Just-in-time inventory (JIT) is a management strategy that aims to increase a firm’s operating efficiency and decrease the level of waste by only keeping enough stock on hand to fulfill current orders or maintain production. With a JIT inventory system, the firm purchases only the level of inventory that it uses in the production process.
Explanation :
JIT inventory requires good planning of production and an accurate estimate of consumer demand . By relying on long-standing contracts with suppliers, the strategy eliminates the problem of switching between suppliers to lock the lowest price.JIT lowers the inventory levels by setting up fast equipment times, lowering scrap levels, and using local suppliers; therefore, it minimizes the working capital and eliminates obsolete and/or defective inventory. On the other hand, if not implemented properly, it may cause a shortage in the raw materials and a delay in production.
In a nutshell :
- The just-in-time (JIT) inventory system is a management strategy that minimizes inventory and increases efficiency.
- Just-in-time manufacturing is also known as the Toyota Production System (TPS) because the car manufacturer Toyota adopted the system in the 1970s.
- Kanban is a scheduling system often used in conjunction with JIT to avoid overcapacity of work in process.
- The success of the JIT production process relies on steady production, high-quality workmanship, no machine breakdowns, and reliable suppliers.
- The terms short-cycle manufacturing, used by Motorola, and continuous-flow manufacturing, used by IBM, are synonymous with the JIT system.
Jump trading refers to sophisticated trading strategies, which are implemented by high-frequency trading (HTF) firms.
Explanation :
Through the use of sophisticated technology, they apply a range of hedge fund strategies, including index arbitrage , merger arbitrage, long/short equity, and others, seeking to capitalize on the fast speed of technology, which allows them to connect to the trading floors of the exchanges in no time. At the same time, the fact that retail investors underperform the markets, lagging major benchmarks, allows HTF firms to provide a higher growth, while practically eliminating active management. Usually, HTF firms keep a low profile and are reluctant to reveal their trading secrets.
In a nutshell :
- Jump Trading LLC is a proprietary trading firm with a focus on algorithmic and high-frequency trading strategies.
- The firm has over 700 employees in New York, Chicago, Amsterdam, London, Shanghai, and Singapore and is active in futures, options, cryptocurrency, and equities markets worldwide.
Judicial review is a power assigned to the judicial branch of the government to review decisions and rulings made by other branches of government or a certain lower court. It is a legal procedure where decisions or rulings are appraised by a higher judicial instance.
Explanation :
Judicial review is a core principle of the U.S. legal system. It places a proper check and balances system that enables the Supreme Court to review and rule over legislators or executives acts. The purpose of this power is to maintain constitutional order, ensuring that no law enacted by these other branches contradicts the principles established in the U.S. Constitution. This concept also applies to the different levels of the judiciary branch. A higher court can review the rulings of a lower court. This frequently takes place when a party appeals a certain ruling. On the other hand, civil courts can also review government agencies’ decisions about the application of certain legislations. Immigration cases or cases involving tax claims are common in this regard. These reviews increase the degree of fairness within the whole judicial environment and protect the population from abuses, negligence or misconduct, since everyone’s decisions can be properly scrutinized.
In a nutshell :
- Judicial review, power of the courts of a country to examine the actions of the legislative, executive, and administrative arms of the government and to determine whether such actions are consistent with the constitution.
- Actions judged inconsistent are declared unconstitutional and, therefore, null and void.
Judicial power is the authority granted to courts and judges by the Constitution and other laws to interpret and decide, based on sound legal principles, and rule accordingly. This power allows judicial authorities to determine the legality of arguments, proofs and facts in order to execute a sentence or a ruling.
Explanation :
The U.S. Constitution, in its third article, establishes the creation of a Supreme Court and other minor courts that are properly vested with the authority to rule and interpret the different laws enacted in the course of the nation’s history. This power flows downwards from the Supreme Court in a pyramid scheme of different courts that guarantee the fairness of legal procedures through an adequate check and balances system. The three main responsibilities these courts have by using this power are: to judge court-worthy cases fairly, to enforce the law when there are certain constitutional principles being put to question and finally, to interpret the laws properly to solve disputes. The abuse of these powers can be properly controlled by the judiciary structure, which is an organism intended to self-regulate. Nevertheless, even though this sounds like a fair scheme, extensive legal procedures are tedious and might lead to a waste of resources and time.
In a nutshell :
- Judicial review of administrative action is inherent in our Constitution, which is based on rule of law and separation of powers.
- It is considered to be the basic features of our Constitution, which cannot be abrogated even by exercising the constituent power of Parliament.
A job cost sheet is a record of all expenses relating to a single job or job segment. Companies that use a job order cost accounting system try to segregate costs by job to see how much each product or job lot costs to make. In other words, they want to know what the unit price is per product produced. In order to figure out how much each unit costs to produce, the company has to track the work that was done to each product before it was completed.
Explanation :
This is where a job cost sheet comes into play. A job cost sheet is exactly what it sounds like. It’s a record of the costs incurred for a single job. A job cost sheet usually includes the customer name, address, job number, job description, date started, date completed, and estimated completion date. The costs for the job are recorded on the sheet during the production process. This usually happens in three categories: direct materials, direct labor, and overhead. As soon as the supervisor incurs a cost, he/she records it on the cost sheet.
In a nutshell :
- A job cost sheet is a compilation of the actual costs of a job.
- The report is compiled by the accounting department and distributed to the management team, to see if a job was correctly bid.
- The sheet is usually completed after a job has been closed, though it can be compiled on a concurrent basis.
A journal entry is the method used to record all individual financial transactions made by a company into its journal. To put it more simply, it is the daily accounting input written in the journal for each business event.
Explanation :
Journal entries are the foundation of all accounting and financial data. This is where it all starts because this is where real world events are recorded into a system. This is the first step in the accounting cycle and takes place each time a financial transaction occurs. The accountant takes the evidence of a transaction and writes a journal entry for it. The entries must have a minimum of two lines according to double entry accounting rules rules. Each column must have the same value after the transaction is recorded in order to keep the books balanced. Here’s what the format looks like.
In a nutshell :
- Journal entries are used to record transactions that have occurred but have not yet been appropriately recorded in accordance with the accrual method of accounting.
- Journal entries are recorded in a company’s general ledger at the end of an accounting period to abide by the matching and revenue recognition principles.
- The most common types of Journal entries are accruals, deferrals, and estimates.
- It is used for accrual accounting purposes when one accounting period transitions to the next.
- Companies that use cash accounting do not need to adjust journal entries.
A journal or book of original entry is the place where journal entries are recorded before they are posted to the ledger accounts. A journal is a record of all the transactions a company has recorded.
Explanation :
Companies use many different types of journals to record their transactions like the sales journal, cash receipts journal, and the accounts payable journal. All of these different journals are optional and can be used if the company wants to. The only journal that is used by all companies is the general journal. A journal stores a complete record of every business transaction the company makes. This usually includes the transaction date, transaction description, accounts that were affected, as well as the debits and credits.
In a nutshell :
- A journal is a detailed record of all the transactions done by a business.
- Reconciling accounts and transferring information to other accounting records is done using the information recorded in a journal.
- When a transaction is recorded in a company’s journal, it’s usually recorded using a double-entry method, but can also be recorded using a single-entry method of bookkeeping.
- The double-entry method reflects changes in two accounts after a transaction has occurred; an increase in one and a decrease in the corresponding account.
- Single-entry bookkeeping is rarely used and only notes changes in one account.
- A journal is also used in the financial world to refer to a trading journal that details the trades made by an investor and why.
Joint costs are costs that are incurred from buying or producing two products at the same time. In cost accounting terms, joint costs have the same cost object.
Explanation :
Manufacturers incur many costs in the production process. It is the cost accountant’s job to trace these costs back to a certain product or process (cost object) during production. Some costs cannot be traced back to a single cost object. Some costs benefit more than one product or process in the manufacturing process. These costs are called joint costs. Almost all manufacturers incur joint costs at some level in the manufacturing process.
In a nutshell :
- The joint cost refers to that cost which is incurred before the split-off point on the production or manufacturing of multiple products, by consuming the same inputs or factors of production (i.e., raw material and manufacturing process).
- This type of cost accounting is usually common in primary industries.
Known liabilities are debts that a company has little uncertainty about. The company knows who to pay, how much to pay them, and when the payment is due. Most of the time, known liabilities come from contracts, agreements, or laws. The most common known liabilities are accounts payable, sales tax payable, payroll liabilities, and contracted notes payable. All of these debts arise from contracts, agreements, or laws that state how much the company owes, whom it owes the money, and how much it owes.
Explanation :
Most liabilities that companies present on their balance sheets are considered known liabilities. You might think this sounds funny. Doesn’t a company know about all of their liabilities? Well, yes. Obviously, a company knows about its liabilities if it lists them on their balance sheet, but that doesn’t make the liability considered a known liability.
Example :
Most unknown liabilities are missing one of those three certainties. Take a note or bond payable to the holder. This means whoever has possession of the note or bond at the due date is entitled to payment. The company originally issues the note or bond to a single person, but that person can freely transfer the debt to someone else. This creates uncertainty as to whom the company has to pay the debt. The company won’t actually know who owns the debt until the due date. That’s why this debt is considered an unknown liability.
In a nutshell :
- Known liabilities are debts that a company has little uncertainty about.
- The company knows who to pay, how much to pay them, and when the payment is due.
- Most of the time, known liabilities come from contracts, agreements, or laws.
Kiting, also called check kiting, is a fraudulent scheme that uses checks to embezzle money from a business. Kiting is usually committed by a bookkeeper or someone else with access to company checks and the ability to forge checks, but it can also be used by the company.
Explanation :
The concept of kiting is quite simple. It uses the float or time it takes for checks to clear to buy time before the actual money is withdrawn from the account. Kiting turns checks into more of a form of short-term credit than an actual check or order to pay. Bookkeepers can perform check kiting if they have access to the checks, perform the bank reconciliations, and record the checks in the accounting system. This might sound like a complete violation of the segregation of duties concept. Well, it is. Many small companies can’t hire extra people and the owner’s don’t want to bother doing bookkeeping work themselves.
In a nutshell :
- Kiting involves the illegal use of financial instruments to fraudulently obtain additional credit.
- Securities firms “kite” if they fail to follow SEC rules around obtaining securities in a timely way.
- Check kiting targets banks or retailers through a series of bad checks, sometimes drawn on multiple accounts.
