SELF TEST QUESTIONS

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  1. Define a payroll system.1
  2. What is the difference between gross pay and net pay?1
  3. How is the total cost of wages and salaries to the employer calculated?1
  4. List four deductions from an employee's pay.1
  5. What must an employer do to process the payroll?2
  6. Give two ways of recording hours.3
  7. What is meant by 'piecework'?3
  8. What is the difference between overtime and flexitime?4
  9. Give two examples of when a bonus may be paid.4
  10. What is commission and who receives it?4
  11. How should payroll documentation be authorised?5
  12. Explain the steps to be taken when posting the payroll to the general ledger.7

FA1: RECORDING FINANCIAL TRANSACTIONS

EXAM-STYLE QUESTIONS

1 An employee works as a fruit-packer and paid according to the number of boxes of fruit packed. By what method of remuneration is the employee paid?

ACommission
BPaid by the hour
CPiecework
DSalaried

2 An employee is paid a basic salary of $2,000 per month. Income tax on the salary is $350 and state benefit contributions amount to $180. The employer also pays state benefit contributions of $210.

In June the employee is also entitled to a bonus of $100 on which no tax or other deductions are payable.

How much was the employee's net 'take-home' pay for June?

A$1,260
B$1,360
C$1,540
D$1,570

3 An employee earns a basic wage rate of $5.00 per hour for a 35-hour week and at the rate of time-and-a-half for any additional hours worked. Last week the employee worked 43 hours.

What is the employee's gross pay for last week?

A$175
B$215
C$235
D$322.50

4 From which account are wages and salaries paid directly to employees?

ABank
BPayroll
CWages and salaries payable
DWages and salaries expense

For suggested answers, see the 'Answers' section at the end of the book.