Question

Expenses are costs incurred by an organization in the process of earning revenue during a given time period. Expense accounts have a direct impact on the profitability of an organization. List three expense accounts related to payroll. Describe when you would expect the account to be cleared to zero. Explain the methods you could use to reconcile these accounts.

pay roll fundamental 2 chapter 1

Answer 1

Answer :-

The three expense accounts related to payroll are Employee salaries expense Employee benefits expenses Employee bonus and commissions expense

B. The pay roll expenses account are cleared to zero in the following manner A special pay roll checking account and payroll cheques are used. After pay roll register has been completed a cheque is written on the company general checking account payable to payroll for the total net pay. This cheque is deposited in a special payroll checking account against which payroll cheques are written for each employees net pay. This amount is reduced to zero as soon as all employees have cashed their pay roll cheques.

C. Methods used for reconciliation of payroll accounts Financial services policy requires that salary and/or wage expenses be reconciled. In order to conform to best practices for reconciling payroll expense reconciliations should be completed for every pay period as soon as possible after payroll expenses have interfaced accounting into action.

The reconciliations should be started prior to each pay day with the timely review of the On-Cycle Payroll Register Dashboard and completed immediately following each pay day or when the accounting interface has occurred Reconciling payroll includes:

1. Verification of the compensation rate for each employee documented against an offer letter or other source document

2. Verification that salary/wages paid are correct 3. Verification employees were paid from the appropriate account