What is Payroll sheet?What is The principal methods of wages payment for accounting? and Systems of wage payment

What  is Payroll sheet?

What is Payroll sheet for account? and Systems of wage payment

What is The principal methods of wages payment for accounting?

The wages sheet is prepared for the following purposed:
• The gross wages earned by each worked during a particular pay period.
• The deduction made therefore e.g., provident fund contribution, contribution towards employee's insurance, fines, house rent and the recovery of advances, and
• The net wages payable to him.

When wages are paid on the basis of time, the wages sheet is prepared on the basis of time cards or clock cards. But when the workers are paid on the basis of output, the wages sheet is prepared on the basis of piecework cards. Wages sheets are prepared department-wise, and its preparation i

s the responsibility of the wages office (pay roll department), which is under the control of costing department.

After their completion, the wages sheets are passed on to the cashier for the payment of wages to the workers.

Systems of wage payment
The success of a concern largely, depends upon the efficiency of labor and the efficiency of labor is considerably affected by the amount of wages paid to them. Some persons are of the view that the profit of a concern can be maximized only by reducing the wages rates payable to the workers. But this view is not correct. It should be remembered that low-paid workers are usually inefficient that leads to wastage of materials, less economics use of tools, frequent breakdown of machinery and loss of time as a result of which the cost of production goes up. Reasonable and fear wages rates allowed to the workers ultimately lead to more economic use of machines, tools, materials and time. Therefore, the importance of the method of wages payment should never be under-estimated.
Methods or systems of wages payment must possess the following characteristics:
• Should be simple to operate and easy to understand.
• Should guarantee a minimum wages to every worker.
• Should be acceptable to the employer and the employee.
• Should be flexible enough so that changes may be made according to the requirements.
• Should ensure the establishment of industrial peace.
The principal methods of wages payment are as follows:
1. Time rate system
2. Piece rate system
Piece rate system

In this method, wages are paid to the employees after completion of work. Under it, a worker is paid on the basis of output, not the time taken by him to perform the work. This is one of the simplest and most commonly used systems of wages of payment. In this system, the wages rate is expressed in term of per unit of output, per job or per work-order. The amount of wages payable to a workman under this method is to be calculated as follows:

Total wages = total output x rate per unit of output,

This system is suitable in the following cases;
a. Where a work is of a repetitive natures.
b. Where the measurement of work is simple.
c. Where the quality and accuracy of output is not very important.
d. Where strict supervision is not possible.
Advantages of piece rate system
The main advantages of piece rate system are as follows:
a. Simplicity: just like time rate systems, the piece rate system is also simple to operate and easy to understand. It does not involve tedious calculations.
b. Incentive to workers: this system provides an incentive to the workers to work hard as the wages are paid on the basis of quantity of output not on the basis of time. So effort and rewards are correlated.
c. Ascertainment of accurate labor cost: since the wages are paid on the basis of output, the exact cost of labor per unit of output or job can be ascertained.
d. No payment for idle time: under piece rate system, any payment is made to the workers for the idle time as a result of which the cost of supervision is not considerable.
e. Proper care and use of machines and tools: the workers take proper care of their machines and tools since breakdown of machines and tools means decrease in output resulting in less remuneration to them.
Disadvantages of piece rate system
This system has the following disadvantages:
a. Less attention to quality: as the payment of wages is made on the basis of output, the workers, in order to maximize their output, workers with a since of hurry, which may affect the quality of the output adversely.
b. Inefficient use of machines and materials: since the wages are paid on the basis of quantity of output, an excessive wastage of materials and frequent breakdown of machinery may be caused by the workers due to their efforts to obtain maximum output.
c. No guarantee of minimum wages: since there is direct relationship between quantity of output, and wages, the workers suffer if they fail to work efficiently. There is no grantee of minimum daily wages to workers.
d. Adverse effect on workers health: the workers may try to work abnormally to earn more which has an adverse effect o their health and efficiency. So this method os not accepted by trade union.
Time rate system

Under this system, the amount of remuneration or the total wages payable to the workers depends on the time which he is employed. This is simple and common method of wages payment. In this method, the workman is paid and hourly, daily, monthly or years rate of wages.

Thus the worker is paid on the basis of time and not on his performance or unit of output. The amount of wages payable to a workman under this method is to be calculated as follows:

Total wages = actual time taken x time rate

Or, total wages = total hours worked x wages rate per hours.

This is method is suitable to be applied in the following circumstances;
• Where the quality of work is more important than production.
• Where the volume of production is not within the control of labor.
• When it is difficult to fix the unit of output.
• The nature of work is such that there is no basis for incentive plan.
• Where the amount of output cannot be accurately measured, canted and standardized.
Advantages of time rate system
This method is widely used even at the present time an account of the following advantages;
a. Simplicity: it is very easy to understand and simple to calculated the earnings of worker under this methods.
b. Guarantee of minimum wages: it grantees a minimum wages to the workers.
c. Unity among workers: under this method, all workers falling under a particular category are paid at equal rate without any consideration of their quantity of output. It encourages a feeling of equality among workers an account of which this method is also favored by trade unions.
d. Quality production: since the amount of wages is not linked with the quantity of output, this method ensures production of better quality due to the careful attention of the workers.
e. Economical: it involves less clerical work and detailed records are not necessary. Since the output is not the criteria for determination of wages, tool and materials are handled carefully. Wastage are also minimized.
Disadvantages of time rate system
This method has the following disadvantages:
a. No incentive to the efficient workers: this system lacks incentive to efficient workers since all workers are paid equally and no distinction is made between efficient and inefficient workers. So, efforts and reward are not correlated.
b. Go-slow policy: the works, in order to earn higher wages for overtime work, may try to perform. So, efforts and rewards are not correlated.
c. Dissatisfaction among the efficient worker: the efficient workers are paid wages at the rate equal to those payable to inefficient workers, which created dissatisfaction among the efficient workers.
d. Payment for idle time: under this method, idle time of the workers is also paid that Increases the cost of production.
e. High cost of supervision: since there is no direct link between quantity of output and wages, wastage of time on the part of the worker is common, the avoidance of which requires considerable supervision leading to increased costs.
Features of a good system of wages payment
The features of a good system of wages payment are mentioned below.
a. Suitable for both employer and employee
b. Simple to understand and easy to apply
c. Economic system
d. Guarantee minimum wages.
e. Assure the equal wages for similar job.
f. Encourage the competent workers.
g. Accepted by trade union.
h. In accordance with the law of country.

i. Flexible.