Page 87 - Accountancy_F5

the government to enact legislation which (b) Payroll expenditures are subject to
impinge (have an effect) on employee’s various government regulations. For
renumeration. example, in tax calculations, payrolls
preparation allows identification of
Activity 3.1 the tax bracket where the employee’s
Read from various sources including salary falls.
FOR ONLINE READING ONLY
online sources on the objective,
importance of payroll accounting, (c) The payments for payroll and related
methods of employee’s remuneration and taxes are deductions which have
employee’s earnings/compensation, then, significant effect on the profit of
write shote notes in your own words.
an organisation. It is therefore very
LANGUAGE EDITING
Objectives of payroll accounting important to have an accurate system
Payroll accounting ensures precise of handling payroll issues.
recording of expenses related to all forms (d) In a way to comply with the rules and
of compensation and ensures timely laws that affect the hiring and paying
payments to employees. Payroll accounting of employees, payroll accounting is an
is generally intended to: essential accounting activity for any
(a) provide accurate and timely payment of organisation regardless of the number
remuneration to employee promptly; of workers it employs.
(b) produce and maintain the necessary
employee and employer records, (e) Calculation of employees’ earnings
statements and any reports relevant to and related withholding taxes and
and required by government agencies other deductions, serves as a basis
and statutory fund management for preparing the payroll tax returns
institutions; to be submitted to the respective tax
(c) prevent fraud; and revenue department.
(d) control the salaries and wages General considerations in
expenses. employees’ remuneration

Importance of payroll accounting Employee numeration refers to all aspects
Payroll accounting is very important to the of paying compensation and benefits to
employers, employees and the government employees for their work. This includes
on the following grounds: both monetary and non-monetary benefits.
(a) Timely and accurate preparation of Monetary benefits include wages, salaries
payroll records and payments helps to and social security contributions, paid
reduce payroll errors and irregularities, annual leave and paid sick leave. Non-
hence maintaining good employees’ monetary benefits include medical care,
moral and royalty. housing, free and subsidized goods.

Student’s Book Form Five
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