Summary Blog :)

http://www.timesonline.co.uk/tol/news/world/us_and_americas/article5898195.ece

Summary:

In the past, the Great Depression has left many with nothing and was forced to live in very rough shelters. Now with the job losses and house repossessions, it has made Americans repeat history. 300 people are now living along the riverbank stretching over a couple of miles, with only tents as their “home”. Many are forced to sell their possessions, just to keep living barely. Unemployment in Sacramento has reached 10.4% in January, and with this sudden amount of people losing their homes, charity workers cannot cope with the number of people that are in need of help. The reason why there is such a large amount of people going unemployed is because with the economy in such bad condition, it is also affecting new layer of middle class earners. People who are earning a good amount of money but did not think about saving their money are now finding themselves at the edge of being homeless with the inconsistency of their pay cheques.



Connection:

In this kind of situation, we can’t honestly say that this has not even a single thing to do with accounting. With the amount of people going unemployed, then that means the wages expense for big company would decrease by far. Indeed this would be the way to cut down on expenses of a company, but at the same time, this would mean less people are willing to spend the money on lifestyle themed companies. Such as toy factories, or electronics companies, they won’t be able to sell a lot of goods, which leads them into bankruptcy. Resulting in even more people unemployed and the cycle repeats. As lifestyle companies loses the publics attention, it means the prices would drop, and then the whole accounting system would not require as much complexity. With this said, people would pay even more attention to the accounting frauds and that would, in a way, make it easier to prevent accounting frauds. But never the less the more people that go unemployed, the more it affects the accounting side of the world.


Reflection:
The above that I’ve said were just some that were on the top of my head that I believe would affect the accounting side of things. There are even tons more that affect accounting, in small and big ways. But with the way it's progressing right now, the whole accounting system would be corrupted, as everyone would eventually start to turn to each other and suspect each other for other things and then the "honesty" that accountants should have would be gone. That itself already defeats the purpose of accounting, and the way it works. In conclusion we could almost say that this depression affects accounting even more than the previous ones since people did not rely on machines that keep records of it, and accounting was not as advance as it is now. So with this in mind we can definitely say, that depression is definitely a bad thing, at least when accounting has evolved so much and has become the way it is now.

Ch 16 Blog :)

http://www.edmontonsun.com/News/Alberta/2009/03/05/8633386-sun.html

Summary:

In the time of depression, Alberta strives to protect their minimum wage as much as possible by increasing the minimum wage by 40 cent. So it would be from $8.40 going up to $8.80, which would make Alberta the second highest minimum wage of any province in Canada. But this fame won’t last, according to the official, because once their plan goes through, within a few months Ontario, Quebec, Saskatchewan and Newfoundland will all have a higher minimum wage. Ontario would be leading with $9.50. This plan was inspired not only because of the depression, but also because Alberta claims that majority of the population of Alberta is earning more than the minimum wage, and they do not want to forget about the lower-income occupations.

Connection:

In Chapter 16 it talked about wages which are not usually raised often, but decrease due to tardiness and such. So with such a large scale change in wages, every company that is giving a minimum wage would have increase their expenses, especially when they have a large amount of workers working under them. If there were 100 workers, then their expenses would increase by $40 and that would be very bad if the company was very tight with their cash.

Reflection:

Alberta tries to stimulate the economy by raising the minimum wage, and by doing this it also encourages other provinces to do the same. But with the minimum wage is raised, his also raises a question, as the people who are earning the minimum wage to gain a raise then those already earning a higher wage also get a raise or remain the same? You can’t say it’s fair to only increase those who have lower wages. But at the same time, it is almost impossible to raise everyone’s wages.

Chap 14 Blog :)

Summary:

Internal control is very important in businesses, since a business should not take chances about its employees' honesty and dedication. It's a primary step for the business to protect itself from scams and such. If a business gets ripped off by one of its employees, reporting the crime to the police seems an obvious answer, but it seems like that's not the case. A detective in Saskatoon finds out that a lot of cases where the employees do scam the businesses, but the business does not report it. The reason was it was not reported was because it was simply more work for them. After finding this out, the police try to promote reporting these internal frauds, cause if they don't get punished for what they do, it would not stop.

Connections:

In chapter 14, internal control is made to protect the assets of a business. But without the businesses reporting the internal fraud that happens to their businesses, it makes the other businesses to not be as cautious, thus making them another victim of internal fraud. Even though the internal control seems to be a pretty good defence from internal scam it does not mean it doesn't happen. If a employee were to have a good idea of how the accounting system works, they could easily weave a path for them to gain a profit. But if a business were to be cautious with all their employees and follow the fundamental rules of a good internal control, then internal fraud would not happen as easily.

Reflection:

As a student learning about accounting, the textbook that describes the internal control makes it seem invincible, and very safe. But if people were to not report these cases of internal fraud, those who haven't experienced it will continue to think that way, and would not be cautious at all. That is why reporting these cases are very important, even if it is more work, since not only send a message to all the frauds that the businesses are aware of it, but they are also more cautious.

Ch 12 Blog :)

Gas stations offer discounts for cash instead of credit cards

Summary:

As most people noticed gas prices had increased compared to 15 years ago, and because of that consumers don't have enough cash on hand so they pay with credit card. The problem with that is the gas station's profit is being eaten by credit card fees. Many gas stations try to advertise the idea of using cash instead of credit card by offering cash discounts. But if the gas price goes up, then it means that credit card fees goes up too. The point of the cash discount is to avoid paying a the credit card fee, which in return gain more profit for the gas station. Since the credit card fees are one of the largest expenses businesses have, it makes sense that if they give discounts, it would still be a profit, even if it's at a low rate. Credit card companies are going to just sit there and do nothing, they argue that if the merchant thinks the fees are too high, they should come up with a solution by themselves instead of blaming on the credit card companies and demanding for lower fees. With that ideas like encouraging people to use cash, or they can choose not to accept cards are some solution gas stations have resorted to. But the bottom line is that despite the fact that they give out discounts, not as many people are going for it since the price of the gas is so high, so the gas station's profit is suffering quite a bit this year, even if it doesn't look like it.

Connections:

The gas stations are not profiting as much as they hope, so they offer cash discounts. Which is used by many different merchandisers to encourage customers to pay on time. But in this article it tells us that cash discounts can be used for other things besides encouraging customers to pay on time. Both ways of using cash discounts are very useful, since one it promises revenues are earned right away and not have to worry about late payment, but secondly it also reduces the amount of expenses to some degree.


Reflection:

It quite interesting that the same cash discount can be used in different ways. In a way that both side of the transaction gets a deal out of it, whether one is bigger than the other or vise versa. The cash discount shows that if one side were to be at a small disadvantage, they may gain another advantage. But with the world worrying so much about how the economy can't afford to be in a recession, it seems like the theme of cash discount may be the way to prevent the economy from falling. But who would be the one that makes that move first?