About Me
CPA
1 Regulation (REG)
1.1 Ethics, Professional Responsibilities, and Federal Tax Procedures
1.1 1 Professional ethics and responsibilities
1.1 2 Federal tax procedures and practices
1.1 3 Circular 230
1.2 Business Law
1.2 1 Legal rights, duties, and liabilities of entities
1.2 2 Contracts and sales
1.2 3 Property and bailments
1.2 4 Agency and employment
1.2 5 Business organizations
1.2 6 Bankruptcy
1.2 7 Secured transactions
1.3 Federal Taxation of Property Transactions
1.3 1 Basis determination and adjustments
1.3 2 Gains and losses from property transactions
1.3 3 Like-kind exchanges
1.3 4 Depreciation, amortization, and depletion
1.3 5 Installment sales
1.3 6 Capital gains and losses
1.3 7 Nontaxable exchanges
1.4 Federal Taxation of Individuals
1.4 1 Gross income inclusions and exclusions
1.4 2 Adjustments to income
1.4 3 Itemized deductions and standard deduction
1.4 4 Personal and dependency exemptions
1.4 5 Tax credits
1.4 6 Taxation of individuals with multiple jobs
1.4 7 Taxation of nonresident aliens
1.4 8 Alternative minimum tax
1.5 Federal Taxation of Entities
1.5 1 Taxation of C corporations
1.5 2 Taxation of S corporations
1.5 3 Taxation of partnerships
1.5 4 Taxation of trusts and estates
1.5 5 Taxation of international transactions
2 Financial Accounting and Reporting (FAR)
2.1 Conceptual Framework, Standard-Setting, and Financial Reporting
2.1 1 Financial reporting framework
2.1 2 Financial statement elements
2.1 3 Financial statement presentation
2.1 4 Accounting standards and standard-setting
2.2 Select Financial Statement Accounts
2.2 1 Revenue recognition
2.2 2 Inventory
2.2 3 Property, plant, and equipment
2.2 4 Intangible assets
2.2 5 Liabilities
2.2 6 Equity
2.2 7 Compensation and benefits
2.3 Specific Transactions, Events, and Disclosures
2.3 1 Leases
2.3 2 Income taxes
2.3 3 Pensions and other post-retirement benefits
2.3 4 Derivatives and hedging
2.3 5 Business combinations and consolidations
2.3 6 Foreign currency transactions and translations
2.3 7 Interim financial reporting
2.4 Governmental Accounting and Not-for-Profit Accounting
2.4 1 Governmental accounting principles
2.4 2 Governmental financial statements
2.4 3 Not-for-profit accounting principles
2.4 4 Not-for-profit financial statements
3 Auditing and Attestation (AUD)
3.1 Engagement Planning and Risk Assessment
3.1 1 Engagement acceptance and continuance
3.1 2 Understanding the entity and its environment
3.1 3 Risk assessment procedures
3.1 4 Internal control
3.2 Performing Audit Procedures and Evaluating Evidence
3.2 1 Audit evidence
3.2 2 Audit procedures
3.2 3 Analytical procedures
3.2 4 Substantive tests of transactions
3.2 5 Tests of details of balances
3.3 Reporting on Financial Statements
3.3 1 Audit report content
3.3 2 Types of audit reports
3.3 3 Other information in documents containing audited financial statements
3.4 Other Attestation and Assurance Engagements
3.4 1 Types of attestation engagements
3.4 2 Standards for attestation engagements
3.4 3 Reporting on attestation engagements
4 Business Environment and Concepts (BEC)
4.1 Corporate Governance
4.1 1 Internal controls and risk assessment
4.1 2 Code of conduct and ethics
4.1 3 Corporate governance frameworks
4.2 Economic Concepts
4.2 1 Microeconomics
4.2 2 Macroeconomics
4.2 3 Financial risk management
4.3 Financial Management
4.3 1 Capital budgeting
4.3 2 Cost measurement and allocation
4.3 3 Working capital management
4.3 4 Financial statement analysis
4.4 Information Technology
4.4 1 IT controls and security
4.4 2 Data analytics
4.4 3 Enterprise resource planning (ERP) systems
4.5 Operations Management
4.5 1 Strategic planning
4.5 2 Project management
4.5 3 Quality management
4.5 4 Supply chain management
2 2 7 Compensation and Benefits Explained

2 7 Compensation and Benefits Explained

Key Concepts

Compensation

Compensation refers to the financial and non-financial rewards provided to employees in exchange for their work. It includes both direct financial payments and indirect benefits.

Benefits

Benefits are non-wage compensations provided to employees in addition to their regular wages or salaries. These can include health insurance, retirement plans, paid time off, and other perks.

Wage and Salary

Wages are typically hourly payments made to employees, while salaries are fixed, periodic payments usually made on a monthly or annual basis. Both are forms of direct compensation.

Example: An employee who earns $20 per hour is receiving a wage, while an employee who earns $50,000 per year is receiving a salary.

Incentive Pay

Incentive pay is additional compensation offered to employees as a reward for achieving specific performance goals. This can include bonuses, commissions, and profit-sharing.

Example: A salesperson receives a 10% commission on every sale they make, which is an incentive pay for achieving sales targets.

Employee Benefits

Employee benefits are non-wage compensations that provide additional value to employees. These can include health insurance, retirement plans, paid time off, and other perks.

Example: A company offers its employees a comprehensive health insurance plan, which is a significant employee benefit.

Retirement Plans

Retirement plans are benefits provided by employers to help employees save for their retirement. Common types include 401(k) plans, pensions, and Individual Retirement Accounts (IRAs).

Example: A company matches 50% of an employee's contributions to their 401(k) up to 6% of their salary, providing a valuable retirement benefit.

Health Insurance

Health insurance is a benefit provided by employers to cover medical expenses for employees and their families. It can include coverage for doctor visits, hospital stays, and prescription drugs.

Example: A company offers a health insurance plan that covers 80% of medical expenses, with employees paying the remaining 20%.

Examples and Analogies

Consider compensation as the "fuel" that drives employee performance. Wages and salaries are like the "basic fuel," while incentive pay is the "premium fuel" that boosts performance.

Benefits can be thought of as the "safety net" that supports employees in various aspects of their lives, such as health and retirement.

Retirement plans are like "savings accounts" for the future, ensuring employees have financial security after they stop working.

Health insurance is akin to a "shield" that protects employees from the high costs of medical care, ensuring they can access necessary treatments without financial hardship.

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