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profit-loss account 33

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MBA-TEP Personnel & Industrial Relations Dr. Lorenzo C. Lorenzo Presented by: Narciso D. Isidro Jr. Narciso D. Isidro Jr. PROFIT SHARING PLANS Ф Profit sharing is an incentive plan under which an employer agrees to share with his personnel a specified portion of the net profits of his business at the end of each fiscal period or over a given period. Ways of Implementing Profit-sharing  Equally distributed Net Profit x .03% ÷ Number of Employees  Performance Rating Net Profit x .03% ÷ Number of Employees Employee 1 (90%-100%) = P500 Employee 2 (80%-90%) = P300 What is the purpose of Profit Sharing?  Aims to modify employees’ attitude to achieve greater employee efficiency, productivity, and loyalty to the firm, and keener interest in its welfare.  It is believed that the employees would feel they have a stake in the company if they get a direct share in the profits of the enterprise in which they work.  Sharing of the firm’s profit with the employees is considered a sound employee relations program. Types of Profit-sharing Plans Three (3) Basic Types of Profit-sharing Plans.  Cash Plan— At the time profits are determined, contributions are paid directly to employees in the form of cash, checks, or stock. The amount is taxed as ordinary income when distributed.  Deferred Plan— Profit-sharing contributions are not paid out currently but rather are deferred to individual accounts set up for each employee. Benefits— and any invest ...
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