Human Resources Flashcards
Discuss government regulations in business.
Government regulations apply to three specific areas of the workplace: regulation, labor/management relations, and discrimination prevention. By the government’s stepping in, employees have a way to ensure they are treated fairly and in accordance with the law, as well as a way to address issues that are questionable or blatantly against regulation (the government’s basic intention is to protect both workers and employers).
Describe the Fair Labor Standards Act
The Fair Labor Standards Act (also called the Wage and Hour Law) concerns employees’ wages and hours. The Act covers several areas, including the aforementioned wages/hours, but additionally child labor and cases considered exemptions to the Act. The Act states that overtime is to be paid at time-and-a-half for hours worked over 40 in a single week (not necessarily over 8 hours in a single day, but a total of OVER 40 hours in a single week), and that children’s work must be regulated in order to avoid child abuse. An amendment was passed in 1973, and since then, the law states that men and women must be paid the same wage if they are doing the same work. The Act applies to union and nonunion employees, and covers almost all workers in businesses that sell or produce items for sale across state borders. Within a state, most employees are covered by similar state laws. Minimum wage is set by Congress every year, and sets in the amount for hourly workers that a company may not pay below for employees who are covered by the Act. Those not covered include some salespeople, those who work seasonally (e.g. a ski area or a summer pool), workers in the fishing industry, people who are typically salaried (professionals, managers, supervisors, executives, etc.), and some student-or disabled-learner workers.
Discuss the job order costing and process costing methods for cost accounting.
Costs must be accounted for in order to be legal and for management to have the information it needs to continue to operate effectively. Usual methods include job order costing and process costing. Job order costing is used when companies have jobs that can be separated into parts easily, such as production of a new home or a road. Here, the labor costs and materials are added. Labor costs can be direct (wages of builders, operators, etc.) or indirect (supervisors, inspectors, maintenance, etc.); material costs can be direct (raw materials) or indirect (small items that are hard to count or classify and whose value is minimal). The manufacturing overhead is counted as all of the overhead costs (both fixed and variable) such as salaries, rent, utilities. Process costing is used in situations where companies have ongoing costs and jobs cannot be divided up into jobs, but are continuous due to nonstop production. Here, costs are analyzed periodically rather than at the completion of a specific job.
Variation-the differences between the budgeted and actual amounts, judged after an evaluation period; when expenses are less or revenue is greater than the budget, it’s a favorable variance (the opposite situation is an unfavorable variance).
Static budget-this budget is set once and does not change, regardless of production; used to check results, but is not as accurate as a flexible budget.
Flexible budget-budgets prepared for several scenarios; e.g. a budget is prepared for company producing 5, 10, or 25 thousand parts, then the actual production rate is used and checked against the portion of the budget corresponding with the appropriate level of production.
Define: forecasting (in an accounting sense).
Forecasting is a term that describes the process by which a company predicts the future needs related to development of a company. When forecasting, companies must look at the short term (months), medium term (three months to two years), and long term (two plus years) periods. Most often, a shorter-term forecast can be considered to be more accurate than a longer-term one, as future circumstances may change. Forecasts include a look at sales, expenses, demand for product, etc. To forecast, companies can look at past performance and make predictions using time-series or regression models, or they can use intuition and knowledge to predict future results (used especially when a company or product is new). Usual forecasts include ranges of data, such as a predicted rate of production of 15 thousand units plus or minus 10 percent. If a budget is prepared, a forecast can then be prepared and is called a proforma financial statement, which is used to help evaluate the budget and plan for future needs.
Define the following financial statement analysis and managerial accounting terms and/or procedures: FIFO, LIFO, weighted average, specific identification.
FIFO, LIFO, weighted average, specific identification: Inventory has to be assigned a value in order to account accurately for it. There are several ways in which to assign a value, as follows:
* Specific identification is inventory of which each and every piece has a specific price assigned.
* Weighted average inventory is that which is priced by multiplying each item by a weighted average price.
LIFO/FIFO-last-in/first-out (the last item purchased is the first sold) and the first-in/first out (the firs item purchased is the first item sold)-this inventory is priced according to either the most recent or first items purchased.
Variation-the differences between the budgeted and actual amounts, judged after an evaluation period; when expenses are less or revenue is greater than the budget, it’s a favorable variance (the opposite situation is an unfavorable variance.)
Static budget-this budget is set once and does not change, regardless of production; used to check results, but is not as accurate as flexible budget.
Flexible budget-budgets prepared for several scenarios; e.g. a budget is prepared for a company producing 5, 10, or 25 thousand parts, then the actual production rate is used and checked against the portion of the budget corresponding with the appropriate level of production.
Define the following financial statement analysis and managerial accounting terms and/or procedures: balance sheet, assets, inventory.
Balance sheet: a financial statement that includes owners’ equity, liabilities, and assets of an entity.
Assets: These include, but are not limited to, investments property, current assets (cash, notes receivable, temporary investments, accounts receivable, inventory), equipment, plant, intangible assets, etc.
Inventory: inventory is an asset owned by a business, and is merchandise kept in order to sell in the future. Manufacturing companies usually have three different kinds of inventory accounts (control accounts), including completed products (finished goods), raw materials that are on hand to manufacture completed products, and goods that are in the process of being manufacture but are not yet complete. A merchandising firm (one that sells goods but does not make them) typically has only one control account to manage inventory (all of this type of firm’s inventory is on hand waiting to be sold).
Briefly define and describe the following budgetary terms: variation, static budget, flexible budget.
Variation-the differences between the budgeted and actual amounts, judged after an evaluation period: when expenses are less or revenue is greater than the budget, it’s favorable variance (the opposite situation is an unfavorable variance).
Static budget-this budget is set once and does not change, regardless of production; used to check results, but is not as accurate as a flexible budget.
Flexible budget-budgets prepared for several scenarios; e.g. a budget is prepared for a company producing 5, 10, or 25 thousand parts, then the actual production rate is used and checked against the portion of the budget corresponding with the appropriate level of production.
Define the following accounting terms and/or procedures: corporation, materiality.
Corporation: a business formed when a charter is issued from the state in which the business wants to exist, and the business has legal rights obligations just like an individual would; however, in a corporation, it’s not owned by one or more people, it’s owned by those who buy capital stock in the ; if an company (shareholders); a corporation is both a separate legal and a separate accounting entity.
Materiality: this term describes the subjective judgement call that one makes when reporting financial information; if an amount is significant to a particular company, it can be accounted less precisely (e.g. a company with $1000/mo in sales should report amounts of $500, but a company with $1 million in sales monthly would not be affected by an amount of even $1000).
Define the following terms and/or procedures: stockholders’ equity, account.
Stockholders’ equity: (also called owners’ equity) refers to the amount of money that would be distributed to the stockholders or owners AFTER liabilities are paid; at any given time, the equity is the total assets minus the total liabilities; owners’ equity increases when owners invest more in the company or when the business profits; owners’ equity decreases when the business experiences losses or it pays off liabilities by giving cash or other assets to owners (in which case, each individual owner’s equity is lessened due to some of the equity already being distributed).
Account: also called a ledger account, the account is a name given to one single place in which information is stored regarding a business; e.g. a “cash account” or a “supplier account”; can be kept/stored on computers or manually (by hand on ledger sheets, for example).
Define the following accounting terms and/or procedures: stockholders, stable dollar concept, revenue, assets/liabilities.
Shareholders: (also stockholders) the owners of stock or shares in a corporation.
Stable dollar concept: for accounting purposes, this is the assumption that a dollar is worth the same amount today as it was in the past.
Revenue: money earned by either receiving payments or other assets after providing goods or services; revenue increases are credits and decreases are debits; a revenue account is typically in a credit balance situation.
Assets/liabilities: these two terms describe debts and obligations to pay others (liabilities) and resources (assets) from which a business owner does receive or can expect to receive income (i.e. buildings, profits, inventory); when recording a business’s assets and liabilities, the accountant should use the stable dollar system, money measurement, and historical cost conventions.
Define and describe these factors to consider when preparing budgets: participative budgeting, zero-base budgeting, continuous budgeting, and control tools.
Participative budgeting-based on the teory that if you help form a plan, and your input is valued, you will probably work harder to meet the plan’s goals, this budget is designed by individuals who will then (hopefully) adopt the budget as a goal and stay motivated to reach the goal/confirm to the budget.
Zero-base budgeting-unlike a traditional budget, which is prepared by starting with the previous year’s budget and then adjusting for current situations, the zero-base means the budget starts from scratch every year and each addition or subtraction is analyzed carefully (good for monitoring expenditures).
Continuous budgeting-this sort of budget is updated on a schedule, usually every month; covers a 12-month period starting with the current month at all times.
Budgets as a control tool-a budget is a plan for success, and if followed, will usually work; as a control, the company’s operations can be checked against budgets to see if goals are being set and then an analysis or adjustment can be done on budgets or personnel/production/costs as needed.
Define and describe the following types of budgets: manufacturing overhead, selling expense, administrative expense.
Manufacturing overhead budget-separate budgets are prepared for n=both aspects of overhead (fixed and variable component costs), with the fixed portion remaining constant and the variable portion remaining dependent on ebb and flow of production budgets and schedules, maintenance costs, etc.
Selling expense budget-this budget has fixed and variable portions, with the fixed ones being advertising (discretionary) and other selling costs, and the variable ones being expenses that vary with sales volume (such as overhead costs of manufacturing).
Administrative expense budget-both fixed and variable, administrative budgets depend on several factors, such as the timing of necessary expenditures and the management’s policies for when and how expenditures may be incurred.
Define the following accounting terms and/or procedures: audit, relevance, periodicity.
Audit: an audit is a review during which an independent party checks over a company’s financial statements in order to ensure that everything has been reported correctly and accurately; usually the auditor is a CPA, and his/her review of the financials help those outside the company have more faith in the reported financial information.
Periodicity: describes the specified time intervals during which accounting is reported: typically every 12 consecutive months (a fiscal year if not starting Jan. 1, a calendar year if beginning Jan. 1).
Define the following accounting terms and procedures: going concern, conservatism, consistency.
Going concern: this term describes the fact that an entity that currently exists will continue to exist (most likely), and that financial information concerning said entity cannot be “closed” (the company is still in operation, so FINAL numbers cannot be calculated), but that all financial information is based on historical costs.
Conservatism: in order to avoid painting an inaccurate picture of a company’s financial situation, the term “conservatism” describes the practice of choosing a method of financial reporting that is LEAST likely to err on the side of overstatement of income or assets.
Consistency: this term describes the fact that once an account chooses one method of reporting financial information, he/she continues to use the same method so that results can be accurately compared.
Define the following financial statement analysis and managerial accounting terms and/or procedures: comprehensive income, retained earnings.
Comprehensive income: This term describes many different forms of income, including revenues/losses/gains reported in net income, plus gains/losses reported in stockholder equity reports. Also included are holding gains and losses on securities that are available for sale. Other comprehensive income includes gains and losses that are not a part of the original reported net income, but that still have an effect on stockholders’ equity, and this other income must be reported in on of these ways: stockholders’ equity statement, combined income statement, an income statement that is separate from the comprehensive income statement.
Retained earnings: This term describes earnings that are considered profit but are not paid to shareholders of a firm, and these earnings are reported in the section of a balance sheet called the “ownership equity section.” The company’s net income represents a retains earnings increase, while the net loss decreases the retained earnings.
