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How People Make Economic Decisions

Written on April 5, 2017   By   in Uncategorized

How People Make Economic Decisions
LaWanda Burns
Eco 212
October 18, 2010How People Make Economic Decisions
In today??™s economy, the consumer is faced with making decisions daily; each choice that we make has risk associated with it. When making a decision we should keep in mind the three principles of individual decision-making, which are trade-offs, scarcity and incentive.
During these times, we face a trade-off. Trade-off is the idea that because of scarcity, producing more of one good or service means producing less of another good or service. There are simply not enough goods and services to satisfy everyone??™s consumption desire. (Wikipedia, 2010)
Scarcity is a situation in which unlimited wants exceed the limited resources available to fulfill those wants. When we decide to give up something, we lose the benefits of its services to or incur costs to obtain the benefits of the items we actually need. Making decisions requires comparing the costs and benefits of alternative courses of action (Wikipedia, 2010).
A rational decision-maker takes on an action if and only if the marginal benefit of the action exceeds the marginal cost (www.investopedia.com, n.d.). Sometimes the goals that we set for ourselves are taken for granted. We tend to put them on the side and come back for it later instead of setting a goal to complete the action.
People respond to incentives by assessing costs or profits, behaviors may change when the costs or profits change. As buyers we must price compare to find the best deal. Whether it is looking for a cell phone or searching for a home. We have to make decisions that will aid us in the end.
When purchasing a computer, I had to decide whether or not I wanted an inexpensive computer that will do minimal work or do I want an expensive computer that will execute ever task. In making my decision I had to make a marginal decision by comparing both computers, deciding on price, execution, and memory. I also looked at reviews on whether or not consumers were developing problems with their systems or was it producing excellent execution. The marginal cost of producing this product is a critical concept to economics. In general, marginal cost at each level of building includes any extra costs required to make the next unit. If producing additional computers requires, for example, building a new factory, the marginal cost of those extra computers includes the cost of the new factory. By choosing the expensive computer, I use the incentive that the unit I purchased was a touchscreen, I can use the mouse at minimum or not at all and I wouldn??™t have to upgrade to a new unit for about five years.
The principles of economics related to decision-making, is very important in this generation. Everyone is into comparison shopping and trying to obtain the best deal for their dollar. When the economy changes we tend to interact with the change, trying to adjustment to the decline. When the economy is up, we tend to buy and spend more.
Market economy is an economy in which the decisions of households and firms interacting in markets allocate economic resources. The main attribute of this economy is that it relies on privately owned firms to produce goods and services and how to produce them (Wikipedia, 2010).
Centrally planned economy is an economy in which the government decides how economic resources will be allocated. The main attribute of this economy controls all major sectors of the economy and formulates all decisions about the use of resources and the distribution of output (Wikipedia, 2010).
Mixed economy is an economy in which most economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources. The main attribute is to regulate the market for environmental concerns.References
Principle of Economics. (n.d.). Retrieved from http://www.depts.alverno.edu
Wikepedia. (2010, October 13). Wikipedia. Retrieved from http://wikepdia.com
www.investopedia.com. (n.d.). Investopedia. Retrieved from http://investopedia.com

Coomunication Development

Written on April 4, 2017   By   in Uncategorized

Communication Development of a child from birth ??“ 19 years of age.
Communication development of 6 months old:
??? Babbles and coos
??? Babbles consist of short sounds e.g. da da, ma ma
??? Laughs, chuckles and squeals
??? Cries to show distress
??? Begin to understand emotion in parent or carers voice
??? Begin to enjoy music and rhymes accompanied by actions
Communication development of 1 year old:
??? Babbling becomes more tuneful and inventive
??? Strings vowels and consonants together to make repetitive sounds
??? Use gestures to ask for things
??? Enjoy games e.g peek-a-boo
??? Understand more than they can say
??? Begin to respond to simple instructions e.g come here, clap your hands.
Communication development of 2 year old:
??? Quickly learns new words
??? Use plurals e.g. dogs
??? Makes errors e.g. drawed, sheeps
??? Starts to use negatives e.g. there no cats
??? Both active and passive vocabularies continue to increase
??? Sentences become longer although they tend to be in telegraphic speech
??? Questions are asked frequently, What And Why
Communication development of 3 year old:
??? Speech is understood by strangers
??? Sentences contain four or more words
??? Imitates adult speech patterns accurately
??? Knows and understands nursery rhymes
??? Enjoys asking questions
??? Talk to themselves during play
??? Pronouns are usually used correctly
??? Rhymes and melody are attractive
Communication development of 4 year old:
??? Vocabulary is now extensive
??? Longer and more complex sentences are used
??? Are able to narrate long stories including sequence of events
??? Play involves running commentaries
??? Can use language to share, take turns, argue, collaborate etc.
??? Begin to describe how other people feel
??? Questioning is at its peak
??? Speech is fully intelligible with few, minor incorrect uses.
Communication development of 5 year old:
??? Sentences are usually correctly structured although incorrect grammar may still be used
??? Pronunciation may still be childish
??? Have a wide vocabulary and can use it appropriately
??? Vocabulary can include shapes, colours, numbers etc.
??? Questions become more precise
??? Offer opinions in discussion.
Communication development of 6 year old:
??? Understands 13,000 words
??? Understands opposites
??? Classifies according to form, colour and use
??? Uses all pronouns correctly.
Communication development of 7 year old:
??? Understand 20,000-26,000 words
??? Understands time intervals and seasons of the year
??? Is aware of mistakes in other peoples speech
Communication development of 8 year old:
??? Form complex and compound sentences much more easily and exhibit few lapses in grammar
??? Carry on meaningful conversations with adult speakers and follow fairly complex instructions with little or no repetition
??? Able to read age appropriate texts with ease and begin to demonstrate competence with writing simple compositions
??? Have acquired various social amenities in common usage, such as please and thank you and will know when and where to use them.
Communication development of 9 year old:
??? Contribute to discussion with other children in planning and producing collaborative work with adult help, such as a short story, a simple story, a simple play, an account of personal experience or a scientific or mathematical investigation
??? Follow extended directions or instructions and long stories or factual accounts
??? Read independently for lengthy periods and, with adult help, use their reading to gain
knowledge or find out answers to questions.
??? Write for different purposes, including both imaginative and factual writing
??? Discuss possible changes to their own or group work such as the use of more effective
??? vocabulary or corrections to illogical or incorrect sequence
??? Understand the rules for spelling. Communication development of 10 year old:
??? Take in extended information, explanations and directions, from talk alone
??? Work effectively with a partner or small group of children to plan and develop a shortfactual account, story or play, and contribute to a presentation of this to other groups of children or a whole class
??? Read widely from fiction, poetry and non-fiction and discuss their preferences with other children, supporting their choice with reasons
??? Use the class or school library to select appropriate books to pursue a line of enquiry
??? Use dictionaries, contents pages and indexes to locate information
??? Produce structures pieces of independent writing, showing evidence of previous planning and organization carried out with the class teacher and/or other children
??? Make some attempt to redraft and revise their own writing, possibly including consideration of structure and content as well as spelling and punctuation

How People Make Economic Decisions

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How People Make Economic Decisions
Jeness D Weninger
ECO/212
18 October 2010
Luis Bernardo Torres Ruiz Every day, people are faced with economic situations requiring a decision to be made, whether knowingly or subconsciously. It may be something as simple as deciding between going to the movies versus renting a DVD, or as complex as calculating how much of a product or even what type of product to produce. According to Ten Principles of Economics, there are four basic principles of individual decision making that apply to all economic choices; that people face trade-offs, that the cost of something is what you give up to get it, rational people think at the margin, and that people respond to incentives (Mankiw, 2002). These decisions are what drive the economy and the goods and services produced.
It is a fact that people face trade-offs. Due to limited resources, other choices have to be made in regard to purchasing goods or services. Sometimes the good or service desired is not available because of scarcity and a decision must be made to either wait for the item to be produced at a later date or purchase another comparable item now. This principle works in tandem with the principle that the cost of something is what you give up to get it. If you decide to wait until a later date to get the item you genuinely wanted, then you are giving up the time waited to get it, making time the opportunity cost.
A general conclusion made by economists is that people are rational and therefore will make rational decisions and that they will do the best they can to achieve their objectives. According to Economics, ???Rational individuals weigh the benefits and costs of each action, and they choose an action only if the benefits outweigh the costs??? (Hubbard & O??™Brien, 2010, p. 5).
Finally, people respond to incentives that entice them to act quickly. This could be something as simple as a rebate on a vehicle. It could be as elaborate as putting up a security system to protect your home.
For many years my husband and I lived in a manufactured home in a trailer park as it was the only housing we could afford. In 2008 we both found jobs that came with higher incomes and decided it was time to move to a traditional home. As we sat down to look at the expenses of owning a home we found that we would spend less buying a new home than what we were spending on our old one, and knew immediately that this was a good trade-off. Additionally, we discovered that there were two incentives if we purchased at that given time. First we would get a better interest rate and second we would qualify for an $8000 homeowner??™s incentive for signing by a specific date. There were no incentives for us to stay in our current home at this point. We found a home that we loved and later purchased, and the only thing we gave up out of the whole situation was about 10 minutes of travel difference to our parents??™ homes.
In the above situation you can see the number of choices a home purchase requires. All day, every day, decisions like this are being made. These decisions drive the economy, and without the principles outlined above, the economy would suffer. References
Mankiw, N. (2002). Ten Principles of Economics.
Retrieved from http://academic.cengage.com/resource…/0324224729_119077.pdf
Hubbard, R. & O??™Brien, A. (2010). Economics (3rd ed.). Boston, MA: Pearson Hall

Cool Hand Luke

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Joe Ferriero
Mr. Noyes
Composition Workshop
March 5, 2010The Man with Nothing too Lose
Cool Hand Luke is a classic movie filled with imagery, allusions, and symbolism and of course, Paul Newman. This film is about a man who refuses to give into society??™s norms and rules and lives his life to the fullest until the day he dies. In this movie, there are many biblical allusions as well as Christ-like imagery that Luke portrays to the prisoners. An example of this is at the end of the movie when Dragline is spreading Luke??™s story it is like Jesus??™ disciples spreading the word of God. Even the name Luke is a biblical allusion because Luke was one of the disciples of Jesus. Also this movie portrays society and authority figures in society as the guards of the jail. The film documents how society and authority can break a person down, but it also shows the reverse about how a man with nothing to lose can affect and change people??™s lives. Finally this movie is able to incorporate the ancient Myth of Sisyphus into two key scenes; one showing Luke??™s rise and one showing Luke??™s fall. Overall, Luke??™s ability to act as a Christ-like figure showed how the guards truly act and the Myth of Sisyphus showed the audience Luke??™s rise and fall as a tragic hero.
Not one person on this planet is a perfect person, however, in the movie Cool Hand Luke, Luke emerges as the Christ-like figure that is willing to help them. In this movie there are three key scenes that display this kind of behavior. Those scenes are ???Not Staying Down???, ???The Big Event???, and ???Drag??™s special delivery???. When Luke fights Dragline, in scene eight, there is a lot of pride on the line for both men, but one is more determined for a victory than the other. Luke is beaten to a pulp; however, he continues to get back up and never quits. Luke sends many messages throughout the movie, but this message to all the prisoners and guards about not staying down and never quitting gives him more respect among the prisoners and instills fear in the guards. In ???The Big Event,??? Luke must eat fifty eggs in one hour and if he does he will win all of the money in the jail. This scene has many important biblical allusions one being that the eggs are a symbol of life and when Luke eats these eggs it is like he is giving each prisoner a new life and a new attitude about life. Also at the end of this scene Luke is laying on the table in a crucifix position, which is a clear reference to Jesus on the cross. ???Drag??™s special delivery??? is important because Luke finally realizes how much he means to all the prisoners and accepts his role as their ???savior???. Luke sends a picture of him with two girls around him and a message for the prisoners that hopefully when they are out of jail they can enjoy success. The picture gives a lot of hope and lifts the spirit of every prisoner, which is what Luke consistently did throughout this movie.
The guards represent the authorities of society and Luke cannot stand them. The guards get upset about losing control and order of the prisoners after Luke enters the prison. Three keys scenes that display this are ???Making Short Work of a Long Road???, ???Into the Box???, and ???Boss Kean??™s Ditch???. In ???Making Short Work of a Long Road??? the guards demanded the prisoners give them speed while working, but they never expected the results they got. The prisoners finished early and the guards quickly realized that Luke was becoming a leader and inspiring the prisoners to become more diligent so that they could have more free time. To end this key scene, the director faded the picture to a stop sign, which foreshadowed that the guards must stop Luke or else they will have no power. ???Into the Box??? is a scene where the guards force Luke to sleep in the box because they are fearful he may try and escape after his mother died. They are trying to establish power over Luke and they are also trying to ???correct his mind??? and change his behavior so that he follows their orders. ???Boss Kean??™s Ditch??? is the only scene where the guards successfully break Luke down and are able to get him to follow orders. The guards once again re-establish their dominance and authority over the prisoners.
The Myth of Sisyphus is about a man who angered the gods and as punishment he must roll a boulder up a hill, and once the boulder reaches the pinnacle, it falls down to the ground and he must do it over again. This is pointless and intense labor, and the original tale says that Sisyphus broke down because he could not do this anymore. In the 20th Century, Albert Camus re-interpreted this story and came to the conclusion that Sisyphus turned this into a moral victory and continued to defy the gods. In Cool Hand Luke, there were two key scenes that incorporated both interpretations of this myth and they were ???Making Short Work of a Long Road??? and ???Boss Kean??™s Ditch???. ???Making Short Work of a Long Road,??? was about Luke encouraging the men to work quickly to appease the guards and because of their hard work they finished what should have been a long and hard day of work two hours ahead of time. This scene correlates with the 20th Century re-interpreted story because they took a daunting task and turned it into a moral victory and defied the guards. The prisoners also grew more respect for Luke because of this idea and because he worked the hardest. ???Boss Kean??™s Ditch??? was the opposite case and it lead to Luke??™s demise. After a hard day of work, Luke was forced to dig a ditch and then re-fill it and dig the dirt out again. This was pointless labor and it eventually broke Luke down and all the prisoners lost all respect for Luke.
Cool Hand Luke is a unique movie because it was able to incorporate a lot of different things into the movie well. This movie accurately portrayed many allusions to the Bible and Christ-like imagery as well as show what can happen when we live under bad authorities. Luke is a tragic hero and a martyr in many ways much like Jesus Christ. For example, they both knew that they were going to die and both left this world on their own terms. Overall, this is an excellent film about a man with nothing to lose, making the best of his situation and living his life to the fullest until the day he died.

How People Make Economic Decisions

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How People Make Economic Decisions How People Make Economic Decisions
* We use economics every day in our lives, possibly without even realizing it. The four principles of individual decision-making are tools people use to make decisions for the most mundane problems. Economics affects our interaction in society a good economy equals jobs and positions in the workforce
* Trade-off is the idea of producing more of one good or service means producing less of another. Opportunity Cost is the cost of giving up the alternative of a good or service. With margins most decisions in life are made; ???at the margin.??? It refers to when a person decides to do a little more of one thing while giving up a little less of another. Incentives are ???devices??? used to entice consumers to purchase a good or services. An example of Incentives; if a retail store is has a certain video game on sale, the game is marked down $20, but if you buy the one that is on sale plus two more that are of equal value you will get a $20 gift card free.
Without realizing it I compare marginal benefits and marginal costs every time I go shopping for groceries with my oldest daughter. She is an extremely picky eater and trying to find something she likes is always a negotiation of sorts. Take canned ravioli for an example, she always goes for the most expensive name brand, granted it is not that expensive but when you are on a budget then everything counts. I ask her if she would be willing to try something else, a lesser brand, we have had lesser brands before and she didn??™t like them. We look at what the grocery store has and we decide on what to get, it is usually something in between the price range of the most expensive and the cheapest brands. By doing this we can purchase one or two more cans of ravioli that is the marginal benefit. The marginal cost is that we gave up the better brand.
An incentive that could have led me to make a different decision is a sale, by reducing the price, even for a limited time and reducing it to close to the brand we would have purchased would have made me purchase the more expensive brand. Or if the store had the product as part of a bundle sale, say, if I purchased three 12 packs of soda and I could get three cans of ravioli and a few other items free.
Decision-making is affected by economics when the consumer trades-off one thing for another. Consumers decide what is produced and what we will sacrifice to get it. Chess would be a good example of trade-off, during the game players willingly sacrifices pieces to gain better positions that would help them win the game. Economics dictates that we give up minor pieces to preserve major pieces. Incentives are another factor in decision-making with consumers, when beneficial incentives are introduced consumers are more willing to give up more than they normally would.
Economics also affects our interaction with one another; time is a factor with everyone. A person??™s time is a valuable commodity; it dictates how we interact with our friends and family. Interaction is also affected by the economy, when the economy is not at its best layoffs occur, and consumers don??™t spend as much. Instead of being in the workforce producing goods and services a person is out looking for another position.
The way the economy as a whole is affected by the principles of economics thru international and domestic trade allows individuals to specialize in an area they feel they will excel in. The standard of living in a country depends on its ability to produce goods and services. People who live in high-income countries have more televisions, cell phones, etc.
Economics is much more than money; it is a science and a philosophy. Economics is one of the forces that run the world. We have seen how it helps us make decisions, how it is involved in society and how our interaction in society is affected.

Cookrige Carpets

Written on April 3, 2017   By   in Uncategorized

COOKRIDGE CARPETSReview of the Work Activities and Effectiveness of the Accounting System at Cookridge Carpets
Contents
1. Terms of reference Page 3
2. Methodology Page 3
3. Executive Summary Page 4,5
4. Introduction Page 5,6
5. Analysis of the current system Page 7,8,9
6. Recommendations for improvement Page 10,11,12,13
to the accounting system
7. Appendices
1. Organisation chart for Cookridge Carpets Ltd
2. Organisation chart for accounts department
3. SWOT Analysis
4. Exposure to fraud at Cookridge Carpets Ltd
5. SAGE 50 Accounts Professional 2012 Cost Analysis 1. Terms of References
* This report describes the responsibility of the accountancy system, and makes recommendations for changes to the existing practice of the accounts department.
* Investigation into the weaknesses and recommendations for improving existing system and general work environment at the Cookridge Carpets. 2. Methodology
The following was undertaken before preparing this report on 28/01/2012
* Familiarisation with the organisation and structure.
* Familiarisation with the accounting system and practices.
Internet websites were studied to look at the prevention of Fraud within the business environment.
Visited websites: ftp://ftp.software.ibm.com/common/ssi/sa/wh/n/wsw14053usen/WSW14053USEN.PDF
www.pwccn.com/home/eng/forenic fraud.html
http://shop.sage.co.uk/accountslanding.aspxgclid=CIW0-Nva-K0CFVRItAodIHilqw
http://www.emagister.co.uk/association_of_accounting_technicians_aat_nvq_level_3_courses-ec170273862.htm 3. Executive Summary
The aim of the report is to identify the areas in the existing accounting system where improvement is needed.This report has identified the problem within Cookridge Carpets accounting department.The area under review
* Accounts receivable with special importance on the credit and debit card collection and accounts payable use of manual payments
* Payroll internal covering the operating of to payroll systems
* Staff training
* Accounting system in use
* Company procedures
The following recommendations
* The purchase of an accounting package SAGE 50 Account Professional 2012
* Follow exactly Company policy and procedures
* Introduction of time sheets
* Increased staff trainingResults indicate that the accounting area is a concern.
Recommendations should remove these concerns, and reduce the duplication of work as well as provide increase efficiency in processing of sales and purchases.
Better supervision and internal controls would safeguard the company against of potential fraud. 4. Introduction
* Cookridge Carpets established in 2007 by two brothers Peter and John Cookrigde. They employs twenty staff across sales delivery, cleaning and accounts. Refer to Appendix 1: Company Organisation Chart
* Cookrigde Carpets Ltd is large carpet, soft furnishing and bed dealership in Southampton.
* Company is now the main dealer for [email protected] Foam beds and mattresses.
* Directors have been very successful in Direct Sales and just began selling carpets over internet.
The Company is regulated by the Financial Reporting Council which sets out to monitor and enforce accounting and auditing standards, regulates audits, oversees the regulatory activities of the professional accountancy bodies and
* Promotes high standards of internal regulations within companies.
* Accounting standards have been developed by the Accounting Standards Board to provide the rules of accounting.
* This framework for accounting is presented by Statements of Standard Accounting Practice and Financial Reporting Standards. These items above need to be looked at and addressed to ensure the company is complying with the regulations and that policies and procedures are being submitted to members of the staff.
* The external stakeholders are the customers who will need to be provided with an easy means of making payments with the availability of credit terms and finance. Suppliers require to be paid on time with credit terms and discounts negotiated. Banks who lend the company money will need access to management accounts which will include sales, inventory cash held, payables and receivable. Tax authorities will require payments of tax due.
* Cookridge Carpets business accounting practises and policies include Payroll, Sales Ledger and Purchase Ledger. As part of a Finance team??™s monthly process, it has to produce monthly accounts these should include Profit and Loss (Income Statement), Balance Sheet (Statement of Financial Position) and a Cash Flow Statement.
* The accounting function operates the Sales Ledger which means that balances can be given to the sales dept. The accounts department can provide reports to management and order inventory via the purchase ledger. The payroll area of the accounts dept pays the staff salaries.

* Financial statements are produced for internal use and can provide the management with information on the financial state of the company. They will enable management to analyse past performance and project for future performance. The Financial statement are also an important source for the external stakeholders who will use them to assess the financial position of the company for example banks, suppliers and HM Revenue and customs.
* Financial Statements consist of the Profit and Loss account (Income Statement) which shows all gains and losses recognised in the financial period and should be included in a profit and loss account. The Balance Sheet (Statement of Financial Position) shows the assets, liabilities and the owner??™s capital of the business at a particular moment in time for example at the year end. The Balance Sheet follows the accounting equations: Assets ??“ Liabilities = Capital. The Cash Flow Statements only include items concerning the movement of cash and cash equivalents it excludes depreciation charges and bad debts written off. The Cash Flow Statement allows investors and external entities to understand how a company??™s operations are running, where the money is coming from and how it is being spent.
* All accounts payable transactions are maintained on a Microsoft excel database by the accounts payable clerk, the majority of company payments are made by the raising of manual cheques. The purchase of all stock items is made on credit terms.
* Sales Ledger transactions come via a mix of in store sales and the internet business. All sales transactions are processed onto Microsoft word by the accounts receivable clerk.
* The majority of company sales are taken under extended credit terms offered by the company, with six months interest free credit offered to all new clients.
* The payroll operates on a weekly or monthly system for paid staff and salaried staff. The payroll is operated on the SAGE accounting package with only the payroll clerk having the necessary access and training.

5. Analysis of the current system
The accountancy department at Cookridge Carpets is a small (appendix 2 Accountancy department chart). The team currently comprises of one sales ledger clerk, purchases ledger clerk and one payroll clerk. There are two part time staff and one full time member. There will be also one full time senior accounts clerk supervising the account department.
The accounts office is located on the first floor with an easy access to all staff and general public. Office it??™s often unattended. The security door to accounts office are wide open (the keypad lock is never used) allowing anyone access to what should be a security protected area.
There are four computers each for one member of staff. Computers are not connected to the server but they share this same printer. The payroll system is operating on the SAGE Payroll Software on one computer. Inventory system is kept on Microsoft Office Excel Spreadsheets. Two other computers are installed with Windows Vista and also have Microsoft Office 2007. All of them have this same password which compromise integrity of all financial information held and thread to confidential information to be accessed illegally.
Company uses few different accounting systems this could leads to duplication of data and could leave business open to fraudulent activity.
Cookridge Carpets accounting practices and policies are supported by the relevant parts of accounting system, general ledger, purchases ledger, sales ledger, payroll, costing and credit control. To show which area of accounts department works well and which needs improvement are shown in (Appendix 3 SWOT Analysis).
Sonja Douglas Wages Clerk is responsible to prepare weekly and monthly payroll information, and calculates all monies due. She also makes up pockets for the weekly paid staff and BACS for monthly paid staff together and preparing all associated returns and documentation. She has gained AAT NVQ level 2 in payroll. She works 15 hours over two full days per week. Cookrigde Carpets operates two payroll systems weekly paid in cash and monthly paid by BACS. Weekly system has many weaknesses and has resulted in number of missing, incorrectly distributed, calculated wage packets. Showroom mangers are responsible for giving wage pockets to the staff but in practise other members of staff undertake that task. This is a hazard policy which resulted in financial losses for the business. Missing weekly wage for sale person Parton Senna which could not be found anywhere and also another sales person Matthew Perkins was complaining that his weekly wage was given to his wife while he was of on holiday by the supervisor unaware he left his wife, leaving him with no money for the week. Wages should be always given to the employee by authorised person to reduce risk of fraud.
Cookridge Carpets dose not has any time keeping system so it can lead to work hours being incorrectly claimed. Company use only staff rotas instead of authorised time sheets, internal control is very poor. Incorrect wages for staff in April, no over time has been added to cover staff sickness has been overpaid.
Stefan Kalinowski is an accounts clerk. He works four day a week. He has no formal accounting training but got experience on his last role. His responsibilities are to prepare sales invoices, monthly management information, manage credit accounts and ensure that all payments are made on time.
All sale orders are received by showroom store staff for processing, and after completions are passed to the accounts department next morning Stefan can prepare and record the invoices in Microsoft Word which he uses for invoices.
There are few concerns regarding handling cash with risk of fraud:
* Sale staff should put cash in one bag at the end of the day leaving ?100 cash in each till for the following morning, which in practice dose not happens during the week. No reconciliation of individual tills and no check is increasing risk of fraud. Management should make sure that procedures are being followed. The payment for over ?700 been completed, had been made with a stolen card and was fraudulent, by middle age lady impaling that she took her husband card by mistake but she knew the pin number.
* There is no record of the deposit of ?8000 worth of beds to Memo Beds for beds ordered this month show room staff said money was collected but there is no record of this. When Stefan contacted customers to query they said that deposits has been left with sale staff. There is no record of the receipt of 20% deposit by the show room staff. It shows how poor is recording of customers deposits by the sales team. (Appendix 4 Exposure to fraud).Cookridge Carpets offers monthly payment terms to all customers at 6 months interest free credit. After this period an annual interest rate of 28.4% through Westbidge Finance. Company uses credit reference agency for new customers but there is no policy regarding the amount of credit offered to the customer which may result as a thread of bad debts. The company has a policy regarding non payment:
* Seven days overdue Stefan will phone a customer
* Fourteen days overdue phone call and letter requesting payment
* 60 days details passed to debt collection agency, however the Coorige Carpets do not often bothers following through with it because they think it??™s expensive.
More than 500 customers owed more than ?1000 each and all taking advantage of 6 months interest free credit. Over 100 customers had not paid in full in eight months and did not pay an interest, which will result in company paying interest of 8.7% to Westbridge Finance to cover this debt. All this factors contributed to big amount of the company??™s overdraft. John had been informed after telephone conversation with the bank manager that the overdraft must be reduced over next four months.
Margaret Petreson is the Accounts Payable Clerk and works 20 hours per week. Her responsibilities are to check GRN and purchase invoices, liaise with carpets, beds and soft furnishing suppliers, ensure that all payments are made on time and prepare monthly management information. She has several years of experience but not formal qualification.
Most of the company payments are made by issuing company cheques with only Peter and John being able to authorised payments. In practice number of cheques to be signed in advance and left with Margaret for supplier payments. It should be kept in the locked drawer but often cheque book is left in open drawer. Use of cheques for payments it??™s costly in terms of time and cost of processing and it could cause potential thread of fraud.
In March Margaret been reconciling the orders against inventory levels on spreadsheet, and discovered that ?5000 of an expensive carpet was uncounted for. Carpet had been ordered but not sold. After investigation missing carpet couldn??™t be found.
In April 2010 when Margaret was off Stefan took blank cheque and sent a payment to the irate supplier. He was very busy this week and forgot to inform Margaret of his actions. As each staff member work on their own computer, he did not update the accounts payable system. This could increase the threat of duplicate payments being made and increase the potential for fraud. Present economic climate is increasing number of suppliers requesting 30 day payment terms on the Cookridge Carpets which with poor credit control is leading to liquidity fears for the business.
The part time hours and flexible working time of the staff often results in accounts department being unmanned. Staff can only do their own job and can??™t cover for various accounting functions which also highlighted in the case study. This poses thread to the smooth running of the accounts department and potential for lost revenue through poor credit control.
Company does have policies and procedures but they are not followed most of the time and this has to change in order for the business to function correctly. 6. Recommendations for improvement to the accounting systemSegregation of duties
A clearer separation of authorisation and responsibilities for example blank cheques should not to be left in the open office, one person should not be responsible to do purchases ledger, authorising invoices and paying suppliers because that is increasing risk of fraud.
Solution
The Senior Accounts Clerk should ensure segregation of duties.
Benefits
Reduce potential for fraud.
The purchase of the accounting package
The main recommendation for Cookridge Carpets is to purchase SAGE 50 Account professional 2012. That is the best option as the business already operates SAGE payroll system.
Purchase of SAGE 50 would help with recording of till receipts and cash sales, process of card payment, sales and order processing as well as purchases processing, bank reconciliation and aged debtor analysis. It would need additional staff training.
Solution
Purchase of SAGE 50 Accounts Professional 2012, training for accounts staff on 3 days training also offered by SAGE. Purchase of SAGE accounting system will bring far more benefits to the company than initial set up costs in terms of time saved, increased customer relations and better financial accountability. It will reduce amount of duplicated work. System will reduce risk of fraud by providing secure payments methods with build in financial controls (see appendix 5 SAGE cost analysis).
Benefits
Faster more reliable system with clearer reporting structure. Many routine operation will be speeded up saving time and reduce salary costs. Electronic payments to suppliers will also save time and money and invoices will have fewer errors. It helps to take better control over company finance. Produce profit and loss, trial balance sheet reports with just few clicks. Automatically calculate VAT and submit returns online to HMRC. Also bank reconciliation – know what??™s in your bank at any given time. SAGE 50 professional accounts will help control over all products, prices and stock levels. For Peter and John SAGE 50 Mobile will allow them to check and manage finances on the move while they away from the office.
The only disadvantage is the initial cost of purchase SAGE and staff training but the benefits of it will be far greater then costs.
Computers access
There are no computer access rights in operation and all computers have this same password.
Solution
Current users will need to confirm which area of computer packages they required to access to. Senior Accounts Clerk will then need to reduce the access based on the information provided. Computer access should be right for the role. Time to set up password protection is minimal. Benefit is greater security and reduced risk of fraud.Security
The accounts staff should make sure that main door and drawers are kept looked when they are not in the office so unauthorised access is minimal. In the interest of data protection and customer data held at the office this should be done.Policy and procedures
Cookridge Carpets dose have some policies and procedures but they are not always followed by staff and management. New policies and procedures need to be introduces and staff made aware of them. Management should control that policies and procedures are followed to reduce risk of fraud and lost revenue. Staff should sing that they read and understand policies and procedures and have manual in need the staff to refer to.
Cash receipts should be recorded by member of staff and then signed by an authorised manager before being taken to the accounts office. Reconciliation of the tills should be done at the end of each day and ensure that they balance. Company policy for non payments should be adjusted depending on the business cash flow.Staff work hours
Company should put time sheets in place for all staff to avoid the risk of inaccurate recording of hours worked and authorised by manager in charge before being sent to the payroll section for payment.
Company should review employees working hours in accounts department and make sure that there is always member of staff in the office.Staff training
Member of staff in accounts department are able only to carry out their own individual work in their own areas. Multi tasking can be very good motivator for employees and great benefit for the company so that they can support another person work in time of absence (holidays or sickness).
Development program should be prepared in order to improve technical skills of the staff. Plans should be discussed with staff and if agreed, documented and formalised within the training program. All training and development should be recorded as continuous professional development hours within their own personal files. Once the raining is put in place it should be evaluated to ensure the success in achieving the learning objectives of each member of accounts team. All staff should receive training for SAGE 50 Accounts Professional 2012.
Stefan asked John about receiving some accounts training and John was very happy and would be willing to pay for it. Stefan could start AAT NVQ level 3 at Southampton City College for ?620+ Vat course duration 9 months. This would give Stefan a better understanding of accounting and benefit the company.
The purpose of internal controls is to provide assurance to managers that the risk of serious errors in the financial records is minimised, assets of the business are safeguarded, liabilities are identified and properly recorded and to make sure that financial records are kept up to date and as accurately as possible. Such controls should include system of authorization and approval, separation of duties, physical control over assets and internal auditing.
Internal control systems at Cookridge Carpets are not effective and need to be addressed.Supervision
Systems of internal control should include supervision so that day to day procedures are being followed. Cookridge Carpets is a small business but is growing, so does the risk of larger frauds being committed.
When it is not possible to apply enough control, the directors should at least be aware of the risks, and make decisions accordingly. Having more than one person involved in an accountancy process or a series of transactions greatly reduces the chance of fraud or theft being committed.
Managers need to carry out more checks on transactions to ensure that the risk of fraud is reduced.
Although there are initial investments required for the upgrade of the computer systems and segregation of duties may lead to staff having to learn more roles and duties which they may feel uncomfortable with, the overall benefits will outweigh the costs in the longer term.
As the company grows the efficiency and speed of the updated computer accounts package will improve accuracy of stock and payments, save time on the accounts and therefore staff costing. The segregation of duties will cut down on any fraudulent transactions.
Cookridge Carpets Ltd has a great potential in the market place which could develop into a larger and more profitable business as a result of their diversification into the soft furnishings, beds and carpets. In order to support the business over the longer term, the implementation of the recommendations will allow the business to prosper and grow within a structured environment and improve profitability over the long term, with a faster more reliable and efficient accounts function, and a more professional, accurate image.APPENDICES Appendix 1
Organisation chart for Cookridge Carpets LtdAppendix 2
Organisation chart for the Accounts DepartmentAppendix 3
SWOT Analysis
Strengths
Cookridge Carpets has a small accounting department which is easy to control and manage.Sales Ledger
Uses a credit reference agency to ensure potential new customers have no history of poor credit.
There company has a policy regarding non payments and process in place for debt recovery.
Purchase Ledger
All inventory purchases are maintained on Excel spreadsheets to show suppliers, cost prices, selling prices, profit margins and re-order levels and quantities.
The company purchases all inventory on credit terms.
Cash and banking
Cash and cheques received from customers into a day book to record the receipt, and update the ledger accounts.
Wages and salaries
Wages Clark is running the payroll system.
Salaried staff is paid monthly by BACS.Weaknesses
Managing workloads within small team can be sometimes difficult and not always managed correctly. Checklists should be provided to prioritise tasks.
Efficiency of accounting functions may be not high enough if there is no use of full potential of software and systems. Training could be provided to improve skills and efficiency of staff.Sales Ledger
Once credit score is checked ,new customer is granted an unlimited line of credit.
Company do not follow procedures with debt collection agency as owner??™s thinks it is an expensive option.
Purchase Ledger
Peter is involved in the purchasing of goods and has favourite group of supplier, mainly because they willing to sponsor his motorbike building and racing, which could potentially be a fraud risk and possibly paying inflated prices for the goods without room for negotiation of terms.
Quite often the cheques are signed blank.Cash and banking
Only for cheques there are authorised signatures required.
All cash and cheques from the tills are removed and bagged as takings from the tills, and stored in accounts office safe. Tills are not reconciled which could result in the theft of cash.
Only one person is responsible for entering cash and cheques in the books and do banking which could be risk of fraud.
Wages and salaries
All staff expect those in the accounts department, are paid weekly in cash. Any member of the sale staff who is not busy gives out pay packets. There is also no timesheets for staff to sign on the start and end of their shift.Opportunities
Cookridge Carpets are expanding especially the internet sales which could be great success for the company. It could help if they improve computer accountancy system.Sale Ledger
Company should look at the losses regarding non paying customers and go ahead with debt collection. Stefan should do accounting training.
Purchase Ledger
Potentially getting new suppliers could get company better deal and reduce risk of fraud. Also would be useful to try renegotiating credit terms with suppliers.
Wages and salaries
Only BACS should be used for paying wages for staff. Clocking cards should be used to ensure that correct amounts are being paid.ThreatsSales Ledger
Potential cash flow problems due to money owed by credit customers. There is also big bank overdraft.
Purchase Ledger
Because suppliers are on friendly bases with the owner they may not be giving the best offer for Cookridge Carpets. This should be checked by senior staff management on the regular bases.
Cash and banking
One person is putting cash and cheques and then banks them make great opportunity for cash being stolen as no one else is checking the amounts entered. There is also no record of amount of money kept in the safe. No one is reconciling petty cash. Whoever takes money from petty cash is only told to put a note of how much was taken and what for which in practice often does not happens. Wages and salaries
Anyone from sale staff can collect money from accounts department which is risk of theft.Appendix 4
Exposure to fraud at Cookridge CarpetsFraud is the use of deception with the intention of obtaining or causing loss to someone else or an organisation. Fraud normally is a combination of theft, falsification or collusion (set up between employee and someone from the outside the organisation).
Detecting fraud can be achieved by observing staff by managers or owners and good management.
There are many areas of potential fraud to be committed within Cookridge Carpets systems and the risk assessment should be completed and include setting up risk management group to identify objectives, identify areas of fraud, grade the scale of risk in each case, develop strategy to manage the risk, setting up system to detect and deal with fraud and get up and running as well as monitor the system.Appendix 5
SAGE 50 Accounts Professional 2012 Cost Analysis SAGE 50 Accounts Professional 2012 | ?1135.00 | +VAT @ 20% ?227.00 | ?1362.00 |
Total Purchase Cost | | | ?1362.00 |
Staff Training from SAGE – 5 days | ?865.00 Per Person x3 ?2595 | + VAT @ 20% ?519 | ?3114.00 |
STAFF HOURS LOST FOR TRAINING | | | |
Sonja Douglas | ?16000 / 52 = ?307.69307.69 / 37.5 = ?8.218.21 * 15 hrs = ?123.15123.15 / 2 days =61.57 per day * 5days = ? | ?307.85 | ?307.85 |
Margaret Peterson | ?16000 / 52 = ?307.69307.69 / 37.5 = ?8.218.21 * 20 hrs = ?164.20164.20 / 2.5 days =65.68 per day * 5 days = ?328.40 | ?328.40 | ?328.40 |
Stefan Kalinowski | ?16000 / 52 = ?307.69307.69 / 37.5 = ?8.218.21 * 37.5 hrs = 307.87307.87 / 4 days =76.96 per day * 5 days = ?384.80 | ?384.80 | ?384.80 |
The total cost for THE SAGE package and staff training | | | ?5497.05 |

How People Make Economic Decisions

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How People Make Economic Decisions
Introduction
Studying the basic principles of economics has altered my decision making in some sense. Ill think of opportunity cost, etc. when it comes to buying things, but when it comes to my time, I dont really think about that so much. I find that having my life follow rational principles of economics takes all the spontaneity out of it, and it just isnt fun; however, I believe it has influenced me at least a little bit.
I??™m affected through the economy because I??™m a consumer. By being a consumer I??™m a part of the system. Through elasticity/inelasticity I??™m at the whim of whoever is making the decisions at the top with some items like gasoline.
Principles of Individual Decision-Making
Society faces trade-offs: producing more of one good or service means producing less of another good or service. for example people make trade-offs – there is a cost for everything and people value goods and services based on these costs. Opportunity cost is the cost of something is what you give to obtain it. Rational decisions are at the margin – people make decisions to make themselves happy. For example, if one would prefer to have more money, they would value this against having to work more. They are comparing the marginal cost of working to the marginal benefit of additional income. People respond to incentives – people only act when there is a perceived benefit. This benefit is the incentive. In short, people do what they perceive will make them happiest. Marginal benefits are theoretical gains that you would make from some discrete action on the margin. Marginal costs are theoretical losses. For example, if you are out of shape you may consider the marginal costs and benefits of exercises. On the one hand, you will receive a benefit from working out today. On the other hand, it will take some pain and effort. It is up to you to decide whether the marginal benefit or cost is greater. If everyone acts in a manner that most pleases themselves, then human interaction involves coincidence of desires. If people can make deals to mutually improve each others lives, it will be an incentive for cooperation. Much of civilization is based on this concept – individuals selfish desires are an incentive for decision-making, cooperation, and the mechanisms of an economy.
Economic principles do affect my decision making, my interaction with others and the economy as a whole. To cite an example, when prices of chicken and hence chicken sandwiches fell, I started taking more of chicken sandwiches at restaurants and only slightly increased my eating of hamburgers whose prices remained the same. This was mere economic rationality. There was a substitution effect and income effect that increased my consumption mostly in favor of the relatively lower priced item. Given by budget constraint on lunch expenses, and given my greater preference for chicken sandwiches, I had to shift towards chicken fiord a larger number of weekday lunch meals. However, my husband argued that he would not increase the quantity of chicken for dinner, he would rather reduce it and spend the saved amount for organic green vegetables whose prices have risen and he asked me for larger amount for the family budget. But I had a fight with him. I said that my income has gone down after the Fed reduced the interest rate : my interest earnings on bond investments had declined. But he kept on nagging. So, I thought over and over again. I found that I was having excess investments: with the bond prices rising the marked to market value of my bond investments had risen. So, I sold a small part of my bond investments and booked a good profit and purchased her a nice gift and went to see Despicable Me movie and enjoyed the evening. The above was just an illustration. In everyday life, we deal with problems that are solved rationally by using economic principles of resource allocation to optimize satisfaction and costs, take advantage of price changes. Another example of marginal benefits and marginal cost associated with a decision is going to school. MC is tuition and all the money I could have earned if I worked full-time, MB is higher salary as the result of degree.
Conclusion
Economics is the study of scarcity. All things are scare, water, air, money and oil. Some things are more finite than others. We as consumers decided what we want and what we buy at a certain price point. The choices determine how much of something is produced. More demand= more supply. Price will rise and fall based on the interactions between supply and demand. Less supply coupled with high demand = high price. A glut in the market resulting in high supply and low demand = low price.
The economy is a place for these interactions. It all comes down to choices based on scarcity and price.
Resources
Economics, Third Edition, by R. Glenn Hubbard and Anthony Patrick O??™Brien. Published by Prentice Hall. [email protected] by Pearson Education, Inc. Ch01,02, 03, 06 and 09

How People Make Economic Decisions

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Running head: HOW PEOPLE MAKE DECISIONSHow People Make Decisions
Anna Moess
ECO/212
University of Phoenix
Basil Al-Hashimi
September 13, 2010How People Make Decisions
Making decisions is a part of every day life. We make decisions without even thinking about them; we go from something as simple as choosing which sweater to wear, to which route to use on our way to work, to deciding if we want to take the next step in our relationship or job in a matter of minutes. We make personal decisions as well as economic decisions. We decide if we want to take our lunch to work, or if we will pay for lunch, we decide if we drink the office coffee or buy a cup on our way in. Those are small decisions that we make in seconds, while we think and debate about bigger decisions for a while. However, the question is, what influences our decisions. This paper will discuss the three economic ideas related to individual decisions, and the author will give a personal example of a decision, what the marginal costs and benefits were, and what incentives could have changed that decision. Additionally, I will explain how the principles of economics affect decision-making, interaction, and the workings of the economy as a whole.
The three economic ideas related to individual decisions are: people are rational, people respond to economic incentives, and optimal decisions are made at the margin. Economists assume that buyers and sellers use all the information available to them to achieve their goals. Rational individuals weigh the benefits and costs of their actions, and only chose the action if the benefits outweigh the costs. Economists also point out that buyers and sellers consistently respond to economic incentives, which has been proven in late history with the cash-for-clunkers incentives, and the $5000 tax refund for homebuyers. Additionally, economists reason that the ideal decision is made when any activity is continued up to the point where the marginal benefits equal the marginal cost. In short, how much benefit do I gain from a certain purchase (Hubbard, & O??™Brien, 2010)
I will use the purchase of a big screen HDTV as a personal example. The TV had to be at 40??? wide, and a video mode of 1080P. The marginal benefit of the purchase was the entertainment value of watching television and movies on a high-definition TV. The marginal cost was investing an entire bonus check on the purchase of the TV. Different TVs were researched upon price, size, and video mode. The time of the purchase was around Father??™s Day, which meant sales in many of the electronic stores. The purchase was made for a Sony brand TV, which offered the lower range of wanted size, but offered the wanted video mode, and twice the Hz than planned. Similar to the three economic ideas, I made a rational decision by researching the product, was influenced by economic incentives, and decided at the margin of the best product for the least amount of money. The only incentive that would have changed the decision would have been a bigger screen size for little money more.
The basic principals of economics are supply and demand, and the purchase of power of consumer and seller. If the price of a product falls, the quantity of the product demanded will increase and when the price rises, the demand will fall. Both consumer and seller have an effect on this. If the seller decreases the price of an item, the consumer will buy more of that product because the consumer has more money to spend on the product. If the consumer buys more of a product because he or she needs or wants it, the price will decrease because the seller is making more money, which means the seller can produce and sell more. The purchase power of both seller and consumer are the deciding factors in the economy as a whole. The more income is available to the consumer, the more income is available to the seller to produce more and charge less. (Hubbard, & O??™Brien, 2010)
Conscious or not, we make decisions based on the three economic ideas related to individual decisions. We find all the related information to make a rational decision, we are influenced by incentives, and we decide at the margin, in which the marginal benefits outweigh the marginal costs (Hubbard, & O??™Brien, 2010). The example of the HDTV purchase showed all the economic ideas, and showed how important incentives are. Supply and demand, and purchase power are what ties the economy together and what drives it along. If the purchase power of the consumer and the seller is low, the supply and demand is low, slowing down the entire economy. Recent history has shown this to be true; our economy cannot recover until the purchase power of the consumer rises, rising the purchase power of the seller along with it.Reference
Hubbard, R. & O??™Brien, A. (2010). Economics (3rd ed.). Boston, MA: Pearson Hall.

Cookridge Carpets

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A review of the payroll system
Analysis of the Accounting Systems at Cookridge Carpets Southampton
Name:
AAT:
Centre:
Word Count: 4604
Student: Date:09 /04/13

ContentsSection Page
1. Terms of reference 2
2. Methodology 3
3. Executive Summary 3
4. Introduction 4
5. Review of the accounting system 7
6. Recommendations 10
7. Cost Benefit Analysis 11
Appendix 1 14
Appendix 2 15
Appendix 3 16
Appendix 4 17
Appendix 5 18?
1. Terms of Reference1.1 This report has been prepared to cover the requirements of the internal control and accounting systems unit of the AAT 4.1.2 The objective of this report is to analysis the accounting function of Cookridge Carpets and to identify any weakness, and then to make recommendations for improvement.2 Methodology2.1 The day to day transactions were monitored in the accounts department and it was observed for a period of six months. 2.2 The Six month diary of event was reviewed.2.3 The current policies and procedures were analysed in detail to make recommendations for appropriate changes.2.4 Researched various sites on the internet, along with help from my current employer please see appendices, bibliography.
3 Executive Summary3.1 After a review of the accounts department in particular the payroll system, a number of weaknesses were highlighted that need to be addressed. A detailed explanation of each individual problem is shown in the report.
3.2 Main areas of concern shown in the report are:
– Petty cash tin with free access to all employees.
– There is only one staff member trained on sage payroll system
– There is a weak system setup with regard to the weekly wages for the sales staff.
– There are no proper guidelines for safeguarding of the pay packets in the safe. It can be accessed by anybody on the accounts floor
– The wages clerk who calculates the wages also prepares the cheque for the amount of cash to be withdrawn from the bank. There is a high risk of fraud here, hence an overpayment can be made or fictitious employees can be created.
– The same password is used on all the computers throughout the company.
– There is no back up taken, hence is case of a power failure there can be loss of information.
– Non-integrated accounting system for sales ledger and purchase ledger, stock control.
3.3 Main recommendations shown in the report are:

– Petty cash should be signed with receipts.
– Training of one other staff member on sage payroll will ensure that there is no disruption to the weekly wages being paid on time when the wage clerk is on leave or is unable to work any extra hours.
– A robust procedure should be in place for checking and authorising rotas before passing it onto wage clerk. This is to ensure that all sales staff is paid for the actual hours worked and eliminate any underpayment or overpayment of wages.
– The safe should be locked at all times and only wages clerk or the supervisor should have the key to it.
– The wages clerk should not approve the cheque payments. Instead supervisor should check the wages calculated by the wages clerk and then approve the cheque for the authorisation.
– An individual user should be able to change the password which should be linked to the individual log in. Hence each employee should be able to have a unique password of his or her own choice and that can be kept confidential.
– All the computers should be joined in a network and data backing up should be done on daily basis.
– An integrated accounting system Sage 50 should be introduced to prepare accounts.
3.4 Based on all the recommendations being implemented, the initial cost savings will be approximately ?13800 in the first year. This will be an on-going benefit. (see appendix 4)
4 Introduction4.1 Cookridge Carpets Ltd. is a family run business and they are a large carpet, soft furnishings and bed dealership in Southampton. It is owned by two brothers Peter and John Cookridge.4.2 In terms of Cookridge Carpets, the main stakeholders are the customers who directly make purchases from their showroom or buy their products over the internet. The employees are also the stakeholders as they are responsible for the sale of carpets and beds. Other stakeholders are the suppliers, lenders and the accounting bodies themselves.4.3 The company was set up in the year 2007 however in February 2010 Cookridge Carpets became the main dealers for Memo beds in Southampton. The business not only generates revenue through the direct sales but have also been very successful in selling carpets and beds over the internet.4.4 The company employees twenty members of staff: (see appendix 1)
– 9 Direct sales staff
– 3 Internals sales staff
– 2 Cleaners
– 2 Carpet delivery drivers
– 1 Accessories sales person
– 3 Part time staff in Accounts Department. 4.4.1 The Accounts Department is further segregated into three key areas with each being responsible for a different section of accounts; Wages Clerk, Accounts Receivable Clerk and Accounts Payable Clerk. (see appendix 2)
4.5 The company uses sage payroll, accounting software for employee payroll purposes. The inventory (stock) information is maintained on Microsoft word and is used for invoice purposes.
4.6 The company produces financial statements as defined by their company status. The statements are governed by the Companies Act 2006, International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS).
4.7 The company also produces the following financial statement:4.7.1 Income statement is prepared to reflect overall revenues and expenses for the company. It summarises revenue generated from each of the products sold by the company.4.7.2 They also annually produce a statement of financial position to show a snapshot of assets and liabilities of the company. These assets and liabilities are further separated into current and non-current and equity sections of the statement details, the amount available to the company owners.
4.7.3 In accordance with IAS 7 cash flow statement is produced. This shows the liquidity of the business and examines where cash has originated from and where it was it distributed to. It also reconciles the profits for the business.4.7.4 The company currently does not have an Employee hand book, this Hand Book should contain all the company procedures relating to Health and Safety, Data protection etc. The hand book should be issued to all staff and they should sign to say they have read and understood its content, and also that they will work to the regulations and procedures contained in it.4.7.5 Changes to any regulations should be communicated to all staff and they should sign to say they have received the amendment and also that they have read and understand its content. The amendments should be filed in each individuals Employee handbook, and the Employee handbook should be updated. The companies??™ policies and procedures should also be updated to reflect any changes to regulations.
5 Review Of The accounting System5.1 In an ideal system the Payroll system should robust and free from fraud. The system should be fully integrated into the IT systems within the organisation, and staff suitably trained to operate that system. There should be some form of ??? clocking system ??? to ensure pay is set against actual time worked, and any bonus or commission payments should be linked to the actual sale to allow clear traceability. In addition there would be a designated person in charge of petty cash with all requests signed for along with the reason and receipts provided.5.1.1 After an investigation of the accounts department, it was concluded that there was sufficient control in most of the areas however the following weaknesses and frauds were identified within the payroll function:5.1.2 A notebook is inside for persons taking money out to explain what the money was used for. Unfortunately, cash is taken out of the tin without explanation , whilst this a medium impact on the company, without improved control of the petty cash the opportunity for theft or fraud is obvious.5.2 Lack of training on sage payroll:5.2.1 Currently only the wages clerk is trained to use sage payroll software. She works only two days a week. In her absence there is no one who can prepare weekly wages. This requires the wages to be made up in advance and payment of overtime and commissions can be delayed or paid in advance. The impact of paying commissions or overtime in advance, is it can impact on the cash flow of the business. In addition payments made in error can take time to recover from the staff who have been overpaid again affecting cash flow, also it could have an effect on the moral of the person having to pay back. It is also possible that mistakes may not be noticed and this could result in money that has not been earned being paid.5.2.2 Also if ever any overtime is required then the wages clerk requires a minimum of a week??™s notice. Hence when there is extra workload no other member of staff was able to assist in completing the task and there is a possibility of some jobs not being completed within the desired timeframe. If employees do not receive their payments on time this may affect their Moral, also the additional workload and pressure to complete in the desired timeframe can result in mistakes being made which may not be noticed or if they are noticed will take time and resource to correct.
5.3 Manual calculation of wages due to the employees:5.3.1 The wages clerk prepares the weekly wages information from the rotas provided and manually calculates any overtime hours worked by the staff. This can be a very time consuming process.5.3.2 Also there is scope for making an error while calculating the wages manually. As her work is not being checked by any supervisor, thus any errors made in calculation can go unnoticed. This can lead to either an employee being overpaid or underpaid in their wages.
5.4 Pay packets are not secure:5.4.1 In the current situation once the pay packets are prepared they are stored away in the office safe for the showroom manager to collect the next day for handing over to the sales and office staff. The safe in the office is not locked at all times. Also anybody can open the safe and access the pay packets from it. Thus the overall risk of money being stolen or misplaced is high.5.4.2 It also appears that there is a lack of accountability as no reconciliations are carried out confirming that what was prepared by wages clerk is being handed over to the showroom manager. Therefore if any money is missing then it will be very difficult to hold any individual responsible.5.4.3 When the pay packets are handed over to the employees, a proper sign off should be taken. Also the pay packets should only be given to the employee and not to any other individual on their behalf. The current system does not require a signature and there is no formal method of ensuring pay packets reach the correct staff. The impact of this weakness is pay packets could go missing or be stolen and Cook Ridge may have to pay an employee ??? twice ???.
5.5 Supervisor approval is not obtained:5.5.1 The wages clerk is solely responsible for the calculation of the wages for the sales and office staff. As a result there is a high risk of her committing fraud by making overpayments to some of the employees or by creating ghost employees.5.5.2 Also the wages clerk prepares the cheques for the cash withdrawal from the bank which is then authorised by the company owners. Because there is no one checking her work or authorising whatever she is calculating, hence she has an opportunity here to withdraw more cash from the bank for her personal use. This can impact on the company by removing funds that are required to operate the business this could ultimately result in losses for the company or in an extreme situation result in bankruptcy.5.5.3 The fact that the internal controls in this function are extremely weak highlights that the fraud is at a higher risk. (see appendix 3)
5.6 Lack of timesheets:5.6.1 The company owners have trusted their employees completely and have no system in place for the staff to sign in or sign out. Neither do the employees maintain time sheets. As a result the sales or office staff can show more hours worked. Due to the lack of the time sheets being prepared there is no check with the actual hours worked against the rotas. The potential impact on the company is that they pay staff for hours they have not worked, and if staff are not working the correct hours, the work that should be completed in this time, but is not may result in additional hours ( overtime ) being worked to allow it to be completed. There is also an issue if salesmen are not working the full hours to service potential customers then the company can lose sales.
5.7 Computers are on stand-alone basis:5.7.1 The computers used by the wage clerk are run on the stand-alone basis and they all share the same password. This is a high security risk as anybody can access any info on the computers and make changes to it without having an audit trail. If people are allowed access to the computers that control payroll etc. then it is possible that they could fraudulently adjust their payments or that of their colleagues. (see appendix 3)5.7.2 Also there is no contingency plan in case of a power failure etc. Hence there is a scope of loss of data. This loss of data could take a long time to replace or it may not be possible to replace it at all. The impact on the company of this lack of contingency could result in sensitive data being lost. This could result in losing problems with customers and also staff. Failure to control sensitive data may result in the company being fined under the data protection act or even potentially being sued.(see appendix 3)

5.8 Non-integrated accounting system.5.8.1 Currently Cookridge Carpet is using Excel to record sales and purchases. All suppliers are paid by cheque if funds are available at the end of the month, this is leading to inadequate purchase ledger control and an ineffective sales system is resulting in customers not paying their accounts on time. They are also using Excel for stock control. This is leading to inaccurate stock recording and ordering. In return this is affecting sales and profitability as changes can??™t be tracked and potential more errors can be made. It??™s recommended that Sage 50 should be introduced as an integrated accounting system.(see appendix 3).5.9 Lack of control to petty cash. 5.9.1 The petty cash of ?100 is drawn from the bank on a monthly basis and simply placed in a tin near the drink facilities so all staff have easy access. This presents a high potential risk of theft as anyone can take the money without getting any notice. The current system is not reconciled and people do not provide receipts.(see appendix 3)
6 Recommendations
6.1 The following recommendations are made to address the issues that have been highlighted in the payroll system. These recommendations have a minimal cost involved however the benefit is to prevent it from any scope of fraud.
6.2 Lack of training on sage payroll:6.2.1 The knowledge of using sage payroll should not be limited to the wage clerk only. Accounts receivable clerk should also be trained on using Sage Payroll. A self-study CD from sage can be used to impart knowledge of using Sage Payroll. This can be completed in approximately 12 hours or a two day classroom training course can be attended.6.2.2 If the wages clerk is absent then somebody will be available to cover her duties. When there is a requirement of any overtime she is unable to do any as she requires a minimum of one week??™s notice to work any extra hours. Therefore if such a situation arises then the account receivable clerk can cover for the extra hours needed.
6.3 Manual calculation of the wages6.3.1 The wages clerk manually calculates the wages of the sales and office staff based on the rotas provided to her on weekly basis. Instead of following this time consuming process she can use sage payroll for processing all the information and calculating all the wages that are due. This would also be time effective and would minimise any scope of making an error while doing a manual calculation. Also this way there will be optimum utilisation of the software. 6.3.2 A supervisor must check her work and do a check between the wages being calculated and the pay packets. This would eliminate any scope for errors being made while calculating the wages. Also there would be a little chance of an employee being over paid or underpaid.
6.4 Pay packets are not secure6.4.1 The pay packets that are prepared should not be placed in a safe that can be accessed by anyone. Instead a new safe should be purchased and should be locked at all times. Only the account receivable clerk should hold a spare key in case of an emergency. This would prevent the cash from being stolen or lost.6.4.2 It is necessary for the showroom manager to count and check each and every pay packet. Also he must reconcile that he has been handed over the right number of pay packets as prepared by the wages clerk. Hence there should be a sign off sheet confirming what wages clerk has prepared, is what is being received by the showroom manager for the distribution to the office and sales staff.6.4.3 The pay packets should be only given to the employee whose wages are enclosed in it and sign off should be taken from them confirming the receipt of the wages and the amount received. The wages should not be given to any relatives or friends. If the wages are given to somebody else then the employee can deny that they received their wages. This can result in making another payment to the employee and company might not be able to recover their money.
6.5 Supervisor approval required6.5.1 The showroom manager should tally and authorise the information used by wage??™s clerk for preparing the weekly salaries against the completed rotas confirming the hours worked and paid are correct. Also he should check the commission being calculated on the carpet sales and paid to the staff. 6.5.2 Once the wage??™s clerk has prepared the cheque for the cash withdrawal, it should then be approved by the showroom manager in order to confirm that the value mentioned on the cheque is exactly the same as the amount needed for paying weekly wages. Only then it should be passed onto the company owners for signing off. The scope of fraud can be eliminated if the preparation of cheque, approval and signing the cheque are done by three different individuals respectively.
6.6 Lack of timesheets:6.6.1 There should be signing in and sign off register. Hence every employee should sign in and enter time of starting their shift as soon as they come to work and also sign out and enter the time of finishing their shift. Also they should maintain individual time sheets that records their expected hours of work, shift start time, shift end time and breaks that are taken. These should be handed over to the showroom manager at the end of each week, who then can tally that with the rotas and be able to prepare the accurate information for the wages clerk to pay out the weekly wages. All this information can be maintained on spread sheets that would enable a weekly calculation of wages. The showroom manager can train all the sales staff on how to fill information on the time sheets. A thirty minutes training will ensure that they all understand the process of accurately filling the timesheets. 6.7 Computers are on stand-alone basis:6.7.1 The computers used should not be on stand-alone basis as this limits for anybody else to access the information needed. Hence if a staff member is absent then the others are unable to access the information from their computer and there can be delays in processing information. Therefore all the computers in the office should be joined in a network and each employee should have their own unique ID and password to log in.6.7.2 A back-up system should be in place. Backing up data twice a day would prevent data loss in the event of power cut.
6.8 Non- integrated accounting systems.6.8.1 Sage 50 should be installed on all accounts computers this will allow all purchases to be recorded. Delivery can then be confirmed and provision for payment authorised. Types of items e.g. Memo bed to be given a nominal code. By giving nominal codes, reports can be run on a weekly basis to check when payment is due. All sales including cash sales to be recorded onto Sage 50. This way sales can be allocated to sales person or categorised such as internet orders. The new version of Sage allows for stock levels to be kept on there. Each day when the previous sales are recorded, the stock level can be adjusted. New orders will only be raised in relation to demand. Credit sales can be given a different nominal code so that they can be tracked accordingly and ensure that at the end of the free credit period, they are contacted for payment.6.9 Lack of control to petty cash.6.9.1 cash to be kept locked in the accounts office. Petty cash receipts should be signed and then entered onto the new Sage software system. All members of accounts staff to have access and training on Sage.
6 Cost Benefit Analysis
The following costs relate to the recommendations mentioned in section 6:
– Integrated accounting system can be achieved by purchasing a Sage 50, the cost of Sage 50 will be ?595 plus ?132.5 per extra user, and ?270 for a 4 days course totalling to 24 hours of training. 10% of this cost discount the service provider will install, maintain the system. Total cost for 4 users plus training and maintenance package is ?1255.5 ( Note ??“ Information obtained from Sage Website:www.sjsoftware.co.uk/Sage50Accounts )- The training cost of an employee for sage payroll will be ?175 for a two day course totalling to 12 hours of training. This can be achieved by a self-study course CD from sage. Another option is to attend a two day Sage Payroll classroom training course at a training and consultancy centre. The cost for attending a training course can be in a range of ?175 to ?220.( Note ??“ Estimated cost based on local training company used by my current employer )- A new electronic fire and water resistant safe can be purchased from an office supplies shop and will cost the company one time investment of ?399. (Note ??“ Prices obtained via E Bay )- An IT consultancy firm can be hired for assisting in setting up all the computers on the network on a weekend. They would charge a consultation fee of ?45 per hour and the networking cost will be ?450.- The showroom manager should be approving and authorising wages prepared by the wages clerk. This will have a zero cost and the benefit is the prevention of employees being overpaid or underpaid. This will also minimise any scope for fraud.- Introducing a procedure for backing up data would benefit the accounting system in the case of a power cut. There would be slightly more work involved but no cost required. This can approximately save the company a day??™s work which is worth ?178.- Allowing the accounts receivable clerk to gain experience in Sage Payroll will result in smooth processing of wages and also improve the employee morale. Thus no overtime has to be paid to the wages clerk. This would save the company approximately another ?40 a week. Appendix 1 Appendix 2
Responsibilities of Wages Clerk (Sales Ledger):
– To prepare weekly and monthly payroll information. To accurately calculate all monies due (wages and commission)
– To make up pay packets for the weekly paid staff and prepare BACS returns for monthly paid staff
– To prepare all associated returns and documentation
– Must be willing to undertake extra hours as neededResponsibilities of Accounts Receivable Clerk:
– To prepare sales invoices
– To manage credit accounts
– To ensure that all payments are made within 90 days
– To prepare monthly management information
– Must be willing to undertake extra hours as neededResponsibilities of Accounts Payable Clerk (Purchase Ledger):
– To check GRN and purchase invoices
– To liaise with carpets, beds and soft furnishings suppliers.
– To manage accounts payable accounts
– To ensure that all payments are made accurately and on time
– To prepare monthly management information
– Must be willing to undertake extra hours as needed
Appendix 3Department Of Risk Grade Of Risk Risk Identified Consequences
Payroll High – The same employee calculates and prepares cheques for wages.- Wages are not authorised by the showroom manager.
– Can result in fictitious employees being paid.
– Duplicate payments can be made
– Over or under payment of wages to staff.
Payroll Medium – The wages are being calculated manually by the wages clerk. Errors can be made which can go unnoticed.
– As a result employees can be overpaid or underpaid. ITPetty cash
MediumMedium
– As the computers are on stand-alone basis there can be lack of accessing information. – There is a possibility of power failure and no back ups are being taken
– Cash are left in a tin unlocked with free access to every one

– As a result time is wasted and the continuity of work is not possible.- There is a scope for data loss or even losing a day??™s worth of work.- Can result in theft. Appendix 4

(Note: The cost of Fraud is estimated and could be far higher)**IT downtime is just an estimate of loss of one day??™s work in a year. However in reality it will be more than that.*** Wages clerk salary is calculated at single time for any overtime hours worked.Appendix 5Bibliography:Sites researched included.
Sage 50: www.sjsoftware.co.uk/Sage50Accounts IT consultation: http://www.rhea-solutions.co.uk/ Security Safe: http://www.thesafeshop.co.uk/contact-us.
Network Systems: http://www.capitalnetworks.co.uk

How People Make Economic Decisions

Written on April 2, 2017   By   in Uncategorized

How People Make Economic DecisionsUniversity of Phoenix
ECO212December 21, 2008How People Make Economic Decisions
People who face trade-offs are making the decision to exchange one thing of importance for another. When you wake up in the morning you start your day with making a trade-off decision. Should I sleep in a little longer or get up and start moving Choosing to sleep longer will make you feel better, but will you make it to work on time or make that important meeting or appointment The trade-offs are based on what you feel is more important. You enjoy getting a little more sleep, but maybe that important meeting will help advance your career or maybe a raise is involved. These are the trade-offs that need to be considered. A recent example is a decision to sell our 2008 spring calves to a friend for a trade of his registered horses. We thought this would be a great trade, as we didn??™t have to give shots, castrate, and tag the new calves. The horse market is extremely bad, so we weren??™t able to sell as many horses as planned. Our income would have been higher if we had kept the calves.
The cost of something is what you give up to get it. While the cost of a good or service often is thought of in monetary terms, the opportunity cost of a decision is based on what must be given up (the next best alternative) as a result of the decision. Any decision that involves a choice between two or more options has an opportunity cost (NetMBA.com, 2002-2007). This is a big decision for many older adults who have embarked on returning to school. Time is such a luxury that sometimes it is taken advantage of. A prime example is my decision to return to school. I have gone back and forth trying to figure out a way to make everything work. I always said if you can put 48 hours into a 24 hour day, my life would be so much easier. That will never happen so I must design a plan that will allow me opportunity costs. I will need to obtain my degree in order for me to advance my career and increase my salary. A degree will also give me the experience to do our business taxes instead of paying someone else to do them. Giving up time with my son, fiance, and animals will hopefully not have a lasting negative effect. I have instilled good education into my son, so he better understands why I have returned to school late in life.
Rational people think at the margin. A rational decision-maker takes action if and only if the marginal benefit of the action exceeds the marginal cost? (Slembeck, 2001). I believe there are less rational people in the world today. I see corporations making hasty decisions when it comes to marginal costs, I don??™t believe they are weighing the costs to the benefits. They are all about themselves and less into what is good for the company. You can see it on the news everyday with the financial bailout happening. CEO??™s of these corporations are still spending a ton of money on retreats, bonuses, and extravagant salaries. A personal example is with our cattle herd. We have a great registered Angus bull that produces nice long calves. I can go up and pet him, which I don??™t recommend to everyone, and has a mellow disposition. We are at a point where we have to make the decision to trade bulls with a friend or purchase a new bull. We are not able to breed him with our last year heifers because you don??™t back breed cattle. Will it cost more to purchase a new bull It will depend on how easy it is to calve with this bull; will we have a mortality rate with a new bull we are not familiar with If we trade bulls with our friend, we will be able to get information on how he breeds and what kind of calves he throws. We have to think about the cost of a new bull, which runs about $2500-3500. We have to think about the cost of calves that are hard to deliver, how aggressive this bull might be and fence he might wreck, mortality rate of the calves that don??™t make it and the difficulty on the cows who are birthing. The cost of trading bulls would be cheaper than the purchase of a new bull. The marginal benefit outweighs the marginal cost.
People respond to incentives due to rational thinking of the reward that will be given for doing something specific. Employers offer incentives for higher sales or making the company more money. This can be a cash bonus, paid days off, or a gift from the employer. It happens with business, as well as personal decisions. What is incentive for doing something beneficial I consider the incentives of owning a ranch beneficial to my happiness. I have never worked so hard, physically, in my life as I have on the ranch. The hard part of the ranch is the heat, the snow, the wind driving the cold into your bones most days in the winter. I believe my family has endured many things dealing with all the work and the incentives of having the animals is a great opportunity. This incentive has taught my son to be responsible, to raise and train horses and steers, and that hard work can bring great joy.
People will continue to make decisions based on what they learn and what they know. It might not always be a good decision, but there is always the chance to learn from a bad decision. Economics play a major role in society as everything and everyone are based on small and large decisions daily. As we look at the opportunities we have within ECO212, we will learn and experience much more than before. Economics is something I have always known, but this class will bring that knowledge to the surface. ReferencesMankiw, Nicholas G. ???The Principles of Economics,??? Chapter 1, page 4-7. Retrieved December
22, 2008 from https://ecampus.phoenix.edu/secure/resource/resource.asp

Internet Center for Management and Business Administration Inc, Business Knowledge Center,
NetMBA.com 2002-2007 NetMBA.com, retrieved December 22, 2008 from
http://www.netmba.com/econ/micro/cost/opportunity/ Slembeck, Tilman, Principles of Economics, October 1, 2006, retrieved December 22, 2008 from
http://www.slembeck.ch/principles.html