay period; also called gross pay.Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Key Terms Reviewsalary A fixed amount of money paid to an employee for each pay period. wage An amount of money paid to an employee at a specified rate per hour worked. time card A record of the time an employee arrives at work, leaves work, and the total number of hours worked each day.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Key Terms Reviewelectronic badge readers An electronic device that scans the magnetic strip containing employee information on an employees identification badge and then transfers the information directly to a computer. commission An amount paid to an employee based on a percentage of the employees sales. piece rate A rate of pay based on the number of items produced.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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SECTION 12.1
Calculating Gross Earnings
Key Terms Reviewovertime rate Pay rate employers are required to pay certain employees covered by state and federal laws; the Fair Labor Standards Act of 1938 sets the rate at 1.5 times the regular hourly rate after 40 hours per week.
Shahzad Arain 92-334-9564004 Master Trainer for South Asia .
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