CHAPTER 6

Link to article

Summary

This article talks about the Canadian dollar is rising, and how it affects Canada and America. An advantage to the increasing rate of the Canadian dollar is that Canadian shoppers that want to head down to the states to purchase clothes and other items will be able to buy more. A disadvantage is that Canadian goods would become more expensive on the world market, causing our largest trading partner, the U.S., to buy less. The article also says the loonie's last surge was in 2007, which was caused by increasing oil prices and other commodities, which caused Canadian manufacturers and export industry to lose money. This time, the loonie is rising because the world market is losing faith in the U.S. dollar, which is considered a "safe reserve".

Connection

Chapter 6 in the textbook talks about what can be done with excess cash on hand, and there is a paragraph about how changes in purchasing power, which is currency in this case, can affect a company's cash. As stated before, the increase in the Canadian dollar would cause U.S. to buy less from Canada and maybe purchase the same product for a cheaper price from another country. In my opinion, Canada should raise their prices a bit, but not too much so that U.S. would continue to purchase our products.

Reflection

Canada's rising dollar doesn't affect me that much in the short run, but may influence me more later on. As of now, the only direct affect it has on me is the rising gas prices. On the other hand, I could go down south to the states and purchase more things than before with the same amount of money. In my opinion, keeping the prices the same and having more people purchasing your product is better than increasing prices and having less people buying your product. If gas prices were lower, I would drive my car more often. Now that the gas prices range from $1.10/L - $1.15/L, I try not to drive as much. Gas is quite expensive; I could probably use up to $60 every two weeks if I drove everyday, and that could really hurt my wallet. Once again, I think that Canada should keep their prices as they are now, and hopefully attract other countries to purchase more from us.

Chapter 5

Article

Summary

ABC Learning's former acting chief financial officer, John Gadsby, told the Federal Court that in min-2008, the company's internal accountants were instructed to prepare a cashflow statement for the rest of the year, because the company's debts are still increasing. The original cashflow statement showed the group was not expecting any "compensation fees" paid to ABC Learning Centers from childcare center operators and developers from June to December 2008. However, Former chief executive and founder Eddy Groves reviewed the second cut of the statement, and found that there could be $44.79 million in fees received over that six-month period. It was also stated in court that other substantial changes was made to the original statement, including an increase in the value of childcare payment receipts from parents in that time.

Connections

The textbook states that a cashflow statement is to be prepared to measure the company's performance on a cash basis, it cannot replace the income statement as it summarizes the cash flows. Owners and potential investors look at cashflow statements to see roughly how well the company is doing over a fiscal period. The cashflow statement cannot replace an income statement just because they both show how well the company is doing. An income statement provides information on the company's profit for a year, while a cashflow statement shows the company's everyday cash flow. David Blanche, an accountant in the company, basically lied about the cashflow statement by altering the values on it; This would mislead potential investors because they would think the company is doing very well and would continue to invest in ABC Learnings Centers.

Reflection

I believe it is very unethical to put fake values on the cashflow statement as it is very important for investors and owners. Putting incorrect values on the cashflow statement would also make the company look bad, and may encourage existing investors to stop investing. As an investor, I would definitely want the correct cashflow statement; If I found out the company was lying after I started investing in them, I may stop investing immediately, but I would ultimately lose money because of their dishonesty. Once again, I think it is important to provide an income statement and a cashflow statement, not just one statement that is combined.

Chapter 4

Article

Summary

The popular online video-sharing site, YouTube, will be pairing up with Time Warner Inc. and The Walt Disney Co to test a video recognition technology. Youtube owner, Google Inc., was previously sued by Viacom Inc. for more than $1 billion; Viacom Inc. complained that YouTube hasn't done enough to prevent its users from posting up "thousands of copyright clips" to the site. Most of the videos on YouTube are homegrown, copyright content from partners such as CBS and NBC also attract viewers. Some of these partner companies don't like how people are uploading their material and YouTube is trying to resolve this problem. "Protecting those relationships is key for online video." Youtube has tried to help this problem by negotiating with uploaders to remove the copyright content or to purchase a license. YouTube can track down these uploaders by using audio recognition technology and a similar video fingerprint technology. Google found this technology and bought it for $1.65 billion in October.

Connection

This topic is related to Chapter four of the textbook because Chapter four mainly focuses on revenue recognition. YouTube is literally paying people to post up videos. If you post up a video, and it has a certain number of views, YouTube would pay you. Anybody can do it, as long as it attracts viewers, they'll get paid. Some users use the money that they earn to buy new equipment for new videos, others use the money to donate to charities; Some people actually earn a living posting up videos on YouTube! Obviously, there is no cash-to-cash cycle, no acquisition of inventory, no selling activity, no delivery of product, and no warranty service. There is a collection of money when the video has enough views.

Reflection

If NBC and CBS is not happy with people uploading their material, they should make their own account and upload it themselves. This way, nobody would make money off them, and YouTube users would be able to watch episodes they missed on TV. Personally, I don't go on YouTube to watch TV episodes, I only go on to watch music videos and other random clips. There are many other sites that you can watch online TV, YouTube is not the best for that. Even though I don't make videos of my own, I like the idea of YouTube paying uploaders to upload videos; I think this would encourage user to upload videos. I think it's insane how much Google would do to prevent pirated material on their site; I can't believe they spent $1.65 billion just for "video fingerprinting technology."

Financial Accounting 12 Chapter 3

Article

Summary

This article from CAmagazine talks about ethics in the

workplace. William, an experienced employee at a large

company, was wondering how his foreman could afford

so many luxury goods. One day, William found a pay

cheque for someone he didn’t recognize and he became

suspicious. He mentioned it to a few people, and they

encouraged him to report the situation through the

company’s ethics hotline. Apparently, the foreman was

creating fictitious jobs and pocketing the extra money.

In similar situations, many employees don’t report the

situation because they fear of losing their jobs and think

they have more to lose than to gain.

Connections

This article in CAmagazine connected to chapter 3 in

the book because on page 163, there is a small article

that also talks about ethics in accounting. It says that

the company wants a big loan from the bank, and asked

you, the staff accountant, to postpone a write off to some

equipment; the equipment is currently idle, and will

probably never be used again. Writing the equipment off

immediately would have significant negative impacts on

the company’s income for the period, which leads to

negative impacts on the bank’s assessment of the

company. Basically this means that companies actually

manipulate things to make their income and balance

sheets looks better than they actually are; which, in

my opinion, is unethical.

Reflection

If I was placed in a situation similar to William’s

situation, I would most likely report it to the ethics

hotline. I believe ethics in a company is really

important because if a lot of people in the company

lie about incomes and other company matters, it will

make a bad impression on others; this would most

likely cause potential investors to avoid investing in

this company. If I was investing in a company, I

wouldn’t want to invest in it, and then find out it’s

doing really poorly. If I wasn’t happy with what I

was making in a company, I would either work

harder to get promoted, I definitely wouldn’t make

fictitious jobs just to earn more money, because

that’s basically stealing.

Chapter 2 blog

Article

Summary

This article talks about how prices in general should be lower in the worst recession since World War II, but right now the prices in the economy are rising, "climbing 26 percent in the last month [May]." The good news is that many oil traders believe that the recession is "at or near its worst, meaning a recovery could start later this year; the bad news is that many people are unwilling to pay for gas at this price, during a recession, will people pay for gas when the recession is over, when the prices rise even more? Because people are scared of the prices increasing, countries all over the world are signing a bill to regulate the use of oil.

Connection

This article has concepts related to the Financial Accounting 12 because chapter 2 deals with "business transaction analysis and financial statement effects." Many companies and organizations own company cars, which are mainly used for the company, not for personal use. People using cars means people purchasing oil, and when they purchase oil for the company's car, the cash of the company should be decreased, not the user's cash. The cost of oil is under automobile expense; therefore it's an expense to the company, and the company would be able to claim more tax return. Due to the increasing oil prices, the company may have to sell off some assets in order to pay for the oil,

Reflection

I believe that the increasing prices of oil will play a big role in affecting the balance sheets and other financial statements of companies. Increasing oil prices mean increasing expenses for companies; during this year and last year, the oil prices have increased dramatically, forcing some people to find new alternatives to driving. People should be aware of how scarce our natural resources are, and should try to reduce the use of it. I think that countries are showing some initiative by signing that bill; hopefully this will help us realize how important it is to save the resources.

Auditor: Earthquake funds spent properly

Article

Summary

On May 12, 2008, an earthquake with a magnitude of 8.0
hit the Sichuan, Gansu and Shaanxi provinces. The National Audit Office (NAO) says that over 4,500 auditors have been tracking the 76 projects distributed across the 28 counties of the three provinces since January. Projects include the reconstruction of rural houses, schools, transportation, and telecommunication projects. Although no major legal breaches were found in the use of reconstruction funds, the NAO did find some problems. The Anxian county lied by inflating its losses from the quake, so they would receive more fundings than they require. As a result, central finance gave out an extra 15.5 million yuan to the project. But in the end, after auditing, the extra money was refunded.

Connection

This article relates to chapter 1 of the textbook, Financial Accounting - a use perspective, because it mentions about auditors and their job. The textbook defines an auditor as someone who is a "professionally trained accountant who add credibility to the financial statements by expressing their professional opinions as to whether the financial statements fairly present the company's results." In other words, an auditor is a professional accountant who "checks over a company's 'books' and their job is to correct the mistakes found." The thousands of auditors are important in this article because they have helped the many people in need by refunding "stolen" money, so it can be used for people that actually need it.

Reflection

In my opinion, auditors are important to everyone; for if there were no auditors, the money would've been "stolen" by these greedy people, and the people starving or homeless may not get help because of their greediness. I believe that many people in the world are lying in order to collect more money, and auditors are helping by stopping them from "stealing" money. Also, I think that auditors should check companies more often, maybe every six months, instead of every year; this will lower the chances of any major violations or legal breaches.

financial accounting 12

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