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Unformatted text preview: oluntary deductions. You will learn about both types of deductions in this chapter. glencoeaccounting.glencoe.com 308-337_CH12_868829.indd 309 Personal Connection Look at your last pay stub. If money was deducted from your earnings, what do you think it was taken for? Online Connection Go to glencoeaccounting.glencoe.com and click on Student Center. Click on Working in the Real World and select Chapter 12. 309 9/15/05 11:41:40 AM SECTION 1 BEFORE YOU Calculating Gross Earnings In a private enterprise economy, people are free to work for any business they choose—as long as they meet the requirements for employment. Employers such as Ford Motor Company, Pier 1, and Symantec Corporation rely on their employees to operate the business and pay their employees for the services they perform. In paying their employees, businesses follow certain guidelines. For example, both federal and state laws require businesses to keep accurate payroll records and to report employees’ earnings. Most companies set up a payroll system to ensure that their employees are paid on time and that payroll checks are accurate. In this chapter you will learn about the payroll system. READ Main Idea Gross earnings is the total amount an employee earns in a pay period. Read to Learn… ® the two main functions of a payroll system. (p. 310) ® the different methods of computing gross pay. (p. 311) Using a Payroll System What Is a Payroll System? Key Terms A payroll is a list of the employees and the payments due to each employee for a specific pay period. A pay period is the amount of time over which an employee is paid. Most businesses use weekly, biweekly (every two weeks), semimonthly (twice a month), or monthly pay periods. The payroll expense is a major expense for most companies. To compute salary expenses, most businesses set up a payroll system for recording and reporting employee earnings information. A well-designed payroll system achieves two goals: payroll pay period payroll clerk gross earnings salary wage time card electronic badge readers commission piece rate overtime rate 1. The collection and processin...
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