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[Music]
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hello guys good morning
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this is your sir kevin oh again here for
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another
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tutorial or discussion about accounting
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information system this time
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we'll talk about payroll and fixed asset
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cycle
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so without further ado
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let's proceed your payroll cycle is
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a little bit self-explanatory this means
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we are going to talk about the payment
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process of salaries and wages
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to employees and normally this is the
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happiest day of our lives
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employees
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salaries
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the payroll cycle of course has the
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following steps
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so here let me enumerate first update
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payroll master file
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update tax rates and deductions third
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validate time and attendance data fourth
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prepare payroll
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five disburse payroll and lastly you
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have
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update general ledger so recording part
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on the last
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let's take number one update payroll
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master file
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so payroll master filepo this is a
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record in the hr department
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information and nandito you have of
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course
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sinocino and currently in service to the
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company
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new hires termination change in pay
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rates changing information
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transfers from and to other departments
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and everything that has to do with
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employee activity
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hr department are responsible for that
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so payroll master file update
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so next the hr or personal department
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prepares and submits
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personal action forms or personal
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action notice to the payroll department
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of the role of the hr department
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so if there is one role of the hr
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department that is most important to the
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payroll cycle it is
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the maintenance of the employee records
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and
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the personal action forms so employee
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record is the list of employees and all
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their information
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and personal action forms are the
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changes to this
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information
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department will always look to personal
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action forms
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for an employee parama verify if that
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employee is really legitimate
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it reflects changes such as new hires or
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rehire
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salary change transfer status position
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change leave of absence termination
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and everything else so all of this is
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for the purpose of
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computation of the salaries of such
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employees
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second in the process updating tax rates
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and deductions
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next would be let us look into our
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current legislation and update the tax
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rates and
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annual deduction applies to my employees
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update information about tax rates and
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other withholdings
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the payroll department makes these
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changes but changes occur infrequently
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of course
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cases on tax rates it would require
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a lot of legislative process in order to
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do that
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so just to emphasize changes in tax
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rates occur
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infrequently on to the next
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next would be time validation so just to
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recap
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employees
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and then you're also aware of any
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deductions they should be subjected from
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and tax
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including taxes next would be to
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validate if these employees
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really work during the payment period or
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salary period
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so that is time validation and
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attendance data
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employees of course in most entities
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it's usually no worth no pay so of
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course we would not be
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paying employees
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for that you have the first document in
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validating time time cards
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simply put on time card spoke they they
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keep track of
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when the employees go to work so time
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cards are
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sent to the payroll department for
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calculating the amount of employees
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paycheck
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of course attendance
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most probably there will be no pay for
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you
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so that's time cards another document in
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documenting time and attendance are
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job tickets job tickets document direct
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labor hours
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so time cards that's for paychecks
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job tickets naman this is for their
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labor hours
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employees could be working for
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production area or
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clerical area or non-production area
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so to separate job tickets from time
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cards both of them are
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essentially time capturing documents
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but job tickets are directed towards
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production area
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so for example uh if you are doing
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costing on inventory in order to
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determine
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direct labor
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is an employee in the production area
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and then their work done
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outside of the production area
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so job tickets would be used to update
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work in process
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accounts
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after job tickets have been collected
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cost accounting will create a labor
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distribution summary that would be
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forwarded to the general ledger function
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that is to finalize naga what is direct
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labor and
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any indirect labor or overhead
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so that's time and attendance data
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next it would be the main event of
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the payroll cycle it is the preparation
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of the payroll
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so no no among activities just to recap
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before we prepare the payroll and
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employee information hr
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tax and deductions time and attendance
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now when you already have the three
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you're ready to prepare the payroll
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and most of the work in the payroll
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cycle of course will happen in the
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payroll department
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the payroll department receives pay
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rates withholding data from hr
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and hours work from the production
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department
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and the payroll department clerk
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performs
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the following first
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a clerk in payroll prepares the payroll
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register so the payroll register
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contains
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the most important details in the
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computation of
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your salaries payable
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there they are the gross pay deductions
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over time pay and net pay
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among others of course next would be
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update the employee payroll records
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you remember your personal action forms
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actually the the payroll department
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already has a list of the employees
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part of that is because they have
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prepared payroll for the last month
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so for this month and mogawin payroll
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department
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inanimate list of employees and then
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update that
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by looking at the personal action forms
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personal action forms and only
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new hires terminations salary increase
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and other changes in employee status so
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your list of employees committing angal
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you have to remove it from your list
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you have to add them for my changing
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rates of course you will have to adjust
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next would be after updating the record
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after computing your
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net pay of the employees preparing the
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payroll register you would go to the
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third
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prepare employee paychecks so
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paychecks now and then these paychecks
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are sent to paymaster well talking about
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this the third and fourth step usually
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these two
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are banks responsibility not these days
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but we'll talk about that in a while
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next would be time cards personal action
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forms and copy of the payroll register
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are filed in the payroll department
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so it attacks proof or
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for the purpose of maintaining a good
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audit trail
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next would be the payroll register
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a copy of that will be sent to accounts
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payable who then prepares
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cash disbursement voucher so after the
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preparation
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of the cash disbursement voucher an ap
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clerk updates the voucher register and
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submits the voucher packet
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to cash disbursement so annoying
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accounts payable
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you will receive the payroll register
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you will make the disbursement voucher
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and then you will record that
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disbursement voucher into a vulture
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register
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and you will forward the voucher packet
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to the cash disbursement department so
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vote your packet again
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that is the disbursement voucher and the
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payroll register the long document
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and then a copy of the disbursement
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voucher is sent to the general ledger
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function
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this is for independent verification
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later by the general ledger department
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so after that is done cash disbursement
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will prepare a single check for the
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entire amount of the payroll
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and deposit it in the payroll impressed
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fund
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sony on each employee's pay
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will be totaled and that total will be
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included in a single check to be
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deposited in the payroll account of
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the company payroll impressed account so
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let's talk about payroll impress account
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it will payroll impress account it could
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be a separate bank account
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nah on purpose long is to pay
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employee salaries so the entity may set
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this
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up mainly for that single purpose
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sanupo determined mcgann on total
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liability not
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into our employees and then it
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transformed amount nyon into the payroll
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impress account
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and then the salaries of the employees
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will be taken
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from that impress account only so that's
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that
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on to the next
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so after matran's reunion fund the
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accounts payable clerk
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will keep a copy of the check along with
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the disbursement voucher and payroll
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register
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for the ap department where they will be
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filed
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so the three documents will be kept by
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the accounts payable department para
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to maintain a good audit trail next
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now the happiest day of the employee's
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life
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the disbursement of the payroll so the
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actual disbursement of paychecks to
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employees are paid either by check or by
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direct deposit
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of the net pay into their personal bank
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accounts do you remember earlier
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we deposited the total amount of payroll
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to
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a impressed account young impressed
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account
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by the bank to transfer individual
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employees paychecks so
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naka 80 m way back when direct deposits
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were not yet
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a thing the entity would prepare a
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single check
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for every employee and then it these
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checks will be given to a paymaster
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an independent distributor of those
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paychecks
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[Music]
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well actually this practice is still
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being done today pero
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not as much as it was practiced before
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atm uh the entity who performs the
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paymaster function is actually the bank
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who
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handles the payroll account so next
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employees who are paid by their deposit
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generally receive a copy of the
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paychecks
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indicating the amount deposited along
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with an earnings statement or
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facelift the purpose of the payslip
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earnings statement is
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to provide the employee with a
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computation company
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and of course the most important thing
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they need an employee
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the net pay so that ends the
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disbursement of payroll
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finally the last step in the payroll
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cycle is updating the general ledger
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so to call activities in the general
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ledger department
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the general ledger function receives
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labor distribution summary from cost
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accounting
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disbursement voucher from accounts
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payable and the journal voucher from
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cash disbursement
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and the general ledger will make the
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following entries to update
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control accounts wages and salaries
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expense debit
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work in process inventory another debit
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manufacturing overhead debbie
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so salaries expensive
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time cards inventory
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work in process that is your direct
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labor
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and manufacturing overhead is indirect
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labor they are coming
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from your job tickets of course that's
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wages payable
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and kapagnabayaran
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employees you would have to debit wages
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payable and of course credit cash
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as per usual
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so that ends your payroll cycle
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so ion as accounting information system
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is concerned
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parts of the payroll cycle that needs to
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be addressed
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internal control that might put into
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place
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we'll do them by category first is
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authorization
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so you know authorization a transaction
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cannot be processed
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if it is not authorized
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in payroll cycle personal action forms
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help payroll keep the employee records
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current preventing payroll fraud
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so so to authorize payment to employees
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kailang and mehrun payroll action forms
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if a payroll action form is not provided
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no pay should be given to a particular
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employee
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disbursement vouchers will authorize
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preparation of the payroll check
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so prepare cash disbursement
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check disbursement voucher coming from
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accounts payable
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okay next segregation of functions
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segregation of functions for the general
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concept is transaction authorization
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should be separate from transaction
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processing record keeping should be
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separate from asset custody
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ap should be separate from cash
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disbursement and payroll
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time keeping should be separate from the
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hr function
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so young so that's segregation of duties
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so supervision supervisor should observe
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timekeeping process and reconcile the
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time cards with
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actual attendance the purpose why
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supervisors are
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there is to ensure that the employees
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are actually
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going to work on time leaving work on
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time and
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generally doing their job properly so
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normally time cards would be approved by
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supervisors to
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really ensure really attended work
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so that's supervision take note that
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supervision is
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a supplementary control lung in the
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absence of other controls
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puedica magdagdagnang supervision to
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ensure that work is actually being done
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properly
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so on to the next accounting records
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here are the important documents in the
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payroll cycle
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all of them were mentioned earlier now
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so just
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go through them on your own or you can
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pause the video
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if you want after accounting records
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come access control assets
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journals ledgers and source documents
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you have time cards job tickets payroll
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register and payment action forms
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disbursement voucher cash and checks
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the main thing in access control is
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these documents
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should be restricted from anybody's
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access
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and last after access control we go with
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independent verification so independent
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verification are practically
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accuracy reviews
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supervisors verify the accuracy of done
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cards
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independent paymaster will distribute
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checks this is to prevent
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ghost employees accounts payable clerk
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verifies the accuracy of the payroll
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register and the general ledger
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will reconcile disbursement voucher
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coming from
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ap payroll register coming from payroll
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department
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and labor distribution summary
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so this is to verify general ledger this
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is to verify
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amount now salaries
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employees
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so in order to understand the payroll
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cycle
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better here i have provided you with a
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sample flow chart
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of a company and their payroll cycle
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this is a manufacturing company and
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that is evidence named production
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department
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so let's start first uh
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everything starts with the production
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department submitting time cards and job
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tickets
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to cost accounting and payroll
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departments respectively
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time cards will be for payroll
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department ito young salaries and wages
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and employees
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job tickets they will go to cost
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accounting of course for
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their labor and indirect labor
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let us take job tickets first your job
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tickets
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again will be used to finally create
00:19:08
a labor distribution summary so another
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job tickets contain the direct labor
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hours which will be posted
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into the work in process accounts
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and then of course after work in process
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has been updated in the cost accounting
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a labor distribution summary will be
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forwarded to on-page connector letter a
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that is your general ledger
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we'll talk about that later so labor
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distribution summary
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job ticket work in process labor
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distribution summary
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punta tayo is a time cards
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your time cards will be forwarded to the
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payroll department
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this is for attendance of the employees
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paris about compute and salaries
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but before that actually the payroll
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department has already received
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personal action forms from the hr
00:20:03
personal action forms they are
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employee informations that contain newly
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hires
00:20:08
uh employees who are no longer in
00:20:11
service
00:20:12
changes in pay rates and everything else
00:20:14
that has to do with computation of the
00:20:16
payroll
00:20:17
so payroll department will have two
00:20:19
inputs time cards and personal action
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forms
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after that they can now process to
00:20:24
create
00:20:25
or compute payroll
00:20:28
or salaries payable then
00:20:32
the output would be payroll register
00:20:36
and employee paychecks uh
00:20:39
once my compute young salary is payable
00:20:42
that would be the amount in the payroll
00:20:43
register
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and do take note that the payroll
00:20:45
register is a listing of
00:20:47
the net pay of each employees which will
00:20:49
be used in creating
00:20:51
employees paychecks so employees
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paychecks
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uh not really a necessary step because
00:20:58
through atm transfer i know this will so
00:21:00
if i were to modernize this
00:21:03
flowchart no longer will paychecks be
00:21:06
prepared
00:21:07
but enough about that let's go back to
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the payroll register
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it's a payroll register again it is the
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product of your time cards and
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the personal action forms so among
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the payroll register one copy will be
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filed by the payroll department together
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with the time cards and personal action
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form
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they will go into this file so path
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time card payroll register but then
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again payroll will forward a copy of the
00:21:33
payroll register to on page connector c
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and the employee's paycheck will be on
00:21:38
page connector b
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connector c will be accounts payable and
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connector b cash disbursement let's take
00:21:47
accounts payable first as in chronology
00:21:50
so accounts payable upon receiving the
00:21:54
payroll register
00:21:56
is prepare the voucher it is
00:21:59
prepare the voucher once the vouchers
00:22:03
are prepared
00:22:04
and approved they will be mainly
00:22:07
distributed or given to
00:22:09
cash disbursement function so the
00:22:12
voucher together with the evidence of
00:22:14
the creation of the vulture the payroll
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register
00:22:16
what do we call these two this is your
00:22:18
voucher packet
00:22:21
will be handed to cash disbursement cash
00:22:24
disbursement
00:22:26
will now use this information to prepare
00:22:30
the payroll check okay
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that payroll check will be
00:22:36
recorded in the check register
00:22:41
and then check nyan
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it will be signed and sent to the bank
00:22:47
so
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rica plantaio so rewind
00:22:53
accounts payable prepare the voucher
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voucher bing
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cash disbursement cash disbursement
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gagawan and check
00:23:00
the check will be recorded in the check
00:23:02
register and
00:23:03
forward yan dito ba baba
00:23:06
uh voucher payroll register check
00:23:10
and a copy of the check of course the
00:23:13
check will be given to the bank
00:23:14
and from the company's main bank account
00:23:19
is a separate young amount
00:23:22
is separate into the payroll fund
00:23:25
into the payroll account to take notlang
00:23:28
nankashna ginagami to pay salaries
00:23:30
is separated in a separate account
00:23:35
with common funds so here
00:23:38
one check sent to the bank this
00:23:42
check the payroll register
00:23:45
and the voucher is returned to the
00:23:47
accounts payable department
00:23:49
this is to inform the accounts payable
00:23:50
department now
00:23:52
hoy accounts payable this particular
00:23:54
salaries have already been disbursed
00:23:59
accounts payable
00:24:02
uh that is to acknowledge
00:24:05
salaries and once the salaries have
00:24:07
already been paid kailangan may inform
00:24:09
the accounts payable so that
00:24:11
the salaries payable record will be
00:24:14
reduced
00:24:15
so that's that so of course the accounts
00:24:18
payable department will have to file
00:24:20
that as a proof
00:24:21
and salaries for that particular period
00:24:24
so there
00:24:25
uh where did it all start
00:24:29
payroll register guinea payroll
00:24:30
department accounts payable accounts
00:24:33
payable
00:24:34
voucher together with the payroll
00:24:36
register bini gay guy cash disbursement
00:24:38
cash disbursement will now prepare
00:24:42
a check and that check will be deposited
00:24:44
to
00:24:46
the payroll account accounts payable
00:24:49
will be informed
00:24:50
a deposit and then they will acknowledge
00:24:53
by receiving
00:24:54
and filing these documents
00:24:58
so there now on page connector b
00:25:02
see on page connector b the paycheck
00:25:06
the employee paycheck they also go into
00:25:09
cash disbursement
00:25:10
but actually the paychecks will be
00:25:12
finally going into the paymaster
00:25:15
right now the paymaster function is
00:25:18
already a thing in the past
00:25:21
mastering ion is is actually the bank
00:25:25
what companies do today is
00:25:28
a corporation or an entity will have a
00:25:31
bank account
00:25:32
in a specific bank let's say bpi and
00:25:35
company nato is he will also ask all of
00:25:39
his
00:25:39
employees na na mag register bank
00:25:41
account in dpi as well
00:25:44
is every month upon sale arena
00:25:48
the company will send a payroll register
00:25:50
to
00:25:51
the bank and then the bank will take
00:25:52
care of transferring the fund
00:25:54
to a separate payroll fund and then
00:25:57
distributing it into the individual
00:26:00
employees according to the information
00:26:02
that
00:26:03
we relate to the bank so that's that
00:26:07
after the payroll has been paid general
00:26:10
ledger will now
00:26:12
do the recording process and update
00:26:15
the general ledger control accounts do
00:26:18
take note naito maganatangapna general
00:26:20
ledger
00:26:21
labor distribution summary that is for
00:26:23
updating
00:26:24
work in process
00:26:27
vulture this is as proof
00:26:31
[Music]
00:26:33
that was distributed for the salary so
00:26:36
update dinner salaries and wages
00:26:39
and of course the labor distribution
00:26:41
summary and
00:26:42
the voucher will be filed by the general
00:26:44
ledger and that ends your
00:26:46
payroll cycle quick summary
00:26:50
una you have your time cards here
00:26:54
bibigay muyankai payroll payroll time
00:26:57
card
00:26:58
together with the path payroll register
00:27:02
payroll register bbk accounts payable
00:27:04
accounts payable gagawang voucher
00:27:07
and then voucher if a forward guy cash
00:27:09
disbursement
00:27:10
cash disbursement will make a check it
00:27:13
deposit yeah
00:27:15
and the bank will transfer the fund to a
00:27:17
separate
00:27:18
payroll account then employee paychecks
00:27:21
will be handed to the paymaster the
00:27:23
paymaster will
00:27:24
distribute the cash to the individual
00:27:27
accounts of
00:27:28
the employee in which case the paymaster
00:27:30
in modern time is the bank
00:27:33
general leader will do updating of your
00:27:35
work in progress
00:27:37
and salaries and wages
00:27:40
of course everything else filed
00:27:43
that's that so that's your payroll cycle
00:27:48
and now we proceed to another subcycle
00:27:51
that is
00:27:53
that requires a little attention as well
00:27:56
that is
00:27:57
fixed asset cycle so the three main
00:27:59
activities here that we must
00:28:02
pay attention to are acquisitions
00:28:03
maintenance and
00:28:05
disposal so asset acquisition po
00:28:10
in this part
00:28:14
tanda first
00:28:18
requisition by a department in need
00:28:24
every acquisition should come from a
00:28:26
department in need for example
00:28:28
in the production department they would
00:28:30
need
00:28:31
new machinery kailang and mero request
00:28:33
from that department
00:28:37
once a request is processed by
00:28:38
department authorization by the
00:28:40
department's head or higher management
00:28:42
will have to be secured so that
00:28:44
department's head or the management
00:28:48
nah one level higher should authorize
00:28:50
the transaction
00:28:52
of course important authorization so
00:28:54
that
00:28:55
we will not be buying any unnecessary
00:28:57
items
00:28:58
authorization is very important to
00:29:01
ensure that only valid requests
00:29:03
are processed so this is to avoid
00:29:06
unnecessary or impractical purchases
00:29:11
next is one's
00:29:14
request in the expenditure cycle that is
00:29:19
also the process we will follow in
00:29:20
acquiring all our ppe items
00:29:23
next fixed asset department is
00:29:25
responsible to keep a record of all
00:29:27
fixed
00:29:28
assets so fixed asset department need
00:29:31
not be a separate department guys
00:29:33
do take note that this can be this can
00:29:36
be
00:29:37
[Music]
00:29:38
this responsibility can be given to a
00:29:40
clerk in the accounting department so
00:29:43
just like your ap clerk accounts payable
00:29:45
clerk accounts receivable
00:29:47
assigns a fixed asset down so there
00:29:52
that's asset acquisitions asset
00:29:54
maintenance uh there
00:29:56
is very little to discuss here that is
00:29:59
on depreciation lancaster just make sure
00:30:02
that the depreciation method is
00:30:04
according to what the accounting policy
00:30:07
of the company is
00:30:08
and then of course depreciation schedule
00:30:10
will have to be prepared periodically
00:30:12
depending on
00:30:13
the need of the company but of course
00:30:15
annual reporting is always
00:30:17
required onto asset disposal
00:30:25
without letting the record keeping
00:30:28
department
00:30:29
no that is fixed asset so first of all
00:30:33
the department in custody will have to
00:30:34
initiate a request for disposal which
00:30:36
will be forwarded to
00:30:38
the fixed asset accounting function and
00:30:40
they will be the ones to authorize
00:30:44
for example if you are claiming a
00:30:47
computer
00:30:49
the fixed asset accounting function or
00:30:51
the management
00:30:52
or any person at all
00:30:56
we'll have to see proof now
00:30:59
relate is for disposal
00:31:02
so that's it guys for your payroll cycle
00:31:04
and fixed asset cycle
00:31:06
thanks for watching this is your sir
00:31:07
kevin again and i will see you again in
00:31:09
our next accounting tutorial
00:31:13
bye
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