scr banking maths 2.docx

7/27/2019 SCR Banking MAths 2.docx

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1. III. k+t

a) None

b) I only

c) II only

d) III only

e) I,II and III

Solution:

First, you must find out whether k

and t are odd or even. This problem

is all about the results of performing

operations on even and odd

numbers.

Given that k^2 - t^2 is an odd

number, then you know that k^2 is

even, and t^2 is odd. Of course, it

could be reverse, but it shouldn't

matter because of commutative and

associative laws.

So, you then know that k must be

even, and t must be odd. Even *

Even = Even, and Odd * Odd = Odd.

Now, just go through the statements:

1: Even + Odd + Even = Odd

2: Even*Even + Even*Even*Odd +

Odd*Odd = Even + Even + Odd =

Odd

3: Even + Odd = Odd

Answer then is None (A).

2. A contractor combined x tons of a

gravel mixture than contained 10%

gravel G, by weight, with y tons of a

mixture that contained 2% gravel G,

by weight, to produce z tons of a

mixture that was 5% gravel G, by

weight. What is the value of x?

(1) Y=10

(2) Z=16

Solution:

3. Mixture 1 : 10% gravel and quantity

: x tonnes

Therefore amount of gravel : 0.1x

Mixture 2 : 2% gravel and y tonnes

Amount of gravel : 0.02y

They are mixed to produce a mixture

of z tonnes that is 5% gravel

Hence, 0.1x+0.02y=0.05z

We need x.

Statement 1

y=10

Now x+y=zx+10=z

INTANGIBALE ASSSETS

CAN BE TREATED IN THE

SAME WAY AS FIXEDASSETS.

THEY ARE NEEDED FOR

OPERATION AND ARE

ACQUIRED WITH

ENTERPRISE FUNDS.

EXAMPLE:

PATENTS CAPITALIZED

& MAY BE

EXPENSED

OVER A

PERIOD OF

TIME


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Putting it in the equation

4. Right triangle PQR is to be

constructed in the xy-plane so that

the right angle is at P and PR is

parallel to the x-axis. The x and y

coordinates of P, Q and R are to beintegers that satisfy the inequalities -

4


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digit is zero or prime AND 3rd digit is

zero or prime AND 4th digit is zero

or prime AND 5th digit is zero or

prime)

This is equal to P(1st digit is zero or

prime) x P(2nd digit is zero or prime)x P(3rd digit is zero or prime) x P(4th

digit is zero or prime) x P(5th digit is

zero or prime)

So, we get 1/2 x 1/2 x 1/2 x 1/2 x 1/2

= 1/32

Contrary to popular belief, credit

cards are a form of money even

though people often refer to

them as "plastic money. " Credit card

users are actually taking out a loan

and sooner or later, they will have to

pay the bill for all those things they

have charged. They are buying

something now and agreeing to pay

for it at a later date with money,

usually a check.

Many banks issue credit cards, even

to people who aren't regular

customers. Before issuing you a

credit card, a bank will require you to

complete an application form and will

examine your credit record to see if

you have a history of paying back

your debts on time. Many people run

up credit card bills that are too big to

pay off every month. When thathappens customers must pay a

monthly finance charge that can run

anywhere from 10 percent to 24

percent a year. In addition, many

banks and other companies that

issue credit cards charge their

cardholders an annual fee usually

$20 to $50 a year. Even customers

who pay off their entire credit card bill

every month still have to pay theannual fee. Banks and credit card


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companies also charge merchants a

fee for making the credit card service

available. Finance charges, annual

fees, and merchant fees have

become an important source of profit

for banks.

Finally there's another plastic card

that resembles a credit card in

appearance but is actually very

different in functionthe debit card.

A debit card is much more like an

ATM card than a credit card. When

someone uses a debit card at the

gas pump or at a store, the amount

of the purchase is electronically

deducted from the user's bank

balance. There's no monthly bill

because the amount of cash

purchase is deducted almost

immediately from the users account.

What Happens to

Your Money After

You Deposit it in

Your Bank

Account?

The bank begins by adding the

amount you're depositing to the

amount that's already in your

account (your existing balance).

Your deposit and new balance are

entered into your "passbook" and into

the bank's computer system. The

money you deposited is mixed in with

all the other cash the bank received

that day.


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When you and other customers

deposit money in a bank, the bank

puts most of it to work. Part of the

money is set aside and held inreserve, but much of the rest is

loaned to people who need to borrow

money in order to buy houses and

cars, start or expand businesses, buy

farm equipment or to plant crops, or

do any of the other things that require

people to borrow money.

Interest - Compounding

When you keep your savings in a

bank, the bank pays you extra

money, which is called interest. The

interest is added to your account on

a regular basisusually once a

month or once every three months

(quarterly). Compounded interestmeans that interest is added to your

balance (usually quarterly), then the

next quarter the interest is computed

on your money deposited plus the

last quarter interest.

Example: New Balance = $500. 00

Interest rate = 5% Annual = $25. 00

New Balance = $500. 00Interest rate = 5% Compounded

quarterly = $25. 72

You would earn $. 72 more with the

interest compounded quarterly and

the annual yield rate would be 5.

14%. Banks must disclose to you if

the savings account is compounded

and how often it is compounded andgive you the annual yield rate as a


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result of the compounding. Some

banks may compound interest as

often as daily. The shorter the

compound period, the higher the

yield rate would be.

There is another side to interest.

When someone borrows money from

a bank, the bank charges them

interest and it charges borrowers a

higher rate than it pays savers. For

example, it might pay savers 5% and

charge borrowers 8% on up to as

high as 25% imposed on some bank

credit cards.

A bank is a business and like other

businesses, banks sometimes fail.

But why should banks go out of

business? Sometimes banks fail

because the people who run them

make poor business decisions such

as expanding too quickly, pushing

too much money into one type of

loan, or using bad judgment makingloans. Sometimes banks fail

because of fraud. Maybe the

president makes questionable loans

to friends or hires unqualified people

and pay them huge salaries.

Things like that happen The bank

begins by adding the amount you're

depositing to the amount that'salready in your

account (your existing balance).

Your deposit and new balance are

entered into your "passbook" and into

the bank's computer system. The

money you deposited is mixed in with

all the other cash the bank received

that day.


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When you and other customers

deposit money in a bank, the bank

puts most of it to work. Part of the

money is set aside and held in

reserve, but much of the rest is

loaned to people who need to borrowmoney in order to buy houses and

cars, start or expand businesses, buy

farm equipment or to plant crops, or

do any of the other things that require

people to borrow money.

Interest - Compounding

When you keep your savings in a

bank, the bank pays you extra

money, which is called interest. The

interest is added to your account on

a regular basisusually once a

month or once every three months

(quarterly). Compounded interest

means that interest is added to your

balance (usually quarterly), then thenext quarter the interest is computed

on your money deposited plus the

last quarter interest.

Example: New When you fill in the

blank spaces on one of your checks,

you are telling your bank how much

of your money you want to transfer

and to whom you want it transferred.

You authorize the transfer by signing

y our check. One reason why checks

are so popular is that people can use

a cancelled check to prove they paid

a bill. In most cases a cancelled

check is as good as a receipt

because it bears the endorsements

of all the persons, banks, companies,

or other organizations that have

handled it. For example if thelandlord claims you didn't pay your


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rent, all you need to do is find your

cancelled check and point out that it

was endorsed by your landlord and

your landlord's bank.

Tracing a Check

Through the

Federal Reserve's

Check Collection

Network

1. Your Aunt sent you a $20Check for your birthday.

2. You deposit the check in your

savings account at your bank.

3. Your bank endorses the check

and sends it to its Federal ReserveBank.

4. The Federal Reserve Bank

gives your bank credit for the

check by adding the amount of

the check to your banks

reserve account or clearing

balance.

5. The Federal Reserve

Transportation system flies the check

to your Aunt's Bank Federal

Reserve Bank.

6. That Federal Reserve Bank

forwards the check to your Aunt's

bank and deducts the

appropriate amount from thatbank's reserve account.


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7. Your Aunt's bank deducts the

$20 from your Aunt's checking

account.

Check 21 is a sweeping new federal

law effective October 28, 2004 that

takes away your ability to get back

your original paper checks. Under

this law, consumers could be more

likely to bounce checks and may find

themselves paying higher bank fees.

The complicated new law gives you

some rights, but those rights dependon a variety of factors, including how

the merchant and the bank decide to

process your check. Visit the FRB's

web site on the new law:http://www.

federalreserve.

gov/paymentsystems/truncation/.

What is Electronic

Banking?Electronics and computers have

made banking an around-the-clock

business. You can now do much of

your banking even when your bank is

closed. You no longer need to plan

your schedule around your banks

business hours.

Automated Teller Machines (ATMs)

are computers that are much like

limited-service bank branches. You

can use them to make a withdrawal,

make a deposit, make a payment,

transfer money from one account to

another, or check your accountbalance. In some cases, ATMs of
http://www.federalreserve.gov/paymentsystems/truncation/http://www.federalreserve.gov/paymentsystems/truncation/http://www.federalreserve.gov/paymentsystems/truncation/http://www.federalreserve.gov/paymentsystems/truncation/http://www.federalreserve.gov/paymentsystems/truncation/http://www.federalreserve.gov/paymentsystems/truncation/http://www.federalreserve.gov/paymentsystems/truncation/http://www.federalreserve.gov/paymentsystems/truncation/


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different banks are linked together so

you can use them when you travel to

a different part of town or even to

another state. All you need to use an

ATM is a plastic card from your bank

and your own personal passwordcalled a PIN number.

You can also have your employer

electronically deposit your pay

directly to your bank account each

payday. Direct deposit is also

popular among people who receive

Social Security checks or pension

checks because it saves them the

bother of standing in line at the bank,

battling bad weather, or worrying

about being robbed on the way home

from the bank

Another electronic banking

service is called electronic funds

transfer or EFT. By using EFT, a

bank can transfer large amounts

of money to another bank by

wiring an electronic message.

There is no need to write a check

or load up an armored car with

cash and there's no long wait for

the money to be moved.

Electronic transfers take only an

instant. An electronic message

instructs a computer to deduct a

certain amount 2. You depositthe check in your savings account

at your bank.

3. Your bank endorses the check

and sends it to its Federal Reserve

Bank.

4. The Federal Reserve Bank

gives your bank credit for the


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check by adding the amount of

the check to your banks

reserve account or clearing

balance.

5. The Federal Reserve

Transportation system flies the check

to your Aunt's Bank Federal

Reserve Bank.

6. That Federal Reserve Bank

forwards the check to your Aunt's

bank and deducts the

appropriate amount from that

bank's reserve account.

7. Your Aunt's bank deducts the

$20 from your Aunt's checking

account.

Check 21 is a sweeping new federal

law effective October 28, 2004 that

takes away your ability to get backyour original paper

minimum balance) in your NOW

account in order to keep earning

interest. Only non-business

customers may open NOW accounts,

businesses must use regular

checking accounts.

Money market deposit accounts

usually pay a higher rate of interest

and require a higher minimum

balance (usually $2,500).

Certificates of deposit (CDs) are

savings deposits that require a

customer to keep a certain amount of

money in the bank for a fixed periodof time (example: $1,000 for two


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years). As a rule the rate if interest

your money earns is higher if you

agree to keep your money on deposit

for a longer period of time. (That's

because banks can plan on using

your money for a longer period oftime.) Banks do not offer check-

writing privileges on certificates of

deposit.

Finally, banks don't always call their

accounts by the same names. Often

they choose distinctive names in

hopes of attracting customer. But

sometimes there can be a real

difference between one bank's

accounts and another's, so shop

around.

homebuyers. Most of the loans went

to people who didn't make enough

money to be welcome at traditional

banks.

Credit unions began as a 19th-

century solution to the emergency

needs of people who were unable to

borrow money from traditional

lenders. Before the opening of credit

unions, ordinary citizens had no

place to turn when they faced

unexpected home repairs, medicalexpenses, or other emergencies.

Credit unions were started by people

who shared a common bond such as

working at the same factory,

belonging to the same house of

worship, or farming in the same

community. Members pooled their

savings and used the money to make

small loans to one another.


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Although there are still differences

between banks and thrifts, they now

offer many of the same banking

services to their customers. Most

commercial banks now compete to

make car loans, many thrifts havebegun to make commercial loans,

and some credit unions make loans

to homebuyers.

used to be. For starters you should

shop around to find out which banks

offer the most competitive services.Some banks charge a monthly fee if

your account falls below a certain

level and sometimes that fee can be

higher than the interest your account

may earn.

Some states prohibit banks from

charging fees on savings accounts

held by people under 18 or 65 andover. Find out if your state has such

a law.

Other things you might want to

consider:

Does your bank pay itsdepositors a competitiveinterest rate?

Is the bank in a convenientlocation and are its businesshours convenient to you?

Is your deposit fully insuredby the federal government?

Is the bank a good corporate

citizen? Does it invest in yourneighborhood?


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How did Banking

Begin?No one knows who started the

world's first bank, but it's safe to saythat banking has it roots in the early

trading civilizations of the

Mediterranean ocean. Without trade

there would have been little need to

establish banks. Without banks there

would have been less money to

finance trading ventures.

Imagine for a moment that you are amerchant in ancient Greece or

Phoenicia. You make your living by

selling to distant ports with boatloads

of olive oil and spices. You don't

grow the olive oil and spices yourself;

you buy them from growers or other

merchants. If all goes well, you will

be paid for your cargo when you

reach your destination, but before

you can sail, you must have moneyto outfit your ship.

You find it by seeking out people who

have money sitting idle. They agree

to put up the money for your cargo

and supplies in exchange for a share

of your profits when you return from

your voyage. . if you return. The

people with the idle money areamong the world's first lenders and

you are among the world's first

borrowers. You complain that they're

demanding too large a share of your

profits. They reply that your voyage

is perilous and they run a risk of

losing their entire investment.

Lenders and borrowers have carried

on this debate ever since.


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Today, most people who want to

borrow money go to banks rather

than to wealthy individuals. But the

basic concepts of borrowing and

lending haven't really changed.

People don't let you have theirmoney for nothing. It's risky to lend

money. There's no guarantee that a

lender will get the money back, even

if the borrower is an old friend. So

why lend money? Why take the risk?

Because lending presents an

opportunity to make even more

money. People will often take a

financial risk if they believe there is a

good chance of making more money.

If a bank lends $50,000 to a

borrower, the bank isn't satisfied to

just get its $50,000 back. In order to

make a profit, the bank charges

interest on the loan. Interest is the

price borrowers pay for using

someone else's money. If a loan

seems risky, the lender will chargemore interest to offset the risk. (If

you take a bigger risk, you want a

bigger return). Of course, the

opportunity to earn lots of interest

won't mean much if a borrower fails

to repay a loan. That's why banks

often refuse to make loans that seem

too risky.

Banks also use interest to attract

savers. After all, people who have

extra money don't have to put it in the

bank. They have lots of choices. But

in addition to all of the different types

of accounts banks offer depositors,

the added advantage is being able to

get to their money quickly.


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How is a Bank

Started?The process varies from state to

state, but here's a simple version of

what it takes to start a bank.

1. Individuals get together anddecide to start a bank.

2. They file an application with the

federal and state bankingauthorities. In Indiana, it's theIndiana Department of FinancialInstitutions.

3. People at the state bankingauthority review the application.They look closely at the financialcondition and the character of theapplicants.

4. After reviewing the application,

the federal and state banking

authorities will either approve

or deny it.

\living by selling to distant ports with

boatloads of olive oil and spices.

You don't grow the olive oil and

spices yourself; you buy them from

growers or other merchants. If all

goes well, you will be paid for your

cargo when you reach your

destination, but before you can sail,

you must have money to outfit your

ship.

You find it by seeking out people who

have money sitting idle. They agree


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to repay a loan. That's why banks

often refuse to make loans that seem

too risky.

SOURCES

PROPRIETORS CAPITAL ORIGINAL

AMOUNT

INVESTED IN

ENTERPRISE

Profit before Taxes

Depreciation STOCK-COMMON/

PREFERRED

AMOUNT

INVESTED BY

SHAREHOLDE

Increase in A/C Payable COST OF PROTOTYPE

DEVELOPMENT &

STUDIES FOR IMPROVED

PRODUCTIO, EFFICIENCY

& PROCESS

DEVELOPMENT (COULD

ALSO BE EXPENSED)

Increase in Bank Loan RETAINED EARNINGS EARNINGS

RETAINED

AFTER

DISTRIBUTION


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OF DIVIDENDS

ACCURED EXPENSES PORTION OF

SALARIES DUBUT NOT YET

PAID

Total Sources

ACCRUED TAXES PORTION OF

TAXES DUE

BUT NOT YETPAID

APPLICATIONS SHORT-TERM LOANS LOANS TO BE

REPAID IN

LESS THAN

ONE YEAR

Expenditures for plant/

equipment

Repayment of Long-term

Debt

LONG-TERM LOAN

(current portion)

PORTION OF

LOAN TERM

DEBT DUE FO

PAYMENT

WITHIN ONE

YEAR

Increase in A/C Receivable

Increase in Inventories


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Taxes

Dividends

Total Applications

Increase (decrease) in Cash

RESEARCH AND

DEVELOPMENT

(DEFERRED REVENUE EXPENDITURE)

GOODWILL

PATENTS, CPOYRIGHTS

PRE-OPERATING EXPENSES


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BUSINESS LOSS

* NONPHYSICAL POOSESSIONS OF AN ENTERPRISE EXPECTED TO YIEL

A PERIOD OF YEARS

PETTY CASH

MONEY IN BANK

RAW MATERAIL

SPARE PARTS & CONSUMABLES

WORK-IN-PROCESS FINISHED PRODUCT (UNSOLD)

GOODS & SERVICES SOLD BUT NOT YET PAID FOR

NOTES & DEPOSITS DRAWING INTEREST, ETC


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INSURANCE PREMIUMS LICENSE FEES

RENT

INTEREST ACCRUED

BUT NOT DUE

Current Assets

Cash/ Bank Balance

Accounts Receivable

Inventories

Total Current Assets

Current Liabilities

Short-term Loans

Accounts Payable

Total Current Liabilities

Net Current Assets

Total Assets

Long-term Liabilities

Long-term Loan


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Debenture

Deposits

EQUITY & LIABILITIES

Equity

Equity Share Capital

Preference Share Capital

Retained Earning

Total Equity

LIABILITIES

Equity

Capital Stock

Retained Earnings

Total Equity

Long-term Liabilities

Long-term Debt

Current Liabilities


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The Going Concern Concept

ACCOUNTING IS BASED ON ASSUMPTION THAT THE

ENTERPRISE WILL OPERATE INDEFINITELY

4) The Cost Concept

FIXED ASSETS ARE ACCOUNTED FOR AT ACQUISITION COST

RATHER THAN VALUE THEY COULD BE SOLD FOR

5) The Dual Aspect Concept

EVERY (EVENT) TRANSACTION RECORDED AFFECTS AT LEAST

TWO ITEMS IN A FINANCIAL STATEMENT

6) The Accrual Concept

INCOME AND EXPENSES ARISING FROM TRANSACTIONS ARE

RECORDED IN THE PERIOD IN WHICH THEY OCCUR RATHER

THAN THE PERIOD IN WHICH PAYMENT IS MADE. SEEKS TO

MATCH COSTS WITH REVENUES

The raw material has to be cut to size. This is done with a variety of tools.

The most common way to cut material is by Shearing (metalworking);

Special band saws designed for cutting metal have hardened blades and a feed

mechanism for even cutting. Abrasive cut-off saws, also known as chop saws, are similar to


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with large piles of inventory. Gear cutting operation was suspected to be the bottleneck. The

project team further interviewed the operators of the downstream operation, lapping, and

confirmed that lapping was constantly starving for competed ring set from the cutting operation.

Accordingly, cutting operation was determined to be the bottleneck and was chosen as the target

for improvement. Incorporating TOC concept into improvement process enabled the project team

to select a project that could increase the plant throughput and bottom-line performance.

(take in Figure 2)

Value analysis was first performed to determine the various activities in the cutter operation

that add both customer and operational value to the process (Table 1). The purpose of value

analysis is to streamline the value chain to reduce all non-value added waste in the system and to

look for ways to enhance high value-added activities. The machine cycle that includes the cutting

operation is both a customer and operational value-added activity. Improving the yield of a high-value added activity such as blade cutting would increase the overall capacity of the plant.

Increasing the gear cutting capacity would have a positive impact on manufacturing system

throughput. This could be achieved through a reduction of hours required per gear set, which would

in turn increase the capacity and remove the need for new capacity investments.

(take in Table 1)

After confirming gear cutters as the bottleneck, the project team initially discussed purchasing

additional cutting capacity. The company was using a solvent-cutting device, where the cutting headwas lubricated to increase the shelf life of the cutting blades. Newer technology in this process had

advanced to dry cutting, a significant increase in the life of the blade, thereby increasing the

capacity. However, with the capital constraints facing the plant, it was not feasible to upgrade to the

dry cutting process. As suggested by the TOC concept, the team decided to exploit or maximize

the utilization of the current technology rather than make new capital investment in additional

cutting capacity. In other words, the team would proceed to investigate the current performance of

the solvent-based cutting machines and identifying ways to increase quality and throughput without

additional capital expenditures.

The business case for this project was initiated because of the eroding sales revenue, which

went down by 23% in 2000, while fixed expenses went up by as much as 22% within the same year.

Management was faced with either shutting down the plant or eliminating the non-value added

processes to increase capacity without incurring new capital expenditures. The Axle facility had

some experience in successfully applying Six Sigma to its process improvement. After receiving

training on TOC, managers decided to combine TOC and Six Sigma to guide their improvement

effort. They felt that the concept of TOC could provide them with a focus on global system

improvement. With careful study and planning, an eight-member project team was formed. The

project team was composed of the plant manager, the controller, two six-sigma certified employees,

and four operators from the plant. One of the authors of this paper and a student team served as


29/36

external resources for the project. The team was charged with the responsibility of seeking process

improvement that would result in a minimum of $175,000 savings per year. This was the minimum

standard established by the plant for any major process improvement project. The team started by

reviewing the process map to determine possible bottlenecks in the process. Extensive interviews

were conducted, and an in-depth observation of the processes was undertaken to identify probable

causes of inefficiencies in the system. After the extensive investigation, the cutting process was

singled out as the likely bottleneck operation. The proposed integrated framework was adopted to

make the improvement. The various stages of the process implementation are discussed below.

Phase 1 of this integrated framework is identical to both strategies, and its purpose is to

identify current constraint(s) that block the improvement of global performance, such as meeting

customer needs or improving system throughput. Accordingly, a specific process is selected for

improvement. Phases 2 and 3 follow the spirit of TOC by exploring the capacity of the selected

process. Phase 2 measures the current performance of the process and identifies the root causes

needed to be corrected for improvement. The two phases of Six Sigma, measure and analyze, are

involved in this step. Once the root causes are confirmed, Phase 3 of the integrated approach

applies conventional Six Sigma strategy by using the key manufacturing, engineering, and statistical

techniques to remove root causes of the problem for making necessary process improvement. The

purpose is to best utilize the current capacity of the process without incurring additional capital

expenditures.

Phase 4 ensures the changes made in previous steps are properly supported by the rest of the

system. For example, managers may need to change policies and obtain buy-in from employees to

implement the changes. Training is often required for a revised process. Phases 5 and 6 are taken

from the TOC process. If the improvement of the selected process is insufficient to satisfy customer

needs or goals, managers have to consider various options (e.g., outsourcing and additional

investment) to raise the capacity of the process. Finally, managers must stay alert to the dynamic

nature of the manufacturing system and constantly monitor occurrence of new constraints.

Overall, when the integrated framework is applied to improve a specific process, these two

techniques seem to complement each other. The integration is made by combining the

management aspect of TOC and the engineering aspect of Six Sigma. Specifically, for firms thatapply Six Sigma, TOC provides a global perspective in identifying the constraints and examining

necessary changes to the rest of the systems. On the other hand, Six Sigma brings in the

perspectives of customer needs, performance measures, and engineering and statistical tools during

the stages Theory of Constraints (TOC) was developed by Eliyahu M. Goldratt during the 1980s

(McMullen, 1998). The core idea of TOC is that every organization has at least one constraint that

prevents management from achieving the goal of the organization to a larger degree. Constraints

can be physical resources or policies. TOC develops a set of procedures and methodologies to

identify and optimize such constraints. For the purpose of continuous improvement, TOC uses a

systematic approach which consists of five focusing steps (Goldratt and Cox, 1992).

1. Identify the systems constraint(s).


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2. Decide how to exploit the systems constraint(s).

3. Subordinate everything else to the above decision.

4. Elevate the systems constraint(s).

5. If a constraint has been broken, go back to Step 1. Do not allow inertia to cause asystems constraint.

The implementation of Six Sigma strategy involves a series of steps specifically designed to

facilitate a process of continuous improvement. The strategy takes the key manufacturing,

engineering, and transactional processes of entire process through the five transformational phases

(Plotkin, 1999).

1. Define: Identify customer needs and a project suitable for Six-Sigma effort.

2. Measure: Determine what and how to measure the performance of the selected process.

3. Analyze: Understand and determine the variables that create quality variations.

4. Improve: Identify means to remove causes of defects and modify the process.

5. Control: Maintain the improvement.

The primary objective of the five-step process is to recognize critical customer requirements,

identify and validate the improvement opportunity, and upgrade the business processes. A

large number of companies have boosted their profitability, increased market share, and

improved customer satisfaction through the implementation of Six-Sigma. Companies such

as Allied Signal, General Electric, Sony, Texas Instruments, Bombadier, Crane Co.,

Lockheed Martin, and Caterpillar are beginning to dir

The swot anlysis of the Perpetual Inventory System is as under:

STREGTHS:

Accurate Reporti ng

Companies often experience more accurate financial reporting with a perpetualinventory system. Accountants update the general ledger after each inventory


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First-In, First-Out method can be applied in both the periodic inventory system and the

perpetual inventory system.

Example

Use the following information to calculate the value of inventory on hand on Mar 31 and costof goods sold during March in FIFO periodic inventory system and under FIFO perpetual

inventory system.

Mar 1 Beginning Inventory 60 units @ $15.00 per unit

5 Purchase 140 units @ $15.50 per unit

14 Sale 190 units @ $19.00 per unit

27 Purchase 70 units @ $16.00 per unit

29 Sale 30 units @ $19.50 per unit

Solution

FIFO Periodic

Units Available for Sale = 60 + 140 + 70 = 270

Units Sold = 190 + 30 = 220

Units in Ending Inventory = 270 220 = 50

Cost of Goods Sold Units Unit Cost Total

Sales From Mar 1 Inventory 60 $15.00 $900
http://accountingexplained.com/financial/inventories/periodic-journal-entrieshttp://accountingexplained.com/financial/inventories/perpetual-journal-entrieshttp://accountingexplained.com/financial/inventories/perpetual-journal-entrieshttp://accountingexplained.com/financial/inventories/periodic-journal-entries


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Sales From Mar 5 Purchase 140 $15.50 $2,170

Sales From Mar 27 Purchase 20 $16.00 $320

220 $3390

Ending Inventory Units Unit Cost Total

Inventory From Mar 27 Purchase 50 $16.00 $800

FIFO Perpetual

Date

Purchases Sales Balance

Units Unit Cost Total Units Unit Cost Total Units Unit Cost Total

Mar 1 60 $15.00 $900

5 140 $15.50 $2,170 60 $15.00 $900

140 $15.50 $2,170

14 60 $15.00 $900 10 $15.50 $155

130 $15.50 $2,015

Under theperpetual inventory system, an entity continually updates its inventory records toaccount for additions to and subtractions from inventory for such activities as received


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(ii) Continuous stock verification: This system comprises of counting and verifying i numberof items at random daily throughout the year so that all items of stores are verified severaltimes during the year. Notice of the particular stock to be verified each clay is given to thestore-keeper only on the date of actual verification.

As there is an element of surprise check in this system of stock-taking, effective control overthe items of stores can be exercised. The system does not necessitate the closing down of thestores to facilitate stock-taking. There is also less possibility of fraud and discrepancy, but themethod is expensive and is adopted by big concerns only.

The actual stock of material should not differ from the recorded stock under normalcircumstances. But-sometimes differences arise due to the following reasons:

(i) Breakage and wastage of materials due to improper handling.

(ii) Shrinkage and evaporation.

In earlier periods, non-continuous, orperiodic inventory systems were more prevalent.Starting in the 1970s digital computers made possible the ability to implement a perpetualinventory system. This has been facilitated by bar coding and lately radio frequencyidentification (RFID) labeling which allows computer systems to quickly read and processinventory information as part of transaction processing.

Perpetual inventory systems can still be vulnerable to errors due to overstatements (phantominventory) or understatements (missing inventory) that can occur as a result of theft, breakage,

scanning errors or untracked inventory movements, leading to systematic errors inreplenishment.

The ESA95 recommends the Perpetual Inventory Method (PIM) for the calculation of thestock of Fixed assets whenever direct information is missing (par. 6.04). The calculation ofconsumption of Fixed capital can be based on these stocks of assets. Besides net capital stockwhich appears in the Balance sheets can be derived within a PIM approach. In this paragraphthe basic principles of the PIM will be discussed. Using the PIM, gross capital stock iscalculated as the sum of gross fixed capital formation in Previous years, of which the servicelive is not yet expired. In the simplest case it is assumed that the total investment of a

particular asset does not deteriorate during the expected service life of that asset and is

discarded as a whole after that period of time.

Becoming a preferred employer involves more than learning the characteristics of such an

organization, howeverit also requires that you understand what top performers want and

value in a relationship with an employer. Interestingly, the answers to both questions are the

same.

To begin with, top-tier employers offer more than competitive pay and benefits. In fact, the

word "competitive" implies that you're simply matching what many other businesses are
http://en.wikipedia.org/wiki/Periodic_inventoryhttp://en.wikipedia.org/wiki/RFIDhttp://en.wikipedia.org/wiki/Phantom_inventoryhttp://en.wikipedia.org/wiki/Phantom_inventoryhttp://en.wikipedia.org/w/index.php?title=Missing_inventory&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Missing_inventory&action=edit&redlink=1http://en.wikipedia.org/wiki/Phantom_inventoryhttp://en.wikipedia.org/wiki/Phantom_inventoryhttp://en.wikipedia.org/wiki/RFIDhttp://en.wikipedia.org/wiki/Periodic_inventory


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providing. Even important additional elements, such as a good environment and open

communication, won't necessarily make the difference.

Studies show that the most important factor is how people feel about their role in the

business. Employees perform at different levels based on how they're engaged in the

lifeblood activities of the company. When an employer brings in people who are talented,

aligned with the company's values and focused on its goals, the results can be tremendous.

Want to set your company apart from your competitors? Here are some steps that can help

you draw the best people to your business:

scr banking maths 2.docx

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