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Payroll Accounting

Chapter 12. $. Payroll Accounting. Making Accounting Relevant Businesses issue payroll checks to their employees to compensate them for work performed. $. $. If you have a part-time job, what items appear on your pay stub? Do you verify that your gross earnings were properly calculated?. $.

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Payroll Accounting

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  1. Chapter 12 $ Payroll Accounting Making Accounting Relevant Businesses issue payroll checks to their employees to compensate them for work performed. $ $ If you have a part-time job, what items appear on your pay stub? Do you verify that your gross earnings were properly calculated? $

  2. Chapter 12 $ Section 1 Calculating Gross Earnings $ • What You’ll Learn • The importance of accurate payroll records. • How to calculate gross earnings. $ $

  3. Section 1 Calculating Gross Earnings (cont'd.) Chapter 12 $ Why It’s Important For many businesses payroll is the largest expense. It is essential that the payroll system accurately determine the gross pay for each employee for every pay period. $ $ • Key Terms • payroll • pay period • payroll clerk • gross earnings • wage • salary • time card • electronic badge readers • commission • overtime rate $

  4. Section 1 Calculating Gross Earnings (cont'd.) Chapter 12 $ The Importance of Payroll Records $ • The payroll is a list of the employees and the payments due to each employee for a specific pay period. • A pay period is the amount of time over which an employee is paid. $ $

  5. Section 1 Calculating Gross Earnings (cont'd.) Chapter 12 $ The Importance of Payroll Records (cont'd.) $ $ $

  6. Section 1 Calculating Gross Earnings (cont'd.) Chapter 12 $ Computing Gross Pay The total amount of money an employee earns in a pay period is gross earnings, or gross pay. An employee’s pay can be based on: $ $ • salary • hourly wage $ • commission • salary plus commission or bonus • overtime pay

  7. Section 1 Calculating Gross Earnings (cont'd.) Chapter 12 $ Salary • A salary is a fixed amount of money paid to an employee for each pay period. • An employee who is paid a salary earns the same amount regardless of the number of hours worked during the pay period. $ $ $

  8. Section 1 Calculating Gross Earnings (cont'd.) Chapter 12 $ Hourly Wage • A wage is an amount of money paid to an employee at a specified rate per hour worked. • The number of hours worked multiplied by the hourly wage equals the gross earnings for the pay period. $ $ $

  9. Section 1 Calculating Gross Earnings (cont'd.) Chapter 12 $ Commission • A commission is an amount paid to an employee based on a percentage of the employee’s sales. • Some salespeople earn a base salary plus a commission or a bonus on the amount of their sales. $ $ $

  10. Section 1 Calculating Gross Earnings (cont'd.) Chapter 12 $ Overtime Pay • Employers are required to pay overtime when employees covered by certain state and federal laws work more than 40 hours per week. • The overtime rate, set by the Fair Labor Standards Act of 1938, is 1½ (1.5) times the employee’s regular hourly pay rate. $ $ $

  11. Section 1 Calculating Gross Earnings (cont'd.) Chapter 12 $ Check Your Understanding $ List the two goals a payroll system should achieve. $ $

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