IMUS INSTITUTE

OF SCIENCE AND TECHNOLOGY

COLLEGE OF ACCOUNTANCY

RESEARCH IN SYNTHESIS

In partial fulfillment for the requirement in

Synthesis

Submitted by:
Maria Cristina D. Ramirez
Nowell S. Silla
BSA – 5

Submitted to:
Prof. Nelson C. Tablizo, CPA, MBA

Date Submitted:
November 2019
 Explain how personal finances are affected by the recession?

When it comes to recessions, sometimes the best definitions are the light-hearted ones. "If

your neighbor gets laid off, it's a recession. If you get laid off, it's a depression," as one economist

jokingly put it. However, economists officially define a recession as two consecutive quarters of

negative growth in the gross domestic product (GDP). According to the National Bureau of

Economic Research, the hallmark of a recession is a "significant decline in economic activity

spread across the economy, lasting more than a few months."

Both definitions are accurate because they indicate the same economic results: a loss of

jobs, a decline in real income, a slowdown in industrial production and manufacturing, and a slump

in consumer spending, which drives more than two-thirds of the U.S. economy.

One effect of recession is that businesses may cut employees, and more work will have to

be done by fewer people. Productivity per employee may increase, but morale may suffer as hours

become longer, work becomes harder, wage increases are stopped, and fear of further layoffs

persists.

As the recession increases in severity and length, management and labor may meet and

agree to mutual concessions, both to save the company and to save jobs. The concessions may

include wage reductions and reduced benefits. If the company is a manufacturer, it may be forced

to close plants and discontinue poorly performing brands. Automobile manufacturers, for example,

have done this in previous recessions.

 This will result to underemployment of more people thus leading to lesser income of

families which would lead to more budgeted spending. Particularly focusing on what really the

family needs.

According to the Effects of the Financial Crisis and Great Recession on American

Households by Michael D. Hurd, Susann Rohwedder, “between November 2008 and April 2010

about 39 percent of households had either been unemployed, had negative equity in their house or

had been in arrears in their house payments. Reductions in spending were common especially

following unemployment. On average expectations about stock market prices and housing prices

are pessimistic, particularly long-run expectations. Among workers, expectations about becoming

unemployed have recovered somewhat from their low point in May 2009 but still remain high.

Overall the data suggest that households are not optimistic about their economic futures.”

There are four main things you can do to prepare your personal finances for a recession:

Get out of debt. This is very important. You need to work hard to reduce your overall debt level.

Pay down balances as much as you can. Put together a debt reduction plan that will help you

dramatically reduce how much you owe to others. Debt can be a major problem during a recession,

and if you have a lot of it, it can become difficult to take care of your other needs.

Build up an emergency fund. You need to build up an emergency cash fund to help you if needed.

This is true of any time, but especially true in the run up to a recession. While you probably can’t

just set aside three to six months’ worth of salary now, you can build up a reserve. Every little bit

helps, and the important thing is to get into the habit of saving.
Consider blue-chip stocks. CNN Money points out that now is not the time to freak out about the

stock market. Indeed, there is a good argument to buy, while prices are low. Here is what Walter

Updegrave says on CNN Money:

“But remember, the shares you buy while the stock market is down will likely be the ones that will

have generated the biggest gains a decade or more down the road. And the money you invest during

market setbacks could very well provide the spending cash you’ll need in your later retirement

years.”

Choose solid stocks that are likely to make a good recovery. They may not offer sexy returns right

now, but they are the tried and true that will recover from a recession.

Consult a professional. A fee-based financial planner can help you chart your path.

If you plan carefully now, and take the appropriate steps, your personal finances should be able to

survive a recession.

Recession will definitely give families financial problems because of lesser job

opportunities that will result to underemployment and lesser income leading to non-payment of

debts, therefore we should already prepare for it as early as possible to reduce the effects of this in

the near future.

 Use of software in cost accounting

Cost accounting is involved with the following:

 Determining the costs of products, processes, projects, etc. in order to report the correct

amounts on a company's financial statements, and

 Assisting management in the planning and control of the organization

 Preparing special analyses that assists in making the best decisions

Examples of Cost Accounting

A significant part of cost accounting involves the unit cost of a manufacturer's products in

order to report the cost of inventory on its balance sheet and the cost of goods sold on its income

statement. This is achieved with techniques such as the allocation of manufacturing overhead costs

and through the use of process costing, operations costing, and job-order costing systems.

Cost accounting assists management to plan and control the business through budgeting

for operations, capital budgeting for expanding operations, standard costing and the reporting of

variances, transfer pricing, etc.

Special analyses includes cost behavior, cost-volume-profit relationships, make or buy

decisions, selling prices for products, activity-based costing, and more.

Cost accounting had its roots in manufacturing businesses. However, today it extends to

service businesses. For example, a bank will use cost accounting to determine the cost of

processing a customer's check and/or a deposit, maintaining a checking account, processing

international wire transfers, servicing a mortgage loan, etc. This in turn may provide management

with guidance in the pricing of various services.

Through the years, technology have been integrated in everything we do, to make jobs

easier, less costly, and faster. Using cost accounting software will make estimating various costs

more efficient. The businesses will save labor cost due to lesser need of employees that will

estimate costs, they would just need to input data in the software and the software will provide

estimates.

One example of a cost accounting software is the ARGOS Software which offers the

following features:

 The Cost Accounting Software module provides full Activity Based Costing (ABC)

across the enterprise with minimal additional effort as part of the Accounting system.

 Powerful yet flexible management reporting … with unique summarizing abilities

 Cellular analysis based on your own groupings/divisors/accounts/periods

 Uses the same Accounting records as General Ledger and Fund Accounting

 Multi-dimensional Job information … by Job, Account, Activity, and Period

 Jobs may cross Departments and Funds, if applicable

 Activities can be used to track tasks, phases, operations, processes

 Accounts may be in more detail than in the General Ledger allowing specific inputs or

products to be tracked and yet summarized in the GL

 Tracks quantity. Important for analysis, decision making, and per unit calculations

 Budgeting at any level of detail, including by Fiscal Period

 Process to transfer amounts between Jobs and to Work-In-Process

  Complete details behind each account plus an audit trail behind each detail

 Journal entries can be made just to the Cost Accounting Software, if required

 Email, fax or print reports automatically through Task Agent or manually

 Ad hoc reporting with ASCII/Excel® file export

Cost accounting software’s will definitely benefit a company in terms of labor costs, timely

reports, and easier estimating various costs based on data inputted. Buying a software may look

costly at first, but its benefits through more efficient managing of resources based on the estimates

provided may exceed the cost you would incur today.

 References

https://www.accountingcoach.com/blog/what-is-cost-accounting

https://www.allbusiness.com/can-your-personal-finances-survive-a-recession-4974275-1.html

https://www.argosoftware.com/consulting/

https://www.investopedia.com/articles/economics/08/recession-affecting-business.asp

https://www.nber.org/papers/w16407