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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