The 6 Steps of the Payroll Cycle
The payroll cycle, also known as the human resource management process, involves two systems: human resource management (hiring, training, evaluating, and firing employees) and payroll (paying employees for their services). The payroll cycle consists of the following steps: 1. Hiring/firing employees 2. Updating the payroll system (aka payroll master file) 3. Timekeeping and supervision 4. Payroll accounting (computing gross pay, deductions, and net pay) 5. Payroll distribution (direct deposit, preparing and disbursing checks) 6. Recording the journal entry The payroll cycle is initiated by the hiring (or firing) of an employee. Once an employee has been hired they need to be added to the payroll. Once an employee has begun working, supervisors are responsible for approving the employee’s time worked and attendance. After verifying the hours worked, the next step is to calculate each employee's gross pay, deductions, and net pay. Employees then need to be paid, either by depositing funds into employees’ bank accounts or cutting checks and distributing them to employees. The final step in the payroll cycle is to record the journal entry in the general ledger. 0:00 Introduction 1:15 Hiring/firing employees 1:58 Updating the payroll system 2:34 Timekeeping and supervision 3:49 Payroll accounting 5:13 Payroll distribution 5:40 Recording the journal entry — Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education freely available to the world. — SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS: • A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING • A 44-PAGE GUIDE TO U.S. TAXATION • A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS • MANY MORE FREE PDF GUIDES AND SPREADSHEETS http://eepurl.com/dIaa5z — SUPPORT EDSPIRA ON PATREON * / prof_mclaughlin — GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT https://edspira.thinkific.com — LISTEN TO THE SCHEME PODCAST Apple Podcasts: https://podcasts.apple.com/us/podcast... Spotify: https://open.spotify.com/show/4WaNTqV... Website: https://www.edspira.com/podcast-2/ — GET TAX TIPS ON TIKTOK / prof_mclaughlin — ACCESS INDEX OF VIDEOS https://www.edspira.com/index — CONNECT WITH EDSPIRA Facebook: / edspira Instagram: / edspiradotcom LinkedIn: / edspira — CONNECT WITH MICHAEL Twitter: / prof_mclaughlin LinkedIn: / prof-michael-mclaughlin — ABOUT EDSPIRA AND ITS CREATOR https://www.edspira.com/about/ https://michaelmclaughlin.com
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