1. Payroll Accounting Making Accounting Relevant Businesses issue payroll checks to their employees to compensate them for work performed. 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. Section 1Calculating Gross Earnings What You’ll Learn  The importance of accurate payroll records.  How to calculate gross earnings. What You’ll Learn  The importance of accurate payroll records.  How to calculate gross earnings.

3. 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. 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. Section 1Calculating Gross Earnings (cont'd.) Key Terms  payroll  pay period  payroll clerk  gross earnings  wage  salary Key Terms  payroll  pay period  payroll clerk  gross earnings  wage  salary  time card  electronic badge readers  commission  overtime rate  time card  electronic badge readers  commission  overtime rate

4. The Importance of Payroll Records Section 1Calculating Gross Earnings (cont'd.)  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.  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. The Importance of Payroll Records (cont'd.) Section 1Calculating Gross Earnings (cont'd.)

6. 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: 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 Section 1Calculating Gross Earnings (cont'd.)  hourly wage  hourly wage  commission  salary plus commission or bonus  salary plus commission or bonus  overtime pay  overtime pay

7. 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.  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. Section 1Calculating Gross Earnings (cont'd.)

8. 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.  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. Section 1Calculating Gross Earnings (cont'd.)

9. 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.  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. Section 1Calculating Gross Earnings (cont'd.)

10. 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.  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. Section 1Calculating Gross Earnings (cont'd.)

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