1. Business Math
Chapter 8

2. Federal Insurance Contributions Act (FICA) Social Security tax
Managing Payroll and Inventory
Chapter 8
payroll
gross earnings
salary
hourly wage
overtime rate
commission
deductions
Federal Insurance Contributions Act (FICA)
Social Security tax
Medicare tax
total gross earnings
perpetual inventory system
point-of-sale terminals
periodic inventory system
specific identification method
first-in-first-out method (FIFO)
last-in, first-out method (LIFO)

3. Managing Payroll and Inventory
Chapter 8

4. The Importance of Payroll Records
Managing Payroll and Inventory
Chapter 8
The Importance of Payroll Records
Calculate Gross Earnings 1
Calculate Payroll Deductions 2
Prepare Payroll Records 3
Common Steps in the Payroll System
Prepare Paychecks 4
Record Payroll Information in the Accounting Records 5
Report Payroll Information
to the Government 6

5. Calculating Payroll Deductions
Managing Payroll and Inventory
Chapter 8
Calculating Payroll Deductions
Voluntary Deductions
Health or Life Insurance Programs
Union Dues
Contributions to Charities
Pensions and Other Retirement Plans
Direct Deposits to a Credit Union or Bank

6. Preparing Payroll Records
Managing Payroll and Inventory
Chapter 8
Preparing Payroll Records
Earnings
Sections of the Payroll Register Pertaining to Money
Overtime Pay
Gross Earnings

7. The Benefits of Direct Deposit
Managing Payroll and Inventory
Chapter 8
Preparing Paychecks
Section 1
The Benefits of Direct Deposit
Employees do not have to go to the bank to deposit paychecks
No risk of misplacing or losing a check
Funds are usually available faster
Employers save the expense of paper and labor

8. Employer’s Payroll Taxes
Managing Payroll and Inventory
Chapter 8
Employer’s Payroll Taxes
Employer’s Share of FICA Taxes
Federal law requires that the employer match the total amount deducted from employees’ paychecks for Social Security and Medicare.
Federal and State Unemployment Taxes
The employer pays both federal and state unemployment taxes.
The federal unemployment tax is 6.2 percent on the first $7,000 of an employee’s annual wages.
State unemployment tax rates and maximum taxable amounts vary among states.

9. Reporting Payroll Information to the Government
Managing Payroll and Inventory
Chapter 8
Reporting Payroll Information to the Government
Issues Addressed by the Internal Revenue Code (IRC)
Determining whether the federal tax coverage rules apply
Computing an employee’s taxable wages
Calculating the amount of employment taxes to be withheld
Depositing the correct amount of taxes with the government
Filing employment tax returns

10. Payroll Accounting in Financial Management
Managing Payroll and Inventory
Chapter 8
Payroll Accounting in Financial Management
Accurate payroll records are essential for controlling business expenses.
Payroll is often the biggest expense of running a business.

11. Establishing an Inventory System
Managing Payroll and Inventory
Chapter 8
Establishing an Inventory System
The Stages of Merchandise 1 2 3 4
Ordering Merchandise
Storing Merchandise
Displaying Merchandise
Selling Merchandise
Tracking and controlling inventory is a major function of an accounting system.

12. Controlling Inventory
Managing Payroll and Inventory
Chapter 8
Controlling Inventory
Inventory Too Large
You may have purchased the wrong quantity
Cash may not be available for operating expenses
Merchandise may have to be sold at a loss
Inventory Too Low
Not enough choice for customers
Less cash from sales as customers go elsewhere
Disappointed customers may be lost forever

13. Analyzing Inventory Turnover
Managing Payroll and Inventory
Chapter 8
Analyzing Inventory Turnover
Inventory Turnover
Average Inventory
Inventory Turnover Levels
Days in Stock
Basic Stock List
Model Stock List
Never-Out List
Stock Lists

14. Perpetual Inventory System Periodic Inventory System
Managing Payroll and Inventory
Chapter 8
Inventory Systems
Perpetual Inventory System
Constant, up-to-date records of inventory
Can use point of sale terminals
Automated reordering possible
Periodic Inventory System
Inventory records updated after physical count
Some businesses shut down for inventory