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?