1) What do you mean by payroll area?

Payroll Area – 
Payroll Area is the data to be input for Org Assignment Infotype (0001). Hence, remember to create the payroll area from IMG->PM-> OM -> Org. Data->Org. Assignment->create payroll area. Here you only create a payroll area like if your co. is in US , I will create payroll areas like monthly,semi-monthly,weekly etc. Payroll Area basically will determine on which date payroll will be executed and what is the period you want to execute . ex – monthly/weekly/bi –weekly etc. 
Again, you need to go to IMG-> Payroll-> Payroll US -> Basic Settings->Payroll Org . Here you have to define period modifier and date modifier and then assign them to the payroll area you created. This will complete your payroll area configuration. However, many additional data like wagetype catalog/wage type attributes/ deductions etc. need to be configured to completely customize the payroll

2) Name mandatory infotypes required for payroll.

Mandatory Infotypes required for payroll –
Giving an exact answer to this question is not advisable. But all infotypes related to tax, time like personnel tax details, absence, attendance etc. are all required to process payroll

3) Name how payroll and time is integrated.

Integration between time management and payroll –
Yes, you integrate TM and PY through Time Evaluation . IMG -> TM-> Time Evaluation->Integration with Payroll. You first need to execute time evaluation. For exectuting Time Evaluation without clock times – use TC – PT60 . You can run time evaluation for personnel no./ payroll area. Once you execute time evaluation, the results are stored in schema TM04. To view this schema,  use TC – PE01 and search for TM04. The results are stored in B2 cluster
Now, you integrate TE and PY – through schema XT00 – TC – PE01->xtoo . You have to create/maintain this schema

4) How will you handle bi monthly payments?

Refer to my answer for payroll area and try to get the idea . 

5) What is a wage type?

Think about giving pay or deducting from the pay of an employee. Ex – you pay to an employee, an example can be basic pay, employer contribution to 401(k), employer benefits(Health/Insurance etc.), you deduct from pay – an example can be deducting tax, deducting employee contribution for 401(k), benefit deductions.

6) What do you mean by wage type characteristics?

Go to wage type attributes..and find for yourself. Explore this and you will understand. Basically wage type validity dates, also if wage-type is positive or negative etc..

7) What is processing class?

Processing class basically defines how a wage type is to be processed. If there has to be deduction, how is the deduction to be made..ifs and buts..they are the set of rules that drives your wage types

8) What are evaluation classes?

Determines the evaluation of wage type. Again you play with rules here. So be cautious

9) Explain the integration between HR payroll and FI.

I presume you are talking about posting payroll to financial accounting. You have to do this or else the payroll does not make sense, the finance has to process pay checks based on your payroll run. It is advisable to run symbolic payrolls before posting actual data.

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