Question

Why are correct payroll calculations so important?
b. From the company's point of view what are some pros and cons of issuing bonds?

Answer 1

a. Why are correct payroll calculations so important?

Answer -

Payroll are the calculations on the part of employees which includes salary, Employer Taxes, Employee Taxes and so on. These are the periodic calculations which are done by HR or accountant on a monthly basis.

Calculation of payroll includes all the present working days calculation, Employer Taxes, Employee Taxes, Tax Deductions which are libilities of the company in the form of Employees salary and government taxes.

If caluculation for the payroll goes wrong it will affect company on the point that the tax deducted by the company will go wrong and they might have to pay interest for low or wrong deduction of taxes.

At the same time it will affect on the loyalty of the company in the mind of employees. Employees are assets of the company and they want their monthly payment timely and accurate manner.

Conclusion -

1. Company will have to pay interest for low or wrong payment of taxes they have collected from employees.

2. Empoloyees Loyalty.

b. From the company's point of view what are some pros and cons of issuing bonds?

Answer -

Bonds are borrowing money from public in return of periodic interest. Company will get money from the pubic for their short term or long term needs.  

If the company has some plan to buy a mchinery or investment in a project bonds are wasy way to get the money with interest cost and tax benefits.

To sell its assets or to use of retained earnings company may go for borrow money by way of bonds and get the tax benefits and interest cost.

Cons -

If a company borrows money from the public they have to pay it interest and at the end principles so the risk of repayment is there in the bonds.

Reduction of Income - Interest expenses are the charge for the company for the borrowed fund.