What is your payroll cycle at work? Besides your salary, what other liabilities can you identify that might appear on your company's balance sheet related to compensation? Hint: look at your pay stub.
Please see the attached file.
Pay Roll cycle at work:
Important terms in payroll accounting:
1 Payroll: is the major item of expenditure in any business concern. Payroll compensation includes fixed salary or wages and overtime remuneration. Many employees also get commission based on their sales or turnover in addition to the fixed salary or wages. Companies may also pay bonus for outstanding performance of their employees.
2 Gross pay: Gross pay is the total amount of pay before making payroll deductions of employee's benefits and taxes. It includes fixed salary or wages and commission and any other employees compensation. 3 Net pay: Net pay is the amount of actual disbursement after making all statutory and optional deductions from the gross pay. It is the exact amount for which check is drawn in favour of an employee.Net pay is the amount the employee actually takes home. Therefore it is also termed as 'Take home pay'.
4 Withheld amounts or payroll deductions: The amount withheld from gross salary is current liabilities of employer in relation to employee's compensation. There are two types of withheld amounts. 1 Required deductions. 2 Optional deductions.
It includes FICA taxes,(Social security tax and Medicare tax) etc. The FICA tax is computed as per the current FICA tax rate. Social security tax is calculated on the basis of maximum annual earnings of employee.
In Canada required deductions and ...
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