Accounting 4.03

25 June 2024
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Payroll
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The total amount earned by all employees for a pay period
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Salary
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A fixed amount of money paid to an employee for each pay period
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Pay period
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The period of time covered by the payroll period
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Payroll clerk
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The person responsible for the preparation of the payroll
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Gross earnings
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The total amount of money an employee earns in a pay period. Also called gross pay or total earnings
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Hourly wage
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An amount of money paid to an employee at a specified rate per hour worked
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Time card
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A record of the times an employee arrives at work and leaves each day. Used to calculate hours worked
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Commission
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An amount paid to an employee based on a percentage of the employee's sales
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Piece rate
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The amount of money paid to an employee for each item produced by the employee
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Overtime rate
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1 Ā½ times the hourly wage. Used to calculate wages earned on hours worked over 40 per week
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Deduction
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An amount subtracted from gross earnings
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Withholding allowance
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A deduction from total earnings for each person legally supported by the employee Reduces the amount of income tax to be withheld
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Form W-4
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Completed by each employee to provide the employer with the necessary information for determining income tax withholding
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Social Security tax
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A required federal tax paid for old-age, survivors, and disability insurance The Social Security tax rate is 6.2%.
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Medicare tax
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A required federal tax paid for hospital insurance. The Medicare tax rate is 1.45%.
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Tax base
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The maximum amount of earnings on which a tax is calculated Most tax bases vary from year to year
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Payroll register
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A form that summarizes information about the payroll for one pay period Shows total earnings, payroll withholding, and net pay of all employees.
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Net pay
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The amount left after total deductions have been subtracted from gross earnings
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Employee Earnings Record
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A business form that contains all of the payroll information for each individual employee
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Accumulated Earnings
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Reflect the year-to-date gross earnings for each employee
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Salaries Expense
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The expense account used to record employees' earnings
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Unemployment Taxes
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Taxes that are collected to provide funds for workers who are temporarily unemployed
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Federal Unemployment Taxes
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Calculated based on employee earnings The federal unemployment tax is 6.2% of the first $7,000 earned by each employee Employers may deduct 5.4% of the federal unemployment tax if they pay unemployment taxes to the state.
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State Unemployment Taxes
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Calculated based on employee earnings The state unemployment rate and tax base is set by each state and varies from year to year.
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Payroll Tax Expense
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The expense account that is used to record the employer payroll taxes
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Federal Tax Deposit Coupon (Form 8109)
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The form used by the employer to pay Social Security, Medicare, and federal income taxes to the Internal Revenue Service
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Electronic Federal Tax Payment System (EFTPS)
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The online system that is used by larger businesses to remit payroll taxes
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Form W-2
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The form that summarizes an employee's earnings and deductions for the calendar year
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Form W-3
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The transmittal form filed by the employer that summarizes the earnings and deductions for ALL employees for the calendar year
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Form 941
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The employer's quarterly federal tax return that reports accumulated amounts of Social Security, Medicare and federal income tax withheld from employee's earnings, as well as the Social Security and Medicare taxes owed by the employer
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Form 940
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Used to report the employer's federal unemployment tax for the calendar year