Financial Accounting Week 10 Course Project Assignment

Financial Accounting Week 10 Course Project - Assignment Example important in an organisation as it helps to build strong and effective competitive organisation because the workers are motivated as their efforts are appreciated in the company. It is noted that a wear and wrong compensation strategy is more likely to destroy an organisation by reducing the level of performance by the workers and decreased morale. This therefore does not utilize fully the potential of the workers (Weygandt 2003). The compensation strategy is very vital in an organisation as help the management to ensure proper management of expenses of the firm and the limits to which employees can be paid. The information also gives certainty to the employees and managers that their work is stable and the organisation’s management is also stable. Good compensation therefore requires adequate balance of skills in human resource management. Therefore before employees and shareholders are compensated, the amount of revenue obtained from the shareholder’s equity as dividends and amount of stocks sold be determined. These are compared and discussed below (Elliot & Elliot 2008) . Dividends are income obtained in excess of the shareholders equity in the firm. The shareholders therefore have the right and privilege of their compensation from the revenues earned in excess of their contribution. The dividends shared have the effect of decreasing the amount of capital in the balance sheet and then it also decreases the amount of cash available in the business. However, it motivates the workers and stakeholders that their business is expanding and increasing in the scope of production (Weygandt 2003). When a company has good stock of inventory then it reduces the cost of production and this enables the firm to produce more of the commodities than when the raw materials have to be bought. The accumulation of raw materials can also be a source of revenue for the firm as the firm can sell the raw materials and get net income. Accumulation of partially produced goods