SOLUTIONS MANUAL: CHAPTER 1 END OF CHAPTER ANSWERS

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SOLUTIONS MANUAL: CHAPTER 1 END OF CHAPTER ANSWERS

ANSWERS TO STOP AND CHECK EXERCISES

Which Law?

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Which Payroll Law?

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What’s Ethical?

• Answers will vary. Some concerns include data privacy and integrity in the software

switchover, tax and employee pay integrity on the new software, and employee pay methods.

• Answers will vary. Liza could choose to ignore her sorority sister’s request, claiming

Confidentiality. She could also discontinue active participation in the sorority. In any case, Liza must not consent to her sorority sister’s request for confidential information.Payroll Accounting 2022, 8e By Jeanette Landin, Paulette Schirmer (Solutions Manual All Chapters 1-7) Excel Supplement Files Download Link at the end of this this file. 1 / 4

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Copyright © 2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.Confidential Records As the payroll clerk, your task is to protect the privacy and confidentiality of the information you maintain for the company. If a student group—or any personnel aside from the company’s payroll employees and officers—wishes to review confidential records, you should deny their request. If needed, you should refer the group to your department’s manager to discuss the matter in more depth. The laws that apply to this situation are the Privacy Act of 1974, U.S. Department of Labor OCHO-1, and potentially HIPAA.

Large vs. Small

• Large companies face issues with multiple departments, employee access to online

personnel portals, employee data security, and timekeeping accuracy.

• For small companies, the cost of outsourcing the payroll function needs to be considered.

On one hand, a small company may not have personnel who are proficient with payroll regulations and tax reporting requirements, which leaves a company vulnerable to legal actions and stringent fines. However, engaging a payroll service company may be cost prohibitive. The decision to outsource the payroll for a small company should consider the number of personnel, locations, and types of operations in which the company engages.

What Is the Difference?

• Manual payroll systems involve the use of paper and pencil recordkeeping or a

spreadsheet program, such as Microsoft Excel. This is most appropriate for very small firms. 2 / 4

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Copyright © 2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

• Computerized payroll systems can be used by any company, regardless of size. Examples

of computerized systems include, QuickBooks, Sage 100, and Microsoft Dynamics GP.These computer packages range in price, depending on the company size and operational scope.

• Outsourced payroll involves the engagement of a third party to manage a company’s

payroll data, issue employee compensation, and prepare tax forms.

• Certified payroll pertains to companies with employees who work on federal government

contracts. Certified payroll ensures that a company reports payroll expenditures of contractually allocated money.

ANSWERS TO END -OF-CHAPTER MATERIALS

REVIEW QUESTIONS

• What is the purpose of a payroll system?
• Provide for internal and external reporting of employee wages and associated taxes, payment

of employee compensation, and monitoring of benefits to employees. It also serves as a means of tracking labor costs that managers use for decision-making, budgeting, and planning.

• What are two differences between large- and small-company payroll practices?
• Small companies would have fewer employees and reporting requirements and would be less

likely to be required to have automated payroll systems.

• Large companies have more employees and greater departmentalization. This increase in

employees leads to a higher level of complexity in payroll accounting, disbursements, and 3 / 4

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Copyright © 2022 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.reporting. Larger companies may also provide Intranet portals for employee self-service options. Additionally, larger companies may need additional accuracy checks.

• What is certified payroll? Which companies must use it?
• Certified payroll is a reporting requirement for companies that work with federal contracts

that are subject to Davis-Bacon wages. Only those companies that have these types of employees would be required to complete a certified payroll.

• Why might it be a good idea to let employees manage their pay records? What are some of

the pitfalls?

• An advantage of allowing individuals to self-manage their payroll records would be the

employee would be able to answer some simple questions on their own without having to come to the payroll accountant for answers. If employees have access to their payroll records, there would be the need to allow multiple access points to the confidential information.These open channels would require security settings to ensure the requirements of confidentiality are maintained.

• What are two ways a payroll system may protect a company in the event of a visit from a

government auditor?

Answers may vary, but should contain:

• Through the establishment and maintenance of an accurate payroll system. Through timely

and accurately reporting wages and withholdings.

• What is payroll outsourcing? When might a company consider outsourcing its payroll?
• Payroll outsourcing is the process of contracting another company for the preparation,

reporting, and filing of employee payroll. Companies may consider this option if the company sees a benefit to the company that outweighs the cost of outsourcing.

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