Accounting 2 Chapter 12

electronic funds transfer

A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents.

withholding allowance

A deduction from total earnings for each person legally supported by a taxpayer, including the employee.

Medicare tax

A federal tax paid for hospital insurance.

social security tax

A federal tax paid for old-age, survivors, and disability insurance.

Salary

A fixed annual sum of money divided among equal pay periods.

commission

A method of paying an employee based on the amount of sales the employee generates.

401(k)

A qualified retirement plan sponsored by an employer.

Roth individual retirement account

A qualified retirement plan that allows tax-free withdrawals from the account.

individual retirement account

A qualified retirement plan that provides most individuals with a deferred federal income tax benefit.

qualified retirement plan

A retirement plan approved by the Internal Revenue Service.

tax base

The maximum amount of gross earnings on which a tax is calculated.

pay period

The number of days or weeks of work covered by an employee's paycheck.

direct deposit

The payment of an employee's net pay using electronic funds transfer.

payroll

The total amount earned by all employees for a pay period

voucher

A check with a detachable check stub that contains detailed information about the cash paymen

time clock

A device used to record the dates and times of every employee's arrivals and departures

payroll deduction

Any amount withheld from an employee's gross earnings

payroll taxes

Taxes based on the payroll of a business

payroll clerk

The accounting staff position that compiles and computes payroll data, then prepares, journalizes, and posts payroll transactions.

Wage

The amount paid to an employee for every hour worked

total Earnings

The total amount paid by a business for an employee's work, earned by a wage, salary, or commission

net pay

The total earnings paid to an employee after payroll taxes and other deductions.

accumulated earnings

The total gross earnings year to date for an employee