SOLUTIONS MANUAL: CHAPTER 2 END OF CHAPTER ANSWERS

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SOLUTIONS MANUAL: CHAPTER 2 END OF CHAPTER ANSWERS

ANSWERS TO STOP AND CHECK EXERCISES

What’s in the File?

• a,b,d,e
• b
• d
• a
• c

Who Are You?

• Student answers will vary. One possible way to prove both identity and employment is a currentU.S. passport. Alternatively, a

current state-issued driver’s license and a social security card will work for the purposes of the I-9.

• Student answers will vary. Many students may underestimate their estimated exemptions.

Worker Facts

• Nonexempt

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Copyright © 2016 McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

2.Exempt workers receive a fixed amount of money and generally direct the actions of other employees; nonexempt workers are eligible for overtime, and generally have their work directed by a manager.

• A beverage distribution driver, full-time life insurance agents for a single life-insurance company, home workers that use furnished

materials, traveling salespersons who workon a single employer’s behalf.Who Does Which Job?Student answers will vary. The answer should reflect a clear separation of duties,cross-training, rotation of tasks, and security protocols.Internal Controls and Audits

• b
• c

Destroy and Terminate

• Paper payroll records should be shredded or burned. Computer records should be purged from the server and all other storage

devices.

• Charlie should receive his final pay on October 12, and not later than October 13. His employer is not required to providehim with

a severance package, although he may be eligible for his accrued vacation pay.

ANSWERS TO END -OF-CHAPTER MATERI ALS

REVIEW QUESTIONS

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• What are some internal controls for a payroll department?
• Payroll system design, authorized signers, documentation, and review of the process
• Why should more than one person prepare/verify payroll processing?
• Internal controls and verification to avoid fraud or theft
• What documents are required in all new hire packets?
• I-9 and W-4
• Why are new hires required to be reported to the state’s employment department?
• The enforcement of child support and legal withholdings, ensuring immigrants are still eligible to work, verification of

professional licensing/qualifications, administration of COBRA benefits

• When must a terminated employee be paid his or her final paycheck?
• This is a state specific regulation time ranging from the point of discharge to no time requirements.
• What are the five main payroll frequencies?
• Daily, weekly, biweekly, monthly, semi-monthly
• What are some of the best practices in establishing a payroll system?
• Keep any requests for leave with the related paystubs, fileretention schedule, have more than one person responsible

for the duties/verification, and separation of duties

• What are the important considerations in setting up a payroll system?

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Copyright © 2016 McGraw-Hill Education.All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.

• Pay frequency, pay types, method of payment, benefits, manual/computerized/outsourced payroll processing, file

security system

• What are the different tasks involved in payroll accounting?
• Entering the employees, entering the hours, calculation of gross wages, preparation of paychecks, payment of taxes,

reporting requirements 10.When does a payroll record retention period begin?

• Disbursement of pay

11.What agencies or organizations can audit a company’s payroll records?

• The Internal Revenue Service (IRS)
• Federal and State Departments of Labor
• Department of Homeland Security
• Other state and local agencies
• Labor unions

12.How long must employers keep terminated employee records?

• Seven years

13.Are independent contractors included in company payroll? Why or why not?

• It depends; some independent contractors are not included in the company’s payroll, but are treated as vendors. Some

independent contractors are considered statutory employees and would be included in the company’s payroll.

14.What is the difference between termination and resignation?