The accounts office

THIS WEEK, I will look at a very important part of any organisation. Yes, the accounts office.

The accounts office in any organisation is very important as it records all purchases and sales, and the receipt and payment of money. Accounts are, therefore, kept for the following reasons: To ascertain whether a profit (or loss) has been made. To record the value of assets and liabilities.

To provide information to others about the finances of the business.

To control the finances.

To maintain accurate records of all transactions.

Some of the functions of the accounts office will, therefore, include the maintenance of:

Accounts payable

Accounts receivable

Credit control

Payroll

Petty cash

Let us now look at the payroll.

THE PAYROLL

Wages are the rewards paid to employees for the labour/services they have supplied to an organisation. There are other terms used for the rewards of services rendered depending on the nature of the work and the period for which payment is made. The other terms are:

Salaries are paid to administration workers and are paid monthly, while wages are paid weekly to production or factory workers.

Piece work is where workers are paid for each piece of work completed – for example, an assistant dressmaker may be paid $100 for every piece of garment upon completion, regardless of how long it takes.

Flat rate are equally rewarded to all employees, whether or not they perform well.

Hourly rate are paid to workers for each hour they work – they are sometimes provided with a time card and are expected to clock in and clock out; when workers arrive for work, they select their clock card from the rack and insert it in the clock which will print their card with the arrival time.

Bonus rate is a system where additional money is paid for extra output of work completed in less time than is specified.

Overtime is payment for work performed outside of the specified working hours – if the normal working hours are 8 a.m. to 4 p.m., Monday to Friday, and the employee works from 4 p.m. to 6 p.m. on any week day, he/she will be paid overtime.

Double-time is payment for time spent in work after a normal working week, or on public holidays.

Commission is additional payments made to sales representatives according to the quantity of goods sold.

WAGE AND SALARY DEDUCTIONS

In addition to the rate at which the employees are paid, it is important to note that the amount earned and the actual amount received is different, because certain deductions have to be made. These can be statutory or voluntary.

A statutory deduction is a compulsory deduction in an individual’s pay without any consent from the individual. Voluntary deductions are deductions requested by the employee from salary (wages). In Jamaica, Income Tax, National Insurance and Housing Trust are statutory deductions.

GROSS PAY

This is the actual amount that the employee receives before statutory deductions are made. To calculate the net pay, the clerk must deduct the following: tax, NIS, Housing Trust.

FORMULA

This is the amount the worker receives after deductions have been made.

See you next week, when I will complete this lesson.

Hyacinth Tugman is an independent contributor. Send questions and comments to kerry-ann.hepburn@gleanerjm.com