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Chapter 12
| Term | Definition |
|---|---|
| Wage | The amount paid to an employee for every hour worked |
| FYI – exemptions to federal wage laws | Allows employers to exempt owners and managers from hourly payment |
| Salary | A fixed annual sum of money divided among equal pay periods |
| Commission | a method of paying an employee based on the amount of sales the employee generates |
| Total Earnings | The total amount paid by a business for an employees work, earned by a wage, salary, or commission |
| FYI – another names for Total Earnings | Gross pay, Gross wages, Gross earnings |
| Pay Period | The number of days or weeks covered by an employees paycheck |
| FYI – 4 pay periods | Weekly, Biweekly, semimonthly, monthly |
| Payroll | The total amount earned by all employees for a pay period |
| Payroll Clerk | The accounting staff position that compiles and computes payroll data and then prepares, journalizes, and posts payroll transactions |
| Time Clock | a device used to record the dates and times of every employees arrivals and departures |
| FYI – Fair Labor Standards Act requirements | requires that businesses pay employees at least 1.5 times their normal hourly rate for hours worked in excess of 40 hours a week |
| Payroll Taxes | Taxes based on the payroll of a business |
| Withholding Allowance | A deduction from total earnings for each person legally supported by a taxpayer, including the employee |
| FYI – W-4 two main piece of info | employees marital status and number of allowances |
| FYI – Withholding exemptions | 1.last year had a right to a refund for all federal income tax withheld because had no tax liability 2.this year expect a refund for all federal income tax withheld because have no tax liability |
| Payroll Deductions | Any amount withheld from an employees gross earnings |
| FYI – requiring Social Security number | law requires that each employee must have a social security number.law ensures that most infants one year old will have a social security number |
| FYI – IRS administers | the tax laws |
| Social Security Tax | A federal tax paid for old-age, survivors, and disability insurance |
| Medicare Tax | A federal tax paid for hospital insurance |
| Accumulated earnings | The total gross earnings year to date for an employee |
| Tax Base | The maximum amount of earnings on which a tax is calculated |
| FYI – current tax rate & tax base amount | 6.2% of earnings up to a maximum of $106,800.00 in each year |
| Qualified Retirement Plan | A retirement savings plan approved by the IRS that provides individuals with a tax benefit |
| 401(k) | a qualified retirement plan sponsored by an employer |
| Individual Retirement Account (IRA) | a qualified retirement plan that provides most individuals with a deferred federal income tax benefit |
| Roth Individual Retirement Account (Roth IRA) | a qualified retirement plan that allows tax-free withdrawals from the account |
| Payroll Register | summarizes the earnings, deductions and net pay for all employees for one day period |
| Net Pay | The total earnings paid to an employee after payroll taxes and other deductions |
| Employee Earnings Record | A business form used to record details of an employees earnings and deductions |
| 403(b) | allows pretax contributions for government employees and employees of tax-exempt organizations |
| Voucher Check | has a detachable check stub, or voucher, that contains detailed information about the cash payment |
| EFT | A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents is called Electronic Funds Transfer |
| Direct Deposit | The payment of an employees net pay using EFT |
| FYI – reasons for separate payroll checking account | provides internal control and helps prevent fraud |
Created by:
andrew.v
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