CPP section 11 - Payroll Accounting
Explain accrual accounting as it pertains to payroll. - correct answer Revenue is organized and recorded
when earned and expenses are recognized and recorded when incurred. Accrual entries are made at the
end of the accounting period to estimate payroll expenses and liabilities incurred between the end of
the last payroll period and the accounting period end.
Internal controls - correct answer Within a payroll system there are checks and balances to ensure the
accuracy of a company's financial records and the security of its assets.
Payroll expenses may be recorded functionally or by type of pay: - correct answer If papyroll expenses
are recorded functionally, entrieds must be based on teh processes supported by the expenses. (e.g.
manufacturing, sales, administration)This means that the payroll would have to be distributed into
different labor distribution expense accounts and a separate Labor Distribution Subsidiary Ledger would
have to be kept. Recording payroll expenses by type of pay can be done where the payroll register
breaks down employees' wages into regular and overtimwe pay.
The five types of accounts that are generally used by businesses to classify transactions: - correct answer
Asset
Liability
Expense
Revenue
Equity
What are earnings per share? - correct answer Earnings per share show the company's net income
divided by the weighted average number of outstanding shares of stock.
What are reversals, and how do they affect accounting? - correct answer Accruals are generally
estimates, so they must be corrected by reversing entries during the next accounting period when the
actual expenses and liabilities are recorded.
Explain accrual accounting as it pertains to payroll. - correct answer Revenue is organized and recorded
when earned and expenses are recognized and recorded when incurred. Accrual entries are made at the
end of the accounting period to estimate payroll expenses and liabilities incurred between the end of
the last payroll period and the accounting period end.
Internal controls - correct answer Within a payroll system there are checks and balances to ensure the
accuracy of a company's financial records and the security of its assets.
Payroll expenses may be recorded functionally or by type of pay: - correct answer If papyroll expenses
are recorded functionally, entrieds must be based on teh processes supported by the expenses. (e.g.
manufacturing, sales, administration)This means that the payroll would have to be distributed into
different labor distribution expense accounts and a separate Labor Distribution Subsidiary Ledger would
have to be kept. Recording payroll expenses by type of pay can be done where the payroll register
breaks down employees' wages into regular and overtimwe pay.
The five types of accounts that are generally used by businesses to classify transactions: - correct answer
Asset
Liability
Expense
Revenue
Equity
What are earnings per share? - correct answer Earnings per share show the company's net income
divided by the weighted average number of outstanding shares of stock.
What are reversals, and how do they affect accounting? - correct answer Accruals are generally
estimates, so they must be corrected by reversing entries during the next accounting period when the
actual expenses and liabilities are recorded.
