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In today’s Business Studies class, We will be discussing Procedures for making payments and Receipts. We hope you enjoy the class!
There are various means of settling a bill in business transactions. They include:
- payment by cash
- Payment by cheque: This is done by instructing the bank to pay our supplier from the money in our bank accounts.
- Payment by bank draft: A bank draft is a means of payment which the bank is guaranteeing on behalf of this customer. While a customer’s cheque can bounce, the bank draft cannot. The cheque and bank draft means of payment enables us to pay a large sum of money without the risk of carrying physical cash
- Give the means of making payment.
- Define a cheque.
WAGES AND SALARIES OFFICE:
The wages and salaries office is a section in an accounts department which is responsible for the preparation and payment of wages or salaries of employees in the organization. This office keeps good accounting records of all the wages and salaries earned by the staff in the organization.
THE ROLES OF WAGES AND SALARIES OFFICE
- Preparation of Vouchers: A voucher can be defined simply as a document representing evidence of payment
- Preparation of Payrolls: They prepare payrolls i.e. tabulated statement of salaries and wages entitlement
- Issuance of pay Advice: They issue pay advice. The pay advice is a document issued to staff members of a business organization indicating the net amount of salary payable to staff after deductions.
- Calculation of Wages: The term wages usually refers to the payment given to non-permanent worked staff or labour in the factory and one-of engagement. Such an amount can be calculated using hours worked multiplied by the rate of pay per hour. Alternatively, it can be calculated using the units of production. This method is calculated using the number of units produced multiplied by the rate of pay per unit.
A given amount of bonus can also be added to any of the above methods as required by management.
METHODS OF PAYING WAGES
- Time rate: This is a system of paying wages to workers based on time spent on the job which can be hourly or on a day’s work
- Piece rate: The amount earned as wages is related to the work done. This method can act as an incentive to increase output.
- Profit-sharing method: This is a method of paying wages under which a worker gets a standard wage and also gets an agreed part of the profit.
- Commission basis: Usually this system applies to salesmen who are paid a certain percentage of their total sales. While in some organizations salesmen are paid only a commission, in other organizations salesmen have fixed wages and they are paid a certain percentage of their total sales.
- Premium bonus system: This is a system where a worker is offered a bonus for time saved. Here wages are paid based on standard time for a given job. For instance, where two hours are given as a standard time to complete a job and a worker is able to satisfactorily complete the job in one hour, then such worker receives a bonus for one hour saved for the organization.
Stock refers to goods which are offered for sales or material which are to be used for production. In businesses, raw materials for producing goods and equipment needed for making other goods can be kept in a store. Hence, a store is a place where materials or goods are kept for future use.
In order to avoid theft, pilfering, shortage or loss, proper stock records are compulsory in a business organization. The store records as used in an organization include the following:
- Stock Requisition Form
This document is used to collect stocks from the store. It stipulates the number of stocks required and the reason for the request. This document helps to ensure orderliness in the movement of stocks in and out of the store. It helps also to detect theft of stocks from the store.
- Stock Card
This is a document prepared for each item of material to show how the stock is being issued from the store, the date on which the item is being issued, the department that made the request and the balance in the store.
- Purchase Requisition Form
This is the document completed by the purchasing department whenever the stock falls to a reorder level and stock needs to be replenished.
- Delivery Note/Gate Pass: This is a document that serves as evidence or proof that a certain quantity of goods has been authorized to be carried from the store. The storekeeper must sign this and it must be prepared in four copies: a copy for the store, one as agate pass, the original for the person collecting the goods from the store and the last copy is retained in the book.
STOCK – TAKING
This is the physical count of stocks in the store periodically. It could be quarterly, monthly, annually or bi-annually.
Advantages or importance of stock-taking
- It helps to prevent theft of stocks
- It enables the stock keeper to know the minimum and maximum re-order levels
- It helps to reveal slow-moving stocks
- It helps to prevent pilfering of stock
- It enables the accounts department to ascertain the end-of-the-year figure of stock for final accounts preparation.
Types of Stock Taking
- Annual stock-taking
- Periodic stock taking
- Perpetual stock taking
- What is stocktaking?
- Explain stock requisition
Business Studies for JSS 3 by O. A. Lawal pages 1- 21
GENERAL EVALUATION QUESTIONS
- Mention seven departments that can be found in any large organizations
- State one function of each of the department mentioned above
- Mention at least three departments found in your school
- List the factors of production and their respective rewards
- Give the other name for an entrepreneur
- Which of the following is not a means of payment? A. Cheque B. Currency C. Bank draft D. Teller
- Which of the following means of payment is the safest for the sellers? A. coins B. cheque C. goods D. bank draft.
- Pay advice is also known as a _______ A. voucher B. invoice C. payroll D. payslip.
- _____________ is a method of calculating wages A. hourly rate B. staff rate C. quarterly rate D. all of the above.
- Stock requisition note is used to __________ A. collect stock from the store B. send goods to the store C. buy goods from the suppliers D. sell goods to the customers.
- State and describe the three means of making payment.
- State two roles of wages and salaries office
- List three items that could constitute deductions on the payroll
We have come to the end of this class. We do hope you enjoyed the class?
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