AFM 123 GENERAL NOTES AFTER MIDTERM
QUESTIONS WITH VERIFIED ANSWERS
Module 1: Payroll - Answers - General Info:
- Companies are required by law to have payroll records for each employee, report and
remit payroll deductions, and respect laws.
2 Types of Payroll Costs - Answers - 1) Employee costs: amounts paid to employees
(gross pay) & amounts paid by employees (payroll deductions).
2) Employer costs: amounts paid by employer on behalf of the employee (employee
benefits).
Note: net pay is always less than gross pay.
Gross Pay (Earnings) - The total compensation earned by an employee - Answers -
Consists of:
1) Wages = hours worked x hourly rate of pay or
2) Salaries: based on weekly, biweekly, monthly or annual rate
- Bonuses
- Commissions
Employee Payroll Costs - the difference between gross pay and the amount actually
received (net pay) - Answers - 1) Mandatory payroll deductions:
- Requred by law
- personal income tax, Canada Pension Plan (CPP) and Employment Insurance (EI).
Determined from payroll deduction tables
2) Voluntary payroll deductions:
- For charitable causes, retirement, and other purposes
- Should be authorized in writing by the employee
- Do not result in a payroll expense to the employer!
Employer Payroll Costs - Amounts an employer is required to match and pay - Answers
- 1) Required by govt's:
- CPP (matching the employee contribution)
- EI (1.4 x the employee contribution)
- Workplace health, safety and compensation
2) Additional employee benefits:
- Paid absences: sick days, vacations, statutory holidays
- Post-employment benefits: to retired employees
- These benefits give rise to liabilities that must be accrued
Recording the Payroll - Answers - Involves:
1) Maintaining payroll records
, 2) Recording the payroll expenses and liabilities
3) Paying the payroll, and
4) Filing and remitting payroll deductions
Payroll Records:
- A separate earnings record is kept for each employee
- Payroll register may be used to accumulate gross earnings, deductions & net pay by
employee for each period.
Recording Payroll Expenses and Liabilities - Answers - Employee payroll costs:
- Entry for the employee portion of a payroll
- The company's expense is equal to total gross pay
Employee payroll deductions become current liabilities of the company until remitted
- Recorded when the payroll is journalized
- Become current liabilities of the company until remitted
- Explained (look at the picture on the payroll ppt slide 7: The debit account shows the
gross pay, but all the credits show the liabilities and then the salaries payable at the
bottom is the net pay on the credits side.
Mandatory Payroll Deductions - Answers - 1) Canada Pension Plan (CPP)
contributions:
- Calculated as a % of earnings (contribution rate) over a set minimum (basic
exemption) to a maximum amount of earnings (maximum pensionable earnings)
- Pro-rated per pay period
2) Employment Insurance (E1) contributions:
- Calculated as a % of earnings to a maximum amount (maximum insurable earnings)
- No basic exemption
- Not pro-rated: deduced from pay until max is reached.
3) Personal Income Tax Deductions:
- Based on tax rates set by federal and provincial govt's
- Progressive rates: higher % rates for higher income levels
CHAPTER 2: Workplace Motivation and Performance - Answers -
Motivation: (Person + Situation = Performance) - Answers - 1) Person
- Ability: refers to the knowledge(what a person knows), and skills(their capacity to
perform an activity -i.e. accounting) that a person brings to a job.
Motivation: a force within or outside the body that energizes, directs, and sustains
human behaviour.
- Role Perceptions: how well an individual understands their organizational role (i.e. the
outcomes that person is expected to achieve).
QUESTIONS WITH VERIFIED ANSWERS
Module 1: Payroll - Answers - General Info:
- Companies are required by law to have payroll records for each employee, report and
remit payroll deductions, and respect laws.
2 Types of Payroll Costs - Answers - 1) Employee costs: amounts paid to employees
(gross pay) & amounts paid by employees (payroll deductions).
2) Employer costs: amounts paid by employer on behalf of the employee (employee
benefits).
Note: net pay is always less than gross pay.
Gross Pay (Earnings) - The total compensation earned by an employee - Answers -
Consists of:
1) Wages = hours worked x hourly rate of pay or
2) Salaries: based on weekly, biweekly, monthly or annual rate
- Bonuses
- Commissions
Employee Payroll Costs - the difference between gross pay and the amount actually
received (net pay) - Answers - 1) Mandatory payroll deductions:
- Requred by law
- personal income tax, Canada Pension Plan (CPP) and Employment Insurance (EI).
Determined from payroll deduction tables
2) Voluntary payroll deductions:
- For charitable causes, retirement, and other purposes
- Should be authorized in writing by the employee
- Do not result in a payroll expense to the employer!
Employer Payroll Costs - Amounts an employer is required to match and pay - Answers
- 1) Required by govt's:
- CPP (matching the employee contribution)
- EI (1.4 x the employee contribution)
- Workplace health, safety and compensation
2) Additional employee benefits:
- Paid absences: sick days, vacations, statutory holidays
- Post-employment benefits: to retired employees
- These benefits give rise to liabilities that must be accrued
Recording the Payroll - Answers - Involves:
1) Maintaining payroll records
, 2) Recording the payroll expenses and liabilities
3) Paying the payroll, and
4) Filing and remitting payroll deductions
Payroll Records:
- A separate earnings record is kept for each employee
- Payroll register may be used to accumulate gross earnings, deductions & net pay by
employee for each period.
Recording Payroll Expenses and Liabilities - Answers - Employee payroll costs:
- Entry for the employee portion of a payroll
- The company's expense is equal to total gross pay
Employee payroll deductions become current liabilities of the company until remitted
- Recorded when the payroll is journalized
- Become current liabilities of the company until remitted
- Explained (look at the picture on the payroll ppt slide 7: The debit account shows the
gross pay, but all the credits show the liabilities and then the salaries payable at the
bottom is the net pay on the credits side.
Mandatory Payroll Deductions - Answers - 1) Canada Pension Plan (CPP)
contributions:
- Calculated as a % of earnings (contribution rate) over a set minimum (basic
exemption) to a maximum amount of earnings (maximum pensionable earnings)
- Pro-rated per pay period
2) Employment Insurance (E1) contributions:
- Calculated as a % of earnings to a maximum amount (maximum insurable earnings)
- No basic exemption
- Not pro-rated: deduced from pay until max is reached.
3) Personal Income Tax Deductions:
- Based on tax rates set by federal and provincial govt's
- Progressive rates: higher % rates for higher income levels
CHAPTER 2: Workplace Motivation and Performance - Answers -
Motivation: (Person + Situation = Performance) - Answers - 1) Person
- Ability: refers to the knowledge(what a person knows), and skills(their capacity to
perform an activity -i.e. accounting) that a person brings to a job.
Motivation: a force within or outside the body that energizes, directs, and sustains
human behaviour.
- Role Perceptions: how well an individual understands their organizational role (i.e. the
outcomes that person is expected to achieve).
