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Chapter 10: Payroll Computations, Records, and Payments
Chapter Opener: Thinking Critically
Aside from the non-financial benefit of an appealing work environment, students might mention benefits like
flextime, healthcare, and paid vacation. Other possible benefits might include profit sharing, bonus plans, or
tuition reimbursement plans.
Fast Facts
• Adobe offers a variety of products for digital imaging such as Adobe® Photoshop® and Photoshop Album.
• Adobe distributes paychecks for over 2,800 employees worldwide.
• With approximately 3,800 employees in locations worldwide, including North America, Europe and Asia
Pacific, Adobe has expanded its employee base by nearly 10 percent since January 2004.
Accounting On The Job: Thinking Critically
Proficient in research techniques, solid communication and organizational skills, grant writing experience.
Accounting On The Job: Internet Application
Answers will vary. U.S. Department of Health and Human Services Web site: www.hhs.gov.
Managerial Implications: Thinking Critically
Answers will vary, but students may suggest payroll audits, monitoring of time cards, and division of labor for
payroll tasks.
Discussion Questions
These questions are designed to check students’ understanding of new terms, concepts, and procedures
presented in the chapter.
1. Earnings during the pay period, length of pay period, marital status, number of allowances.
2. Sets minimum hourly wages and maximum work hours per week. Applies to firms engaged directly or
indirectly in interstate commerce.
3. Fair Labor Standards Act sets the minimum hourly rate of pay and maximum hours of work per week. It
is also referred to as the Wage and Hour Law.
4. Two common payroll frauds are overstating hours worked and the issuance of checks to nonexistent
employees.
5. Salaried employees who hold supervisory or managerial positions, not subject to maximum hours and
overtime.
6. The Federal amounts can be reduced by amount charged by the state government.
7. No, levied on the employer only.
8. Number of hours worked is multiplied by the hourly wage. For hours above 40 in a week, the rate used
is one and one-half times the regular hourly rate.
9. Used to finance medical insurance for retired employees.
10. Used to finance retirement benefits for the employee, benefits for dependents of the retired employee,
and benefits for a disabled employee.
11. Funds are automatically deposited in the employee’s account from the employer’s bank.
12. hourly-rate, salary, commission, piece-rate.
13. withholding tables
14. Circular E
15. One depends solely on the number of hours worked each week; the other is a fixed amount per month,
per week, or other pay period.
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Exercises
Exercise 10.1
Employee No.
1
2
3
4
Hourly Rate
$9.70
8.75
9.50
8.90
Hours Worked
38
40
40
35
Gross Earnings
$368.60
350.00
380.00
311.50
Hourly Rate
$9.75
9.50
9.25
8.90
Hours Worked
44
48
33
45
Regular Time
Earnings
$390.00
380.00
305.25
356.00
Overtime
Earnings
$ 58.52
114.00
—
66.75
December
Salary
$9,200
8,750
8,975
6,650
Earnings
through
November 30
$87,900
83,450
90,100
67,500
Soc. Sec.
Taxable
Earnings
$2,100
6,550
-06,650
Social
Security Tax
$130.20
406.10
-0412.30
December
Salary
$9,200
8,750
8,975
6,650
Earnings
through
November 30
$87,900
83,450
90,100
67,500
Medicare
Taxable
Earnings
$9,200
8,750
8,975
6,650
Medicare
Tax
$133.40
126.88
130.14
96.43
Marital
Status
M
S
M
S
Withholding
Allowances
1
2
3
2
Weekly
Salary
$650
595
735
590
Income Tax
Withholding
$52
57
47
57
Exercise 10.2
Employee No.
1
2
3
4
Gross
Earnings
$448.52
494.00
305.25
422.75
EXERCISE 10.3
Employee No.
1
2
3
4
Exercise 10.4
Employee No.
1
2
3
4
Exercise 10.5
Employee No.
1
2
3
4
248 䡲 Chapter 10
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Exercise 10.6
GENERAL JOURNAL
Date
Description
2007
Aug. 7
7
PAGE 16
Post.
Ref.
Office Salaries Expense . . . . . . . . . . . . . . . . . . . . . . . . .
Social Security Tax Payable . . . . . . . . . . . . . . . . . . . .
Medicare Tax Payable . . . . . . . . . . . . . . . . . . . . . . . .
Employee Income Tax Payable . . . . . . . . . . . . . . . . .
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payroll for week
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued checks, weekly payroll
Debit
Credit
2,442.00
151.40
35.41
549.66
1,705.53
1,705.53
1,705.53
Exercise 10.7
GENERAL JOURNAL
Date
2007
July 31
Description
PAGE 20
Post.
Ref.
Sales Salaries Expense . . . . . . . . . . . . . . . . . . . . . . . . .
Office Salaries Expense . . . . . . . . . . . . . . . . . . . . . . . . .
Social Security Tax Payable . . . . . . . . . . . . . . . . . . . .
Medicare Tax Payable . . . . . . . . . . . . . . . . . . . . . . . .
Employee Income Tax Payable . . . . . . . . . . . . . . . . .
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payroll for week
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Debit
Credit
30,400
8,000
2,381
557
3,040
32,422
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Problems
Problem 10.1A
Regular Hours,
Hourly Rate
Hours Worked
Regular Time
Earnings
Overtime
Earnings
Gross
Earnings
Cindy Taylor
$ 12.75
48
$510.00
$153.00
$663.00
Gross Pay
Social Security Tax
Medicare Tax
Income Tax Withholding
Health & Disability
United Way
US Savings Bond
Net Pay
$663.00
41.11
9.61
36.00
176.00
20.00
50.00
$330.28
Post.
Ref.
Debit
Credit
Employee No.
GENERAL JOURNAL
Date
2007
Dec. 31
Description
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued check for weekly payroll
330.28
330.28
Analyze: Cindy has worked 108 hours of overtime and earned overtime pay of $2,065.50.
250 䡲 Chapter 10
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
M
M
M
S
Marital
Status
Medicare
611.04
561.75
410.00
565.56
2,148.35
Social
Security
611.04
561.75
410.00
565.56
2,148.35
FUTA
June 30, 2007
1
4
1
2
Taxable Wages
AND ENDING
Nelda Anderson
Earl Benson
Frank Cortez
Winnie Wu
No. of
Allow.
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
133.19
37.88
34.83
25.42
35.06
Social
Security
PAID
48
49
40
52
No. of
Hrs.
31.16
8.86
8.15
5.95
8.20
Medicare
Deductions
64,955.00
17,540.00
16,875.00
15,980.00
14,560.00
Cumulative
Earnings
1,690.00
135.00
46.00
17.00
20.00
52.00
Income
Tax
470.00
420.00
410.00
390.00
Regular Time
Earnings
1,849.00
518.30
501.77
358.63
470.30
Net
Amount
July 3, 2007
$11.75
10.50
10.25
9.75
Rate
June 24, 2007
Ck.
No.
1,582.79
611.04
561.75
410.00
67,103.35
18,151.04
17,436.75
16,390.00
15,125.56
Cumulative
Earnings
565.56
565.56
Office
Wages
2,148.35
611.04
561.75
410.00
565.56
Gross
Amount
Theater
Wages
Distribution
458.35
141.04
141.75
—
175.56
Overtime
Earnings
Earnings
2:43 PM
Name
WEEK BEGINNING
10/26/05
PAYROLL REGISTER
Problem 10.2A
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Chapter 10 䡲 251
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GENERAL JOURNAL
Date
Description
2007
June 30
July
3
Theater Wages Expense . . . . . . . . . . . . . . . . . . . . . . . .
Office Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Social Security Tax Payable . . . . . . . . . . . . . . . . . . . .
Medicare Tax Payable . . . . . . . . . . . . . . . . . . . . . . . .
Employee Income Tax Payable . . . . . . . . . . . . . . . . .
Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weekly payroll
Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued check for weekly payroll
PAGE 15
Post.
Ref.
Debit
Credit
1,582.79
565.56
133.19
31.16
135.00
1,849.00
1,849.00
1,849.00
Analyze: Nelda Anderson’s cumulative earnings at June 30, 2007 are $18,151.04.
252 䡲 Chapter 10
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
M
S
M
S
Marital
Status
Medicare
771.78
1,182.50
1,346.80
510.00
3811.08
Social
Security
771.78
1,182.50
1,346.80
510.00
3,811.08
FUTA
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
236.29
47.85
73.32
83.50
31.62
Social
Security
PAID
46
42
48
40
No. of
Hrs.
55.27
11.19
17.15
19.53
7.40
Medicare
Deductions
170,352.00
32,760.00
57,200.00
53,872.00
26,520.00
Cumulative
Earnings
December 21, 2007
4
1
3
0
Taxable Wages
AND ENDING
Gloria Bahamon
Alex Garcia
Ron Price
Sara Russell
No. of
Allow.
3,276.00
630.00
1,100.00
1,036.00
510.00
Regular Time
Earnings
706.00
103.00
299.00
241.00
63.00
Income
Tax
2,813.52
609.74
793.03
1,002.77
407.98
Net
Amount
December 23,2007
$15.75
27.50
25.90
12.75
Rate
December 15, 2007
Ck.
No.
1,281.78
510.00
771.78
174,163.08
33,531.78
58,382.50
55,218.80
27,030.00
Cumulative
Earnings
2,529.30
1,182.50
1,346.80
Delivery
Wages
3,811.08
771.78
1,182.50
1,346.80
510.00
Gross
Amount
Office
Wages
Distribution
535.08
141.78
82.50
310.80
—
Overtime
Earnings
Earnings
2:43 PM
Name
WEEK BEGINNING
10/26/05
PAYROLL REGISTER
Problem 10.3A
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Chapter 10 䡲 253
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GENERAL JOURNAL
Date
2007
Dec. 21
23
PAGE 32
Post.
Ref.
Description
Office Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Delivery Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social Security Tax Payable . . . . . . . . . . . . . . . . . . . .
Medicare Tax Payable . . . . . . . . . . . . . . . . . . . . . . . .
Employee Income Tax Payable . . . . . . . . . . . . . . . . .
Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weekly Payroll
Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of payroll
Debit
Credit
1,281.78
2,529.30
236.29
55.27
706.00
2,813.52
2,813.52
2,813.52
Analyze: Delivery wages were 66.4% of total taxable wages.
Problem 10.4A
Employee Name
Cumulative
Earnings
James Taylor
Carolyn Wells
Linda Taylor
Totals
$171,000
153,000
54,000
$378,000
Monthly Pay
Social
Security
$19,000
17,000
6,000
$42,000
—
—
372
$372
Medicare
Employee
Income Tax
Withholding
Net Pay
$275.50
246.50
87.00
$609.0
$ 5,088
4,388
1,147
$10,623
$13,636.50
12,365.50
4,394.00
$30,396.00
GENERAL JOURNAL
Date
2007
Oct. 31
31
Description
Salaries Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social Security Tax Payable . . . . . . . . . . . . . . . . . . . .
Medicare Tax Payable . . . . . . . . . . . . . . . . . . . . . . . .
Employee Income Tax Payable . . . . . . . . . . . . . . . . .
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PAGE 22
Post.
Ref.
Debit
Credit
42,000
372
609
10,623
30,396
30,396
30,396
Analyze: An employee is hired by and works under the control and direction of the employer. An
independent contractor is paid by the company to carry out a specific task but is not under the direct
supervision or control of the company.
254 䡲 Chapter 10
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Problem 10.1B
Regular Hours,
Hourly Rate
Hours Worked
Regular Time
Earnings
Overtime
Earnings
Gross
Earnings
Treschell Seymore
$ 13.75
48
$550.00
$165.00
$715.00
Gross Pay
Social Security Tax
Medicare Tax
Income Tax Withholding
Health Insurance
American Cancer Society
Credit Union Savings
Net Pay
715.00
44.33
10.37
35.00
197.00
25.00
$150.00
$253.30
Post.
Ref.
Debit
Credit
Employee No.
Date
2007
Dec. 31
Description
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issued check for weekly payroll
253.30
253.30
Analyze: Treschell worked 1,301.24 hours of overtime and earned overtime pay of $26,838.00.
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 10 䡲 255
256 䡲 Chapter 10
M
M
M
S
Medicare
643.91
689.04
1,357.00
1,043.00
3,732.95
Social
Security
643.91
689.04
1,357.00
—
2,689.95
FUTA
166.77
39.92
42.72
84.13
—
Social
Security
PAID
47
48
44
28
No. of
Hrs.
54.13
9.34
9.99
19.68
15.12
Medicare
Deductions
284,428.00
44,179.00
53,015.00
82,748.00
104,486.00
Cumulative
Earnings
December 31, 2007
Taxable Wages
AND ENDING
3
2
4
2
Marital
Status
3,263.00
510.00
530.00
1,180.00
1,043.00
Regular Time
Earnings
554.00
33.00
48.00
235.00
238.00
Income
Tax
2,958.05
561.65
588.33
1,018.19
789.88
Net
Amount
December 31, 2007
12.75
13.25
29.50
37.25
Rate
December 25, 2007
Ck.
No.
3,732.95
643.91
689.04
1,357.00
1,043.00
Gross
Amount
3,732.95
643.91
689.04
1,357.00
1,043.00
Store
Wages
Distribution
469.95
133.91
159.04
177.00
0.00
Overtime
Earnings
Earnings
288,160.95
44,822.91
53,704.04
84,105.00
105,529.00
Cumulative
Earnings
2:43 PM
Barbara Brooks
Cynthia Carter
Mabel Easley
James Periot
No. of
Allow.
WEEK BEGINNING
10/26/05
Name
PAYROLL REGISTER
Problem 10.2B
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Page 257
GENERAL JOURNAL
Date
2007
Dec. 31
Description
PAGE 18
Post.
Ref.
Store Wages Expense . . . . . . . . . . . . . . . . . . . . . . . . . .
Social Security Tax Payable . . . . . . . . . . . . . . . . . . . .
Medicare Tax Payable . . . . . . . . . . . . . . . . . . . . . . . .
Employee Income Tax Payable . . . . . . . . . . . . . . . . .
Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payroll for week ending December 31
Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Paid wages for week ending December 31.
Debit
Credit
3,732.95
166.77
54.13
554.00
2,958.05
2,958.05
2,958.05
Analyze: The difference is the total deductions of $774.90 which must be remitted to the IRS.
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 10 䡲 257
258 䡲 Chapter 10
M
S
M
S
Medicare
467.25
369.00
1,413.15
1,359.13
3,608.53
Social
Security
467.25
369.00
1,413.15
1,359.13
3,608.53
—
—
—
—
FUTA
223.74
28.97
22.88
87.62
84.27
Social
Security
PAID
43
36
45
41
No. of
Hrs.
52.33
6.78
5.35
20.49
19.71
Medicare
Deductions
210,624.00
26,565.00
25,933.00
75,268.00
82,858.00
Cumulative
Earnings
November 12, 2007
Taxable Wages
AND ENDING
3
2
4
2
Marital
Status
3,289.00
420.00
369.00
1,190.00
1,310.00
Regular Time
Earnings
494.00
13.00
22.00
192.00
267.00
Income
Tax
2,838.46
418.50
318.77
1,113.04
988.15
Net
Amount
November 12,2007
10.50
10.25
29.75
32.75
Rate
November 6, 2007
Ck.
No.
836.25
467.25
369.00
214,232.53
27,032.25
26,302.00
76,681.15
84,217.13
Cumulative
Earnings
2,772.28
1,413.15
1,359.13
Consulting
Wages
3,608.53
467.25
369.00
1,413.15
1,359.13
Gross
Amount
Office
Wages
Distribution
319.53
47.25
—
223.15
49.13
Overtime
Earnings
Earnings
2:43 PM
Kathryn Allen
Calvin Cooke
Maria Vasquez
Hollie Visage
No. of
Allow.
WEEK BEGINNING
10/26/05
Name
PAYROLL REGISTER
Problem 10.3B
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Page 259
GENERAL JOURNAL
Date
2007
Nov. 12
15
PAGE 32
Post.
Ref.
Description
Office Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consulting Wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social Security Tax Payable . . . . . . . . . . . . . . . . . . . .
Medicare Tax Payable . . . . . . . . . . . . . . . . . . . . . . . .
Employee Income Tax Payable . . . . . . . . . . . . . . . . .
Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Record weekly payroll
Wages Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Paid payroll
Debit
Credit
836.25
2,772.28
223.74
52.33
494.00
2,838.46
2,838.46
2,838.46
Analyze: Total deductions of $770.07 were taken from employee paychecks for the period ended
November 12.
Problem 10.4B
Employee Name
Cumulative
Earnings
Monthly Pay
Troy Braxton
Sherrye Braxton
Henry Thomas
Totals
$185,000
160,000
62,500
$407,500
$18,500
16,000
6,250
$40,750
Social
Security
—
—
387.50
$387.50
Medicare
Employee
Income Tax
Withholding
Net Pay
$268.25
232.00
90.63
$590.88
$5,110
3,640
1,190
$9,940
$13,121.75
12,128.00
4,581.87
$29,831.62
GENERAL JOURNAL
Date
2007
Nov. 30
30
Description
PAGE 24
Post.
Ref.
Salaries Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social Security Tax Payable . . . . . . . . . . . . . . . . . . . .
Medicare Tax Payable . . . . . . . . . . . . . . . . . . . . . . . .
Employee Income Tax Payable . . . . . . . . . . . . . . . . .
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debit
Credit
40,750.00
387.50
590.88
9,940.00
29,831.62
29,831.62
29,831.62
Analyze: Troy Braxton reached the limit for social security withholdings in May 2007.
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Challenge Problem
Employee Name
Cynthia Arnold
Richard Chen
Viadimir Grebennikov
Totals
Cumulative
Earnings
165,000
78,000
66,000
$309,000
Monthly Pay
Social
Security
15,000
13,000
6,000
$34,000
-0744
372
$1,116
Medicare
Employee
Income Tax
Withholding
Net Pay
217.50
188.50
87.00
$493.00
3,206
2,646
801
$6,653
11,576.50
9,421.50
4,740.00
$25,738.00
GENERAL JOURNAL
Date
2007
Dec. 31
31
Description
Salaries Expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social Security Tax Payable . . . . . . . . . . . . . . . . . . . .
Medicare Tax Payable . . . . . . . . . . . . . . . . . . . . . . . .
Employee Income Tax Payable . . . . . . . . . . . . . . . . .
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Monthly Payroll
Salaries Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of Monthly Payroll
PAGE 32
Post.
Ref.
Debit
Credit
34,000
1,116
493
6,653
25,738
25,738
25,738
Analyze: The balance after all entries have been posted is zero.
Critical Thinking Problem
1. Some of the weaknesses in Taco Havana’s payroll system include: (a) Managers are able to add new
employees to the payroll without written authorization or verification. There is no check on the
qualifications of employees hired and managers could add bogus employees to the payroll.
(b) Employees should not have access to blank time cards. (c) Payroll functions should be allocated to
more than one employee; there are not any checks on the accuracy of Mireya’s work. (d) Mireya should
not sign the payroll checks. The person who prepares the checks should not sign the checks.
2. Since there are no checks on who the managers hire, it would be possible for a manager to add a
fictitious employee to the payroll. This fraud would be further aided because the manager is responsible
for sending time cards to headquarters and distributes the paychecks.
3. To prevent fictitious employees from being placed on the payroll: (a) New employees should not be
added to the payroll without written authorization from headquarters, (b) Payroll checks should not be
distributed by the managers. The paychecks could be mailed directly to the employees or someone
from headquarters could distribute the checks.
260 䡲 Chapter 10
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Business Connections
Managerial Focus
1. If overtime is excessive, profits are drastically reduced.
2. Paying by check would eliminate security risk and reduce work involved in preparing pay envelopes.
3. Various federal, state, and local payroll laws require that detailed payroll records be maintained. These
records provide management with information needed to make decisions about the firm’s needs.
4. Used by management to see that operations meet previously established goals and that related outlays
for wages are within previously established limits.
Ethical Dilemma
It is ethical for the company to offer the promotion, but they should allow the managers to decide whether to
accept it. The managers should not accept the promotion since they will be receiving $10 less per day from
$210 to $200.
Streetwise
1. Invested in associates through more than 23 million hours of learning. Enhanced compensation and
reward programs. Jobs may include sales staff, inventory managers, buyers, and accountants.
Management: salary based. Cashiers and delivery drivers: hourly basis.
2. Higher labor productivity, reduced labor costs per sales dollar. This was offset by higher expenses for
incentive programs.
Financial Statement Analysis
1. $29.6 million
2. 40.9%
3. $450 million
Analyze Online: Answers will vary depending on the year.
Extending the Thought
Employee: Performance may suffer if work hours are too long. Yet long hours may be rewarded with pay
increases or bonuses. Employer: Long hours necessary to complete important projects or launch new plans
for expansion.
Business Communication
Gross pay allocation pie charts would show the following:
Social Security Tax . . . . . .
Medicare Tax . . . . . . . . . .
Federal Income Tax . . . . .
State Income Tax . . . . . . .
Medical Insurance . . . . . .
Net Pay . . . . . . . . . . . . . . .
6.7%
1.5%
11.2%
2.2%
1.3%
77.0%
Team Work
Employee signs the time card and gives it to the manager. The manager approves the hours and gives it to
the payroll clerk. The payroll clerk runs the payroll and prints the checks. The treasurer signs the checks and
gives them back to the payroll clerk who gives them to the manager. The controller enters any necessary
adjusting entry. The manager gives the check to the employee.
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Internet Connection
Experience necessary is 3 out of 5 years preceding the date of the exam. Exam is offered in April and
October at several testing sites. The non member fee in 2005 is $350. Testing includes Payroll
Fundamentals and Operation (26%), Fundamental for Calculation of Paychecks (30%), Tax and Regulatory
Compliance (10%), Accounting (8%), Payroll and Supporting Systems (16%) and Management and
Administration (10%).
Practice Test Answer Key
Part A
1. T
2. T
3. F
4. F
5. F
6. F
7. T
8. T
9. F
10. F
11. F
12. F
True–False
Part B
1. e
2. i
3. J
4. k
5. c
6. b
7. a
8. g
9. h
10. f
Matching
262 䡲 Chapter 10
Copyright © 2007 The McGraw-Hill Companies, Inc. All rights reserved.