CHAPTER 17 Flashcards
Recording Payroll Transactions
Payroll
A list of employees and what they are being paid
Income tax
Employer collects tax on behalf of government as the employee is paid
Employer’s duties
- Operates income tax
- Maintain necessary record
- Pay income tax & benefit contribution to tax authorities every month
- Let tax officer inspect record
- Submit end of year return
- Give details payslip to employees (tax,benefit contribution)
- Give annual statement showing deductions to employees
- Maintain minimum 3 years of tax records
Main requirements of payroll processing
Accuracy
Timeliness
Security
Gross pay
Pay for employee’s work done in a period
- Basic pay
- Overtime
- Commission/bonuses/profit
- Backpay (payment for past work done)
High day rate scheme
- To stimulate greater productivity
- Paid a higher hourly rate
Bonus
Extra payment as a reward for results achieved
- motivate employee to work harder
- reach/exceed some target
Commission
Payment (percentage) made to employee based on value of something (sales) the employee has generated
Payroll function
- Calculate gross pay
- Calculate tax, national insurance & other deductions
- Prepare payslips
- Making appropriate return to external agencies
- Making up wages
- Distribute payslips
- Prepare payroll statistics
Timesheet
Record hours spent by each employee on each job
Daily time sheet
Indicate time spent on each job
Weekly time sheet
Passed to the cost office at the end of the week
Job cards
Time spend on the job by each employee (cards prepared for each job)
Route cards
Similar to job cards but they follow the product through the works and carry details of operation
Details required BY LAW on payslip
▪ Gross pay
▪ Deductions
▪ Net pay
