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Cash v. Accrual: Why certain reports do not agree with other reports
Broadly speaking there are two ways to report accounting information. Revenues and expenses can be measured on either a cash basis or accruals basis:
- Cash Basis: Revenue is recognised in the period that money is received and expenses are recorded in the period in which money is paid.
- Accrual Basis: Revenue is recognised in the period in which the sale is made, regardless of when money is received. Expenses are recorded in the period in which the purchase occurs, regardless of when the payment is made.
What method you use can vary according to different circumstances:
- How you report to the business' management and shareholders (internal reporting);
- How you report to the ATO, ASIC and/or ASX (external reporting); and
For example, you may maintain your internal books on a cash basis by tracking receipts and payments (a "cashbook"), but your accountant may convert this to the accruals method by adding back debtors, creditors and stock on hand at year end. Therefore you are reporting to the ATO on an accruals basis.
Another example is that you may account for GST using cash or accruals regardless of your internal reporting standard. So you may do all your internal reporting on an accruals basis but submit the Business Activity Statement on a cash basis for cash flow reasons.
Using accruals for internal, external and GST reporting is the most natural and easily understood method. This is because all the mechanisms that make reporting meaningful (stock categories, tax codes etc) are recorded against the original invoice/purchase. When cash reporting is used, the system must calculate backwards from the cash entries to obtain the details about the items in those transactions. This is slower, clumsier and there are circumstances where it may present the same information differently (for example, if you reverse a receipt and then re-receipt against different invoices).
So even if your business is "cash-based" — in other words, your customers pay immediately and you pay your suppliers immediately — it is preferable to generate accruals-based reporting. And of course, it doesn't make any arithmetic difference.
The majority of Cadzow 2000 reports use accruals, however some provide cash reporting. Unless you have no debtors and no creditors, these reports will never agree with each other for any given period.
For example, you issue an invoice dated 01/05/2004 for $100 and the customer pays on 15/07/2004. On a Cash basis, the revenue is recognised in July (of the 2004/2005 financial year). On an Accruals basis, the revenue is recognised in May (of the 2003/2004 financial year).
Therefore a sales report for 2003/2004 using accruals will not agree with a sales report for 2003/2004 using cash.
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Disruption has taken on new meaning, particularly as applied to global supply chains during the pandemic. That “disruption” is to human activity, but the existing ecosystem of supply chains—the plants, factories, and logistics infrastructure—remains intact if temporarily human-less.
That might be an obvious observation, yet you wouldn’t know it by the chorus of calls for overhauling supply chains because the pandemic has somehow revealed structural weaknesses. It has also become a central political argument in justifying economic “decoupling”—in large part because China happens to be where many industries’ suppliers are located.
But was the supply chain system in place pre-Covid particularly fragile? It would appear that the concentration of supply chains in East Asia—from high tech products to commodity goods—has turned out to be a major silver lining. That’s because Taiwan, South Korea, China, and Japan dealt successfully with the pandemic and are now the first batch of major economies to resume production. As of April, the majority of Chinese firms’ production capacity had returned to above 80%, according to official figures. This is corroborated by Trivium China’s “return to work” tracker, which currently stands at 87%.
A leading indicator of how well the East Asian supply chain has absorbed the pandemic shock is Apple. It is only one company, but its performance in the middle of a pandemic, combined with the concentration of its suppliers in East Asia, makes Apple a useful bellwether for the resilience of supply chains (see Figures 1a and 1b).
Figure 1a. Apple Suppliers Breakdown by Region, 2017
Figure 1b. Apple Suppliers Breakdown by Region, 2019Notes: 1) The data show where suppliers are physically located, not the headquarters of the actual firms. 2) For 2017, there are a total of 759 supplier entities in the sample; for 2019, there are a total of 799 supplier entities. 3) The “Other” category includes Brazil, Mexico, Israel, India, Costa Rica, Morocco (2017), and Australia (2019).
Source: Apple; author calculations.
Not only did Apple concentrate more suppliers in China from 2017-2019, it also increased its overall supplier presence in East Asia, from 83.6% to 86.5%. Taiwan and South Korea also gained slightly, possibly at the expense of Japan because they manufacture substitutable products, though that’s difficult to determine precisely from the data. To the extent there is some diversification from China, the shifts have been largely intra-Asia among Asian suppliers. Some Japanese, and even Chinese, firms have relocated to Southeast Asia.
Among the “Others” category, Apple seemed to have shifted away from Mexico (from 7 to 4 entities), while India gained more supplier entities in those two years. Perhaps it is no coincidence that Indian newspapers have been rife with speculation that Apple may shift one-fifth of its manufacturing from China to India, though it would appear that is far more aspirational than anything approaching reality.
But what is the reality is that none of the new products that Apple has quietly released over the last few months has experienced significant hiccups, despite reports raising concerns. If East Asian supply chains were in shambles, then consumers would feel it quickly. So far, consumers haven’t (including myself who ordered a laptop for work that arrived days ahead of schedule). And the company’s upcoming iphone 12 release is still scheduled for the usual fall season, with few signs of delay.
Doubling down on the East Asian supply chain ecosystem isn’t exclusive to Apple either. After its splashy investment in Shanghai in 2019, Tesla has since redoubled its efforts to build out what amounts to a “parallel” supply chain in China as it aims to ramp up capacity out of its Shanghai Gigafactory. That makes sense as a matter of corporate strategy, since one of the key inputs that Tesla needs, the lithium-ion battery, is increasingly being dominated by Chinese giant CATL.
For multinational companies, supply chains by definition come with ever-present risks, with or without a pandemic. It is sensible and necessary for companies to constantly improve the integrity and security of their supply chain networks that took years, if not decades, to build. But it is precisely the fact that these ecosystems are painstakingly built and generally well managed that they have largely passed the Covid shock test.
That doesn’t mean the next crisis will be the same. For some companies, it may make strategic sense to enhance their supply chain integrity by diversifying from China and East Asia. For others, the lesson from the pandemic may be to hasten the adoption of robots to hedge against interruptions to human activity rather than to diversify production location.
Industries differ in their experiences of the pandemic’s impact, but any industry that has complex and entrenched supply chains would agree that the switching costs are likely exorbitant in terms of both corporate revenue and lost productivity. And the cost of unwinding that complexity by political fiat, such as forcing China out of the East Asian ecosystem by mandate, will ultimately be borne by consumers.
Factors could change more drastically post-Covid, but the resilience of the East Asian supply chain has been a bright spot amid abysmal economic news. To borrow Robert Solow’s famous quip: you can see supply chain decoupling “everywhere except in the numbers.” At least not yet.
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When a national economy gains or loses shares in the world’s markets, there is usually a direct tie to the country’s unit labour cost position. This position indicates how high a product’s labour costs are in comparison to those of foreign competitors. An interactive chart developed by the Cologne Institute for Economic Research (IW) illustrates this connection in 16 surveyed countries: When the unit labour costs in the manufacturing industry decrease, an increase can usually be seen in the export performance. Conversely, higher unit labour costs are shown to be associated with a loss of market shares.
Germany suffered for many years as a consequence of decisions made in the past: The high-cost labour agreements at the beginning of the 1990s increased the cost of German industrial products at the time by one-fourth, relative to the competition. Thanks to its moderate wage policy, Germany has largely managed to reclaim its market shares since that time. Some countries have experienced the opposite: Finland and Sweden, for instance, first reduced their unit labour costs, but then went on to forfeit the market shares they had gained in the process.
Southern European countries, such as France, Italy and Spain, have also seen a considerable decline in export performance over the past years. The curves are particularly dramatic in the case of Greece: Before the euro was introduced, the unit labour cost position first declined, and exports increased at the same time. However, the common currency then led to a credit boom and to quickly escalating unit labour costs – with the country’s export performance seeing a corresponding decline. The relationship between costs and exports is not always as clear as in the European countries affected by the financial crisis. Japan, for example, has not managed to recover from its recession for decades – despite decreasing unit labour costs.
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How great would it be to save money? Paying your car payment earlier than the due date each month can help you save money by reducing the interest you have to pay to your lender.
When you make your car payment, some of your payment will be applied to the interest on the loan, while the remainder will be applied to the principle. Interest is the amount the lender charges for letting you borrow the money, while the principle is the actual amount that was paid on your behalf when you purchased the car.
Interest begins accuring on your auto loan as soon as money is disbursed for the car your purchased. Depending on the interest rate the lender gives you, it will determine how much you pay back in interest. Since interest will accrue daily on your loan, If you pay your payment five days early, then you will pay 5 days less of interest. The earlier you pay the payment, the more of the payment will go to principle.
When you make your automobile payment, interest due comes out of your payment and the remainder is applied to your actual balance. When you pay before your due date, you have fewer days of interest due and more of your payment is applied to your balance, which allows you to payoff your automobile loan early.
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We all want our money to go further for us. But given the choice, we’d all probably like our money to work harder for us but at the same time contributing to greater society. Sustainable, ethical and responsible investing is all about this – using your money to make a difference but also generate a positive return. There’s no reason why you can’t go green on two-fronts!
Sustainable investing and the changing landscape
The world is changing and attitudes are changing. Over recent years, we have seen the growing importance of tackling key issues such as climate change, reducing the use of plastics and ensuring businesses are run and governed in ways that benefit society.
As populations and average-life expectations continue to increase, the focus on businesses providing a positive impact to societies in which they operate is understandably drawing more attention.
And your investments have the opportunity to contribute. In April 2020, the Investment Association confirmed within the UK that there were record inflows into responsible investment funds . And this was against a backdrop of a pandemic. Investors are becoming more aware of the contributions that there money can make to society, to do the world and themselves good.
What is sustainable investing?
There is no fixed definition of sustainable investing. You’ll often hear it interchanged with other words. But one thing is for sure is that whatever word is used (such as ethical, responsible, impact, green), sustainable investing is all about making a positive impact to society.
With that said, there are some key principles for differentiation:
- Impact Investing: investments where the benefit or impact to wider society can be measured. This could be related to savings to water usage or more broadly across areas such as renewable energy and affordable housing.
- Ethical Investing: investments that tend to work on the basis of exclusion (or ethical screening) because they have a bad effect to the wider world. Firms that use animal testing, involved in the gambling industry or produce tobacco are some of the examples you’ll be familiar with.
- Sustainable Investing: Like the other principles, sustainable investing follows the same principle of investing in businesses that do good for the environment and wider society. You’ll often hear it hear it as referred to as some of the aforementioned names. Although when it comes to sustainable investing, there’s usually consideration of environmental, social and corporate governance activities within the process.
EGScellent – the principles that are changing approaches to investing
The concept of Environmental, Social and Governance aspects of a company broadens up the definition somewhat. It considers:
- Environmental: the impact a business has on the environments they operate within on areas such as air pollution and climate change.
- Social: consideration as to how a business interacts with internal and external stakeholders including on areas such as charitable engagement, gender equality and positive working environments for employees.
- Governance: how a business is governed in-line with a view to ensuring management acts within interests of its shareholders rather than its own.
It’s worth noting that if a fund has a focus on ESG then it could still include in areas that investors would prefer to exclude such as tobacco. This is because points 2 and 3 in the above may rank well regardless if it operates in an industry that is believed to do harm to the environment.
Let’s get practical: your options for sustainable or responsible investing
Now, you could invest directly in shares of companies that you believe to be sound from a responsible perspective. This would require looking not only at the sector itself but doing a great deal of research yourself to truly understand the workings of a company (balanced against your desired returns).
Investing in funds offers a potentially easier way for responsible investing, and here we’look at a few practical examples.
Passive Funds & the FTSE4Good Index Series
Established in 2001, The FTSE4Good Index Series has a focus on the ESG principles and avoids investing in sectors such as weapons and tobacco – capturing a broad range of global businesses that are showing positive application of ESG. Passive funds can track an index such as this and ease the burden on you.
As a series, there are also other variants to the FTSE4Good index including FTSE4Good Emerging Index – with the latter covering 20 emerging market countries.
Active Funds: Responsble Fund, Ethical Funds, Sustainable Funds, ESG Funds…
When it comes to active funds, you will often see various choices for responsible investment funds (sometimes called ethical funds, sustainable funds or ESG funds). The best way to understand the options are to take a closer look at some of via their fact sheets:
- Fidelity Sustainable Water and Waste Fund – described as an ESG fund that provides exposure to under-researched water and waste management sectors. It its investment policy is to invest at least 60% in shares of sustainable water and waste companies globally. Some of its include American Water Works Co and Veolia – a company focused on water, waste management and energy that aims to ‘contribute to the sustainable development of industries and communities’.
- Triodos Global Equities Impact Fund – described as a global impact fund that invests in a diversified range of large listed companies that are selected for their sustainability as well as financial performance. Holdings include Danone as well as Roche Holding – a multinational healthcare company ‘committed to improving lives’.
- Kames Ethical Cautious Managed Fund – described as a fund that integrates an ethical screening proccess which means it doesn’t invest in certain sectors. Some of its biggest holdings are in RELX as well as GB Group – a company that helps organisations with identity management and fraud prevention.
- Schroders – recognizing the importance of ESG and responsible investment, Shroders has committed to integrating these principles into all of its investments by 2020.
Regardless of the naming convention (Sustainable, Ethical or Impact), you will see they all have on thing in common; their top holdings are generally representative of companies that seek to positively contribute to society.
Going Green on Two-Fronts
Your first instinct is probably that responsible investing will mean reduced returns. But this is not true. Looking at the above, you will see you can still invest in many big-name companies, but ones which are contributing to society and the environment we all live in. Data is also showing that ESG investing can outperform its less societal-aware peers.
Let’s think about the basis of investing, it’s about investing for the long-term (a minimum of 5 years). Investing is not about the short-term and neither is a business. A business must be able to adapt and harness changes in consumer attitudes and the environmental landscape – without doing so, it will eventually fall behind the rest. There is logic in the fact that these firms have a greater chance of seeing their value increase. Look at BP, it’s new strategy is focused on renewable energy. Firms must adapt to survive.
Given increased choice, it’s easy to see why you may chose to go green on two fronts – increasing your returns but content in the knowledge that you are supporting businesses that are helping to support a better word, for now and for the future. What investor wouldn’t want that?
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Between the subjects of advertising market a variety of functional relationships are formed – from partnership to competition. It is believed that partnerships are usually established between the advertiser and of advertisements. It is these relationships are the cornerstone of the entire advertising process. Advertiser is the central figure in subjects of advertising market and the consumer of advertising services, therefore, advertisement producer is necessary, on the one hand, as much as possible to consider its consumption needs, and on the other hand, the rational use of the resources available to it.
Competition forces of advertisements to think about the interests of advertisers, as only if there is demand for advertising services it can sell them. The main purpose of advertisements and distributors of advertisements is to make profit through timely and profitable realization of advertising services. To achieve this, the data subjects have to establish and realize their competitive advantages, to produce competitive products, to determine the target group of consumers and advertising services a niche market.
Economic relations between the main actors of the advertising market are coordinated through a pricing mechanism that maintains the balance in the market between production and consumption, supply and demand. Historically, the advertising market have developed some form of financial relationships between the customers of advertising and executing advertising. Among the most common forms of compensation for customers advertising works production are the following …
- The payment of the fee.
- The payment of fees.
- Hourly rates (contract prices).
- Mixed payment (commission + hourly fee or a commission fee +).
- The payment of additional fees in the form of bonuses.
Further development of the financial relations between advertisers and advertisement producers shows that in response to the increasing demands of advertisers, advertisement producers start to use different forms of compensation, which depend on the outcome of their work, that is, on what actually is the contribution of the advertisement in the change in the position advertised object on market. It is this trend is beginning to be traced in the relationship between the major advertisers and advertising producer.
Competition In The Subjects Of Advertising Market
On the subjects of advertising market, as well as in other markets, the law of competition, according to which there is to improve the quality of advertising services, a decrease in their prices, as well as the objective process of exclusion from the advertising market of substandard and expensive advertising services.
Advertising services competitiveness expressed by a set of qualitative and cost characteristics that provide its benefits on the advertising market among similar services. The level of competitiveness of advertising services is strongly influenced by market factors such as the degree of satisfaction of the demand for specific advertising services, the capacity of the individual market segments, the presence and number of competitors, pricing policy.
Competitor – person, group, organization, competing to achieve identical objectives: in an effort to have the same resources, benefits, occupy a superior position in the market, produce and sell the same kind of goods or similar goods, increasing their sales by reducing sales rivals. Competitors faced by the organization, it is the producers or sellers of similar products, different individual parameters (parametric competitors), appearance and functions (trade competitors) or trademarks (unbranded competitors), and producing a fundamentally different products with high short-term replacement.
There are various types of competition: fair – unfair; price – non-price; intra – inter-industry; effective; effective. In general, to distinguish between price and non-price methods of competition. Price competition is based on price. Reduced prices for advertising services strengthens the market position of the organization compared to the competition, while the price increase for services reduces its competitiveness. Non-price competition is based on improving the level of service and quality of service. Increasing the quality characteristics of product advertising, the organization receives a significant advantage over its competitors, which could serve as the basis for the purpose of higher prices. If the organization keeps the price of their services from the competition level, the higher quality allows it to occupy a leading position in the market, increase the number of users of its services and the size of the occupied market share.
Price competition is kind of competition, which is based on lowering the price and is based on reducing the cost of services. At the same time, in a civilized market systems do not allow dumping, that is an artificial reduction of prices with the aim of ousting and ruin a competitor and gaining a monopoly position in the market. Price reduction is possible either by reducing costs or by reducing profit. Thus, to achieve the goal, which implies an offer price for its services, lower than the price of similar services to other commercial producers, the organization must either reduce the costs of providing services, or consciously go on a loss of profit to keep for a larger market share. Lowering the price usually forced, economically disadvantageous to the advertisement producer event, as in the end it leads to lower profits and thus may limit the further development of the business.
Non-price competition is kind of competition, which is based on the sale of services of higher quality and reliability, achieved through technical excellence, as well as using all legal means, in addition to lower prices, in order to attract new customers. This competition, in which the advertisement producer improves the quality of services and their conditions of sale (marketing), leaving the price unchanged. In this case, the epicenter of competition between the advertisement producer are such non-price service parameters as their novelty, quality, reliability, prospects, compliance with international standards, ease of maintenance and others. Thus, non-price competition is carried out in different directions: innovation (update) services, improving the technical aspects of services and their adaptability to the needs of consumers.
The State As The Subjects Of Advertising Market
The state acts as such a subject. It is a special subjects of advertising market – it cannot be considered, because of the specificity and magnitude of the impact of its functions, or to primary or secondary to the subjects. State function on the advertising market – the legislative and controlling – the state establishes the “rules of the game” in the market are monitored. The reasons for government intervention in the market process of production and consumption of advertising services have an objective character. The main functions of the state control on the advertising market concerns control of inappropriate, prevention and suppression of monopoly and unfair competition.
The functioning of the modern advertising market is impossible without state regulation – a system of legal, organizational and economic forms and methods of influence on the market processes in order to protect the rights and interests of all market participants. The need for government regulation due to the fact that the natural flow of market processes in some cases gives rise to contradictions of monopoly elements, imbalances and so on. State regulation is aimed at ensuring the legal and economic conditions for the smooth functioning of the market economy, free competition, protection against monopoly and administrative pressure.
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In the sixth century, they were already included in the diocese of Coutances where they remained until the Reformation. In the late twentieth century, a strong Roman Catholic presence re-emerged with the arrival of numerous Portuguese workers (both from mainland Portugal and the island of Madeira). The term "Channel Islands" began to be used around 1830, possibly first by the Royal Navy as a collective name for the islands. continued the work. Hoards of Armorican coins have been excavated, providing evidence of trade and contact in the Iron Age period. the Crown, the Church, and the people). Rental income comes second at 15.1% with other business activities at 11.2%. Among these are Bréhat, Île de Batz, Chausey, Tatihou and the Îles Saint-Marcouf. In 2019, the island's economy, as measured by GVA, grew by 2.1% in real terms to £4.97 billion. Hydrogen is the most abundant chemical substance in the universe. For the archipelago off the coast of California, see, Satellite photo of the Channel Islands in 2018, UK Supreme Court, R (on the application of Barclay and another) v. Secretary of State for Justice UKSC 54, List of islands of the Bailiwick of Guernsey, Channel Islands in the Wars of the Three Kingdoms, minor counties of English and Welsh cricket, List of churches, chapels and meeting halls in the Channel Islands, United Nations Department of Economic and Social Affairs, "Fact sheet on the UK's relationship with the Crown Dependencies", Bertrand du Guesclin: The Black Dog of Brittany, "Appendix F: Concentration Camps: Endlösung – The Final Solution", "Aurigny; un camp de concentration nazi sur une île anglo-normande (English: Alderney, a Nazi concentration camp on an island Anglo-Norman)", "Nazi Germany Surrenders: February 1945 – May 1945", "Public Hearing: Review of the Roles of the Crown Officers", "Review of the Roles of the Jersey Crown Officers", "Background briefing on the Crown Dependencies: Jersey, Guernsey and the Isle of Man", "Guernsey and Jersey begin recruiting for senior Brussels positions", "Jersey Economy 2020, CIA World Factbook", "Measuring Jersey's economy GVA and GDP - 2018", "Gross Value Added and Gross Domestic Product", "Guernsey Annual GVA and GDP Bulletin 2018 (First Estimates)", "Other British Islands' Notes | Bank of England", "New Channel Island company offers freight service", "Channel Isles: The Islands' Domain Names :: Home", "Trail of the unexpected: Victor Hugo’s Guernsey", "Minor Counties Trophy Matches played by Channel Islands", "First ever Jersey official religion statistics show 39% of islanders are non-religious", "This is the eighth part of a 54-page article", British–Irish Intergovernmental Conference, United Kingdom of Great Britain and Ireland, Guernsey Grammar School and Sixth Form Centre, Policy and Resources Committee of Guernsey, https://en.wikipedia.org/w/index.php?title=Channel_Islands&oldid=993204012#Economy, Special territories of the European Union, Wikipedia articles needing page number citations from December 2015, Articles with French-language sources (fr), CS1 maint: BOT: original-url status unknown, Articles with dead external links from July 2020, Articles with permanently dead external links, Articles with unsourced statements from November 2010, All articles with specifically marked weasel-worded phrases, Articles with specifically marked weasel-worded phrases from April 2015, Wikipedia articles incorporating a citation from the 1911 Encyclopaedia Britannica with Wikisource reference, Wikipedia articles with WorldCat-VIAF identifiers, Creative Commons Attribution-ShareAlike License, The Little Swinge (between Burhou and Les Nannels), La Déroute (between Jersey and Sark, and Jersey and the Cotentin), Souachehouais (between Le Rigdon and L'Étacq, Jersey). According to 2015 statistics, 39% of the population was non-religious.. Thousands of children were evacuated with their schools to England and Scotland. They make up 99% of the population and 92% of the area. Guernsey (GBG): a number of up to five digits; This page was last edited on 9 December 2020, at 10:00. Since the 1990s, declining profitability of agriculture and tourism has challenged the governments of the islands. Regional television and radio broadcasts are available in the islands. The German garrison in Alderney was left until 16 May, and it was one of the last of the Nazi German remnants to surrender. A number of islands in the English Channel are part of France. Premium Economy Flights to Channel Islands: Enter your dates once and have Tripadvisor search multiple sites to find the best prices on Channel Islands flights. The Channel Islands (Norman: Îles d'la Manche; French: Îles Anglo-Normandes or Îles de la Manche) are an archipelago in the English Channel, off the French coast of Normandy. Islanders became involved with the Newfoundland fisheries in the seventeenth century. After British legislators also threatened to impose public registers on them, the Channel Islands, Guernsey, and Jersey announced in June they would … At the Reformation, the previously Roman Catholic islands converted to Calvinism under the influence of an influx of French-language pamphlets published in Geneva. The young King Richard II of England reconfirmed in 1378 the Charter rights granted by his grandfather, followed in 1394 with a second Charter granting, because of great loyalty shown to the Crown, exemption for ever, from English tolls, customs and duties. The Channel Islands are British crown dependencies located off the French coast of Normandy and in the English Channel. Established by Congress in Any institution common to both is the exception rather than the rule. A long-running court battle over the “gig economy” has ended with the UK Supreme Court upholding self-employed workers’ rights – and may have knock-on effects in the Channel Islands. Find out why. Email: online.groceries@channelislands There were probably some Celtic Britons who settled on the Islands in the 5th and 6th centuries AD (the indigenous Celts of Great Britain, and the ancestors of the modern Welsh, Cornish, and Bretons) who had emigrated from Great Britain in the face of invading Anglo-Saxons. , The islands acquired commercial and political interests in the North American colonies. Welcome to financialadvisory.com Both bailiwicks are members of the British–Irish Council, and Jèrriais and Guernésiais are recognised regional languages of the islands. , The islands have never been part of the European Union, and thus were not a party to the 2016 referendum on the EU membership, but were part of the Customs Territory of the European Community by virtue of Protocol Three to the Treaty on European Union. :158 The term refers only to the archipelago to the west of the Cotentin Peninsula. The two bailiwicks have been administered separately since the late 13th century. The names of the larger islands in the archipelago in general have the -ey suffix, whilst those of the smaller ones have the -hou suffix. They are considered the remnants of the Duchy of Normandy and, although they are not part of the United Kingdom, the UK is responsible for the defence and international relations of the islands. There are four main dialects/languages of Norman in the islands, Auregnais (Alderney, extinct in late twentieth century), Dgèrnésiais (Guernsey), Jèrriais (Jersey) and Sercquiais (Sark, an offshoot of Jèrriais). A bailiwick is a territory administered by a bailiff. The Chausey Islands south of Jersey are not generally included in the geographical definition of the Channel Islands but are occasionally described in English as 'French Channel Islands' in view of their French jurisdiction. Any British citizen who applies for a passport in Jersey or Guernsey receives a passport bearing the words "British Islands, Bailiwick of Jersey" or "British Islands, Bailiwick of Guernsey". The islands were the only part of the British Isles to be occupied by the German Army during World War II. That is not to say that Channel Islands reverses the binary, “making culture primary and economy secondary” (2304), rather it is an example of the ‘open’ and ‘porous’ nature of the creative industries, influenced as much by culture , Jersey has had a steadily rising population, increasing from below 90,000 in 2000 to over 105,000 in 2018 which combined with a flat GVA has resulted in GVA per head of population falling from £57,000 to £44,000 per person. In the late eighteenth century, the Islands were dubbed "the French Isles". For the most part the islands legislate for themselves. Sir Edmund Andros of Guernsey was an early colonial governor in North America, and head of the short-lived Dominion of New England.. Compare the top deals for Economy Rent a Car, backed by our Price Match Guarantee. The Jersey cricket team and the Guernsey cricket team are both associate members of the International Cricket Council. She was purpose-built to do exactly what we do – sail the waters of the Channel Islands. :5–10 Jersey was occupied by the French in 1461 as part of an exchange of helping the Lancastrians fight against the Yorkists during The War of the Roses. 'Îles Normandes' and 'Archipel Normand' have also, historically, been used in Channel Island French to refer to the islands as a whole. The lowest point is the English Channel (sea level). Alderney had the only Nazi concentration camps on British soil.. Channel Islands Spanish: Archipiélago del Norte Geography Location Pacific Ocean Total islands 8 Area 350.89 sq mi (908.8 km 2) Highest elevation 2,429 ft (740.4 m) The Channel Islands (Spanish: islas del Canal, Archipiélago del Norte) are an eight-island archipelago located within the Southern California Bight in the Pacific Ocean, off the coast of California. The Isle of Wight, which is part of England, lies just off the coast of Great Britain, between the Channel and the Solent. A local television service was called Channel Islands Live started transmitting in early 2016, from the studios at Dorset Street, St. Helier, Jersey, Channel Islands. Tourism 4.5% with agriculture contributing just 1.2% and manufacturing even lower at 1.1%. The systems of government in the islands date from Norman times, which accounts for the names of the legislatures, the States, derived from the Norman 'États' or 'estates' (i.e. , The Norman language predominated in the islands until the nineteenth century, when increasing influence from English-speaking settlers and easier transport links led to Anglicisation. Registered Office: The Channel Islands Co-operative Society Limited, 57 Don Street, St Helier, JE2 4TR. This article is about the Crown dependencies. The German occupation of 1940–45 was harsh: over 2,000 Islanders were deported by the Germans, some Jews were sent to concentration camps; partisan resistance and retribution, accusations of collaboration, and slave labour also occurred. Economy - overview: The Channel Island economy is based on international financial services, agriculture, and tourism.In 1996 the finance sector accounted for about 60% of … From the beginning of the ninth century, Norse raiders appeared on the coasts. Bailiwick Radio broadcasts two music services online, through Apple & Android apps and on TuneIn. FCA registration No. The islands became detached by rising sea levels in the Neolithic period. Due to the destruction of documents, it is impossible to state how many forced workers died in the other islands. We like to get the hook down before the sun sets. Guernsey is the setting of Hugo's later novel Les Travailleurs de la Mer (Toilers of the Sea). Most travel guides look at the population, the sights to visit, something of … The islands were invaded by the French in 1338, who held some territory until 1345. Many land mines were laid, with 65,718 land mines laid in Jersey alone.. The legal courts are separate; separate courts of appeal have been in place since 1961. ‘The UK imported services worth £4.1 bn from Jersey, representing 2.5% of all UK service imports. Get the latest Economy news from the ITV News team in the Channel Islands. There was considerable hunger and privation during the five years of German occupation, particularly in the final months when the population was close to starvation. © financialadvisory.com 2010-2020 - Although we cover a range of products that we update periodically, please confirm the precise terms and interest rates of the product with the relevant bank. Channel Islands National Park preserves the five northern Channel Islands and one mile of ocean around each. The British Government demilitarised the islands in June 1940, and the lieutenant-governors were withdrawn on 21 June, leaving the insular administrations to continue government as best they could under impending military occupation.. Christianity was brought to the islands around the sixth century; according to tradition, Jersey was evangelised by St Helier, Guernsey by St Samson of Dol, and the smaller islands were occupied at various times by monastic communities representing strands of Celtic Christianity. Islanders are full British citizens, but were not classed as European citizens unless by descent from a UK national. , The annual "Muratti", the inter-island football match, is considered the sporting event of the year, although, due to broadcast coverage, it no longer attracts the crowds of spectators, travelling between the islands, that it did during the twentieth century. Jubilee Hospital Radio provided Guernsey hospitals with a radio service, Radio Lions serves Jersey hospitals. The numerous dolmens and other archaeological sites extant and recorded in history demonstrate the existence of a population large enough and organised enough to undertake constructions of considerable size and sophistication, such as the burial mound at La Hougue Bie in Jersey or the statue menhirs of Guernsey. Each of the three largest islands has a distinct vehicle registration scheme: In Sark, where most motor traffic is prohibited, the few vehicles – nearly all tractors – do not display plates. , Both bailiwicks issue their own banknotes and coins, which circulate freely in all the islands alongside UK coinage and Bank of England and Scottish banknotes.. It was retaken by the Yorkists in 1468. , The main islanders have traditional animal nicknames:. The States have evolved over the centuries into democratic parliaments. Wiley is the perfect boat for economy sailboat charter for up to four people Economy Charter Sail for a few hours … or sail all day. There was no resistance movement in the Channel Islands on the scale of that in mainland France. On 20 August 2013, Huelin-Renouf, which had operated a "lift-on lift-off" container service for 80 years between the Port of Southampton and the Port of Jersey, ceased trading. Modern broadband speeds are available in all the islands, including VDSL for home and business. The UK’s withdrawal from the EU on 31 January 2020 does not directly affect the Channel Islands ’ relationship with the EU 27 in key areas like tax, anti-money laundering, financial services, and data protection where the Islands were already third countries and as such remain committed to close cooperation with the EU. Under the provisions of Protocol Three, Channel Islanders who do not have a close connection with the UK (no parent or grandparent from the UK, and have never been resident in the UK for a five-year period) did not automatically benefit from the EU provisions on free movement within the EU, and their passports received an endorsement to that effect. It is responsible for wireless telegraphy licensing throughout the islands, and by agreement, for broadcasting regulation in the two large islands only. The earliest evidence of human occupation of the Channel Islands has been dated to 250,000 years ago when they were attached to the landmass of continental Europe. In official Jersey French, the islands are called 'Îles de la Manche', while in France, the term 'Îles Anglo-normandes' (Anglo-Norman isles) is used to refer to the British 'Channel Islands' in contrast to other islands in the Channel. PwC events to examine how boosting opportunities for women would give the Channel Islands’ economy a huge lift 04 March, 2019 This week, PwC will host events in both Guernsey and Jersey to highlight the benefits of having a diverse leadership team in business and how this links directly to higher economic performance. UK stamps are no longer valid, but mail to the islands, and to the Isle of Man, is charged at UK inland rates. In September 2010, a Channel Islands Brussels Office was set up jointly by the two Bailiwicks to develop the Channel Islands' influence with the EU, to advise the Channel Islands' governments on European matters, and to promote economic links with the EU.. チャンネル諸島（チャンネルしょとう、英: Channel Islands ）は、フランスのコタンタン半島西方沖合い、英国海峡に浮かぶ島々。 英語の発音により近い表記はチャネル諸島ではあるが、日本では慣例的にチャンネル諸島と呼ばれることが多い。 Edward III of England granted a Charter in July 1341 to Jersey, Guernsey, Sark and Alderney, confirming their customs and laws to secure allegiance to the English Crown. The Isle of Sark Shipping Company operates small ferries to Sark. Historically there have been railway networks on Jersey, Guernsey, and Alderney, but all of the lines on Jersey and Guernsey have been closed and dismantled. 6,600 out of 50,000 left Jersey while 17,000 out of 42,000 left Guernsey. In recognition for all the help given to him during his exile in Jersey in the 1640s, Charles II gave George Carteret, Bailiff and governor, a large grant of land in the American colonies, which he promptly named New Jersey, now part of the United States of America. While they are popular with visitors from France, Channel Islanders rarely visit them as there are no direct transport links from the other islands. The islands decided not to join the European Economic Community when the UK joined, and remain outside. , Following the liberation of 1945, reconstruction led to a transformation of the economies of the islands, attracting immigration and developing tourism. Read the other articles within this publication below PwC's Women in Work events examined how boosting opportunities for women would give the Channel Islands’ economy a huge lift On 6 and 7 March, we hosted events in both Guernsey and Jersey to highlight the benefits of having a diverse leadership team in business and how this links directly to higher economic performance. They were historically linked to the Duchy of Normandy, but they are part of the French territory along with continental Normandy, and not part of the British Isles or of the Channel Islands in a political sense. The Channel Islands (Norman: Îles d'la Manche; French: Îles Anglo-Normandes or Îles de la Manche)[note 1] are an archipelago in the English Channel, off the French coast of Normandy. In the early 21st century, the existence of governmental offices such as the bailiffs' with multiple roles straddling the different branches of government came under increased scrutiny for their apparent contravention of the doctrine of separation of powers—most notably in the Guernsey case of McGonnell -v- United Kingdom (2000) 30 EHRR 289. , Channel Island sportsmen and women compete in the Commonwealth Games for their respective islands and the islands have also been enthusiastic supporters of the Island Games. These services are provided by BBC Radio Jersey, BBC Radio Guernsey, BBC Channel Islands, ITV Channel Television, Island FM, and Channel 103. Control by the bishop of Winchester was ineffectual as the islands had turned overwhelmingly Calvinist and the episcopacy was not restored until 1620 in Jersey and 1663 in Guernsey. They contain major offshore financial centres in the Bailiwicks of Guernsey and Jersey. But there were not enough of them to leave any trace and the islands continued to be ruled by the king of the Franks and its church remained part of the diocese of Coutances. How Geography Shaped the Politics and Economy of the Channel Islands My post today is a selection from "The Channel Islands" by David Thomas Ansted and Robert Gordon Latham, published in 1865. Before German troops landed, between 30 June and 4 July 1940, evacuation took place. Among the legal heritage from Norman law is the Clameur de haro. Le Canal du Squez, (Figure 1) was discovered by Brian Phillipps of the Société Jersiaise in the early 1990s and has produced the largest Mesolithic assemblage from the Channel Islands … The UK Parliament has power to legislate for the islands, but Acts of Parliament do not extend to the Islands automatically. , Guernsey's traditional colour for sporting and other purposes is green and Jersey's is red. In 2016, the financial services sector accounted for about 41% of the island's output. , Jersey is heavily reliant on financial services, with 39.2% of Gross Value Added (GVA) in 2018 contributed by the sector. Guernsey had a GDP of £3.2 billion in 2018 and with a stable population of around 66,000 has had a steadily rising GDP which in 2018 passed £52,000. The population of Sark largely remained where they were; but in Alderney, all but six people left. The two Bailiwicks each have their own internet domain, .GG (Guernsey, Alderney, Sark) and .JE (Jersey), which are managed by channelisles.net. , Victor Hugo spent many years in exile, first in Jersey and then in Guernsey, where he finished Les Misérables. In 1483 a Papal bull decreed that the islands would be neutral during time of war. The Roman name for the Channel Islands was I. Lenuri (Lenur Islands) and is included in the Peutinger Table:4 The traditional Latin names used for the islands (Caesarea for Jersey, Sarnia for Guernsey, Riduna for Alderney) derive (possibly mistakenly) from the Antonine Itinerary. In 1066, William II of Normandy invaded and conquered England, becoming William I of England, also known as William the Conqueror. Usually, an Act gives power to extend its application to the islands by an Order in Council, after consultation. , Various attempts to transfer the islands from the diocese of Coutances (to Nantes (1400), Salisbury (1496), and Winchester (1499)) had little effect until an Order in Council of 1569 brought the islands formally into the diocese of Winchester. The teams have played each other in the inter-insular match since 1957. With lower tax rates than some European Union countries within its vicinity it is popular with private equity funds and banks. Submarine cables connect the various islands and provide connectivity with England and France. Since then, the Channel Islands have been governed as possessions of the Crown and were never absorbed into the Kingdom of England and its successor kingdoms of Great Britain and the United Kingdom. Channel Islands will be impacted by UK economy slowing down and shifting composition in the future EY ITEM Club is more optimistic about GDP growth in 2017, raising its forecast to 1.3% this year However, 2018 looks like to be a Bicycles display tax discs. , Tourism is still important however, Jersey and Guernsey have, since the 1960s, become major offshore financial centres. Since 1969, Jersey and Guernsey have operated postal administrations independently of the UK's Royal Mail, with their own postage stamps, which can be used for postage only in their respective Bailiwicks. Anglicanism was imposed in the seventeenth century, but the Non-Conformist local tendency returned with a strong adoption of Methodism. In 2001 and 2002, the Channel Islands entered a team into the MCCA Knockout Trophy, the one-day tournament of the minor counties of English and Welsh cricket. During the Wars of the Three Kingdoms, Jersey held out strongly for the Royalist cause, providing refuge for Charles, Prince of Wales in 1646 and 1649–1650, while the more strongly Presbyterian Guernsey more generally favoured the parliamentary cause (although Castle Cornet was held by Royalists and did not surrender until October 1651). A regular passenger ferry service on the Commodore Clipper goes from both Channel Island ports to Portsmouth daily, and carries both passengers and freight. They contain major offshore financial centres in the Bailiwicks of Guernsey and Jersey. The first evacuees returned on the first sailing from Great Britain on 23 June, but the people of Alderney were unable to start returning until December 1945. Their numbers have been reinforced by recent migrants from Poland and elsewhere in Eastern Europe. :2–4 Owain Lawgoch, a mercenary leader of a Free Company in the service of the French Crown, attacked Jersey and Guernsey in 1372, and in 1373 Bertrand du Guesclin besieged Mont Orgueil. This has been ascribed to a range of factors including the physical separation of the Islands, the density of troops (up to one German for every two Islanders), the small size of the Islands precluding any hiding places for resistance groups, and the absence of the Gestapo from the occupying forces. , Cricket is popular in the Channel Islands. This notwithstanding, it is a matter of local pride for monarchists to treat the situation otherwise: the Loyal toast at formal dinners is to 'The Queen, our Duke', rather than to 'Her Majesty, The Queen' as in the UK.. Television programmes are broadcast from the Frémont Point transmitting station. , The Channel Islands fall into two separate self-governing bailiwicks, the Bailiwick of Guernsey and the Bailiwick of Jersey. Although the words derive from a common root ('bail' = 'to give charge of') there is a vast difference between the meanings of the word 'bailiff' in Great Britain and in the Channel Islands; a bailiff in Britain is a court-appointed private debt-collector authorised to collect judgment debts, in the Channel Islands, the Bailiff in each bailiwick is the civil head, presiding officer of the States, and also head of the judiciary, and thus the most important citizen in the bailiwick. 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'S Later novel Les Travailleurs de la Mer ( Toilers of the island 's,... Of Hugo 's Later novel Les Travailleurs de la Mer ( Toilers of the century.
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Today, the New York Stock Exchange (NYSE) is a global institution. Billions of shares in thousands of companies are traded there every day, but it had an interesting and, dare I say humble, beginning.
I heart NA?
The NYSE was not the world’s first stock exchange – Amsterdam did it a few years earlier. (Now it’s part of the Euronext Exchange). But it’s no coincidence NYC wasn’t far behind. After all, New York was originally a Dutch settlement called New Amsterdam.
The Dutch gave it up to the English in 1664 in exchange for control of the Spice Islands, and the English – paragons of naming – rechristened it after the Duke of York.
The Tree that Launched a Thousand Stocks
Before the ticker tape and the bell, the earliest stock traders of NA/NY chose for their exchanging activities a nice, shady spot under a buttonwood tree outside what is now 68 Wall Street.
As time went on (more than 100 years), the brokers decided to set down some basic rules. On May 17, 1792, twenty-four of them wrote and signed America’s first trading regulations. The “Buttonwood Agreement” was only two sentences long. The brokers agreed that:
1) They were only allowed to trade with each other (they didn’t like auctioneers), and
2) the commissions on trades would henceforth be 0.25%.
“We the Subscribers, Brokers for the Purchase and Sale of the Public Stock, do hereby solemnly promise and pledge ourselves to each other, that we will not buy or sell from this day for any person whatsoever, any kind of Public Stock, at a less rate than one quarter percent Commission on the Specie value and that we will give preference to each other in our Negotiations. In Testimony whereof we have set our hands this 17th day of May at New York, 1792.”
Why is it called “Wall Street”?
Wall Street was Wall Street before New York was New York. The now world-famous street was once a lowly pathway that ran alongside a wall, which was built to keep the Native Americans out. It turns out the Dutch were just as creative at naming as the English were.
Now “Wall Street” is more than a location on a street map, it’s an adjective, an ideal, and the mecca of the finance industry.
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The Coffee Crisis: Is Fair Trade the Solution?
Case Study #10-8 of the Program: ''Food Policy For Developing Countries: The Role Of Government In The Global Food System''
Coffee is an important crop widely grown in the developing world. The economies of some countries, particularly those in Central America and parts of Africa, are highly dependent on coffee as a source of both national income and export earnings. About 25 million people, most of whom are small-scale farmers, rely on coffee for a living. Smallholder coffee farmers once reaped abundant benefits from their crop. Cash from coffee sales financed schools, hospitals, infrastructure, and training for farmers. Coffee-producing regions were also associated with higher income levels, higher literacy rates, higher nutritional levels, and less political instability. But all these benefits have evaporated since the late 1990s, when the world coffee price slumped to unprecedented low levels. The collapse of coffee prices has led to a humanitarian crisis with devastating effects on coffee growers, communities, and countries. In the absence of government intervention in the sector, a number of innovative approaches, most notably the Fair Trade movement, have been proposed to revive farmers' incomes from coffee production. The Fair Trade movement seeks to challenge historically unequal international market relations, transforming North–South trade into an avenue of producer empowerment and poverty alleviation. Recently the Fair Trade movement has been characterized by national labeling initiatives coordinated under the Fairtrade Labelling Organizations International (FLO). The FLO certification is designed to help coffee growers gain direct access to international markets at guaranteed premium prices. Fair Trade has had some success, but it also raises a number of issues. First, there is substantial concern about how much growers can actually benefit from this scheme. Although studies have shown that a decent share of Fair Trade premiums do reach growers, a large portion still goes to companies' profits or to administrative costs of Fair Trade organizations. Second, it is questionable whether Fair Trade can be a long-term solution to the coffee crisis. The cause of the coffee crisis is oversupply, so the high prices Fair Trade offers induce farmers who would otherwise seek other alternatives to stay in coffee production, exacerbating the current situation. Third, the Fair Trade practice itself may be an inefficient means of wealth reallocation, making it susceptible to criticism from economic grounds. Recognizing that the current coffee market problems are complex, policy makers have twin objectives: to meet the short-term needs of poor farmers during the crisis and to find longer-term solutions to overproduction in the market. Obviously, the most effective long-term strategy to assist the majority of coffee growers is not to create a niche market, but to help them explore other potential sources of income and dismantle barriers to switching crops. Before such a longterm strategy can take effect, however, Fair Trade should continue to be pursued. Your assignment is to design an international coffee agreement to solve the problems now facing the farmers. By accounting for the different parties involved—coffee-producing countries, coffeeconsuming countries, and nongovernmental organizations (NGOs)—you are required to identify both challenges and opportunities in the negotiation process.
13 pp.©Cornell University, Ithaca, New York. All rights reserved. This case study may be reproduced for educational purposes without express permission but must include acknowledgment to Cornell University. No commercial use is permitted without permission.
Cornell University Division of Nutritional Sciences
CUL Initiatives in Publishing (CIP)
Previously Published As
Fuzhi Cheng (2007). Case Study #10-8, ''The Coffee Crisis: Is Fair Trade the Solution?''. In: Per Pinstrup-Andersen and Fuzhi Cheng (editors), ''Food Policy for Developing Countries: Case Studies.''13 pp.
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What is the Indicated Yield?
How Does the Indicated Yield Work?
The formula for indicated yield is:
For example, assume a stock's most recent quarterly dividend was $2 and the stock currently trades at $100. The indicated yield is: ($2 x 4) / $100 = 8%.
Why Does the Indicated Yield Matter?
The indicated yield is a way to forecast a stock's annual dividend yield. It is important to keep in mind that the indicated yield is only part of the equation when evaluating possible returns from a stock investment. The other part of the equation is potential stock appreciation or decline. Indicated yield is only a partial measure of return.
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Oops! Decades of climate policy hasn’t helped the climate. It turns out that a focus on emissions isn’t enough and even a focus on climate isn’t enough. Climate policy with a chance of stopping runaway climate change is policy for radically reshaping the global economy. The old way of running economies, competing to turn ever more valuable resources into dangerous wastes, is coming to an end whether or not politicians choose to make the transition. So now we have a moment of opportunity (before experiencing a world without either a working economy or climate) to attract attention to proposals for a new way to run economies.
Lewes resident James Greyson proposes a policy that’s worth a look. Politicians would get economies able to grow (by building future economic activity from cutting emissions and waste of all resources). Transition initiatives would get funding that matches the work to be done. All of us would get an economy and a climate with a chance of recovery. The policy is called ‘Fix the system – get a circular economy‘, and would allow markets to shift funds from the old linear waste-making economy economy to a new sustainable circular resource-regenerating economy.
James’ proposal is the most supported and most commented proposal in MIT’s Climate CoLab this year. Unfortunately the CoLab looks unlikely as a way to bring it to the world’s attention so please let’s hear your ideas on what to do instead. Where’s the best place to take really big ideas?
Please check out the proposal, click the ‘support’ button and add a comment with your thoughts. Thanks! Check it out here…
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Energy, a prerequisite to life, has played an indispensable role in helping people manage everyday affairs since the medieval period. Facing an ever-increasing population, our reliance on energy will only increase with time, making it one of the safest and most rewarding investment options out there.
Global power demand has grown by 58% between now and 2040, or 2% per year. Growth in power demand increasingly decouples from GDP and $10.2 trillion is expected to be invested in new power generation capacity worldwide by 2040 according to various reports. Of this, 72% goes to renewables, or $7.4 trillion. Investment in renewable energy would be increasing to around $400 billion per year by 2040, a 2-3% average annual increase.
“Breakthroughs in energy technologies could reduce air pollution, help people escape poverty, and avoid the worst effects of climate change. But here’s the tricky part: We don’t yet know which ones will succeed. So we need to explore lots of ideas with investments from both the government and the private sector.”Bill and Melinda Gates Foundation.
Gas is a transition fuel, but not in the way most people think. Gas-fired capacity shall increase 16% by 2040 but gas plants will increasingly act more as a source of flexible generation needed to meet peaks and provide system stability. Increases in conventional gas production (0.7% p.a.) are led by the Middle East, Russia, and Australia. The main centers of demand growth are China, with gas gaining share in industry and power; and the Middle East and the US where increased availability of gas helps boost demand within the power sector.
Renewables in power is projected to be the fastest-growing fuel source. Europe continues to lead the way in terms of the penetration of renewables, with the share of renewables within the European power sector. However, China is the largest source of growth over the next 20 years, adding more renewable power than the EU and US combined. The strong growth in renewable energy is underpinned by the view that the competitiveness of both solar and wind power improves significantly.
“Improved batteries are one possible breakthrough that could help scale existing renewable sources like wind and solar. Solar fuels are another that could power airplanes, trucks, and cargo ships without adding any CO2 to the atmosphere. These fuels are made by using sunlight to split water into oxygen and hydrogen, then combining the hydrogen with carbon dioxide to make hydrocarbons.” – Gates
Wind and Solar
Investment in the wind is growing faster than solar – wind increasing 3.4% and solar 2.3% per year on average. Wind and solar account for 48% of installed capacity and 34% of electricity generation worldwide by 2040. This is compared with just 12% and 5% today. Installed solar capacity is expected to increase 14-fold and wind capacity fourfold by 2040.
“A super-efficient power grid is another possible solution. High-voltage direct current lines – the technology already used in China and elsewhere – make it possible to transmit electricity more efficiently over long distances. With a grid-like that, the US could generate solar power in Arizona or wind power in the Midwest and transmit it cheaply wherever it’s needed.” – Gates
Nuclear power generation is expected to grow steadily by 2.3% p.a., broadly maintaining its share within the power sector.
“Another path is to make nuclear power safer and cheaper. I founded a business that is working on several approaches to this. The most promising is a traveling wave reactor (TWR) that would run on depleted uranium, a waste product created by today’s light-water reactors. A TWR could be sealed up and run for decades without refueling, requiring little maintenance or personnel, and reducing the chance of accidents.” – Gates
Global coal-fired power generation looks set to peak by 2026. Growth in coal demand is centered on Asia, but is offset by sharp declines in Europe and the U.S. Coal-fired generation in China is set to peak within the next decade. India is the largest growth market currently, with its share of world coal demand doubling from around 10% in 2015 to 20% in 2035. Over two-thirds of India’s increased demand for coal is projected to feed into the power sector.
The ever-increasing energy demand is opening up various energy investment opportunities, enabling investors to draw great returns and diversify their investment portfolios. Investment in energy efficiency expanded, despite persistently low energy prices, reaching $231 billion last year. While Europe spent the most on energy efficiency last year, the fastest growth occurred in China, where a strengthening of energy efficiency policies is helping to reduce the energy intensity of the economy, alongside structural changes. Globally, most investment – $133 billion – has gone to the buildings sector, which accounts for one-third of total energy demand.
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If you're embarking on a career path in the financial arena, you might be surprised to learn about the variety of entry level accounting jobs you can pursue. There are about 1.2 million professionals who currently work in some area of the field, and many employers require at least a bachelor's degree in accounting or in a similar field, according to the Bureau of Labor and Statistics (BLS).1
The most appealing roles for those just starting out are ones that offer a good starting salary, show stable job growth, and better position you for eventual advancement to a more senior role. Deciding what path best aligns with your goals and interests begins with exploring the details about the typical entry level accounting jobs in today's companies and organizations.
A staff accountant is responsible for many areas of an organization's finances. These may include creating, researching and analyzing financial reports; meeting with management to present and review company financials; and developing a company's table of accounts in filing company taxes. Many times, organizations advertise an entry level staff accountant position with a requirement of one to three years or less of experience. While an entry level accounting salary may vary, the median pay for accountants and auditors was $63,500 annually in 2012, according to the BLS.1
A staff auditor is responsible for reviewing and analyzing an organization's finances and financial systems. They oversee financial data, checking for noncompliance of legally required financial systems, inefficiency and fraud. They're responsible for organizing an audit and preparing and presenting their report and findings to an organization's management. The field is expected to grow handsomely, with the BLS projecting an increase of 166,700 jobs for accountants and auditors between 2012 and 2022.2
In many cases, management accountants start as cost accountants. Cost accountants calculate and analyze the cost of a product or service, and they work with management to set costs based on cost behavior analysis.3 Gaining experience in statutory accounting principles (SAP), which are a set of accounting regulations, is important for this role and can help make you a better candidate.
Entry Level Budget Analyst
A budget analyst helps to create an organization's annual budget, oversee organizational spending and alert program managers about funding in each area. The majority of professionals who work in this field note that a good understanding of economics, and accounting knowledge is essential.4 While entry level budget analysts start off with more limited responsibilities, but per the BLS, advancement is common. 5
Gain Experience to Secure Your First Job:
Land a summer internship: You may have limited direct experience in the field, so it's common to list relevant coursework and classes on an entry level accounting resume. Check with your university and search popular job boards where summer internship positions are advertised. The American Institute of Certified Public Accountants (AICPA) is also a good resource, providing an extensive list of companies that offer internship programs.
Target organizations that train new hires: Search for "will train accounting jobs" on popular job boards to get results in your area where companies offer a training program for great candidates with little experience.
Seek out mentoring programs: Mentors typically work with professionals within an organization, helping them hone their skills for advancement in their field. But if you're searching for your first job, research whether your local CPA society or board of accountancy offers a mentoring program. Some do offer comprehensive programs and support for recent grads or for those still in school.
Find contract and temp work: Many times, from an employer's standpoint, it's less risky to hire a temporary candidate. Likewise, it's an opportunity for you to gain experience and to show a potential employer how well you'll do in a permanent role.
No matter what path you take, getting started in the accounting field can be a stable path to a rewarding career.
Ready to learn more? Explore accounting degree programs at AIU.
1. Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2014-15 Edition, Accountants and Auditors, on the internet at http://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm (visited July 20, 2015)
2. Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2014-15 Edition, Accountants and Auditors, on the internet at http://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm (visited July 20,2015)
3. Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, 2014-15 Edition, Accountants and Auditors, on the Internet at http://www.bls.gov/ooh/business-and-financial/accountants-and-auditors.htm#tab-4 (visited July 20,2015)
4. O*Net Details Report for Budget Analyst, on the Internet at http://www.onetonline.org/link/details/13-2031.00 (visited July 26, 2015)
5. Bureau of Labor and Statistics, U.S. Department of Labor, Occupational outlook Handbook, 2014-2015 Edition, Budget Analysts, on the Internet at http://www.bls.gov/ooh/business-and-financial/budget-analysts.htm#tab-2 (visited on July 25, 2015)
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From its first official mention in 2009 when a discussion paper was introduced by the previous United Progressive Alliance government to the point when the current Modi government tabled the Constitution Amendment Bill in Parliament, building consensus on the GST hasn’t been easy.
The most prominent hurdle in introducing this new tax structure has been the struggle between the states and the Centre on the loss of revenue. It’s taken years to resolve, but even now it is an issue that isn’t completely fixed.
Nonetheless, the introduction of the Constitution Amendment Bill in Parliament seems like the first key step towards bringing in the belated GST reform.
Why does India need the GST?
The GST is being introduced not only to get rid of the current patchwork of indirect taxes that are partial and suffer from infirmities, mainly exemptions and multiple rates, but also to improve tax compliances.
The spread of GST in different countries has been one of the most important developments in taxation over the last six decades.
Owing to its capacity to raise revenue in the most transparent and neutral manner, more than 150 countries have adopted the GST.
With the increase of international trade in services, the GST has become a preferred global standard. All OECD countries, except the US, follow this taxation structure.
The proposed framework
In India, the unified tax will take the form of a “dual” GST, to be levied concurrently by both the Centre and states. The unified tax will comprise of a Central GST and a State GST, which will be legislated, levied and administered by the respective levels of government. The same taxable base will be subject to both GSTs.
The words “legislate, levy and administer” are key, since the Centre and the state will legislate the respective GST Acts and both will have power to administer the taxes.
The proposed tax system will subsume a variety of central and state levies such as Central Excise Duty, Service Tax and VAT, thereby simplifying the complicated tax structure and reducing compliance costs.
For tackling the complicated issues related to inter-state transactions, an innovative Integrated Goods and Services Tax is also under consideration.
The fine print
The bill, cleared by the Lok Sabha, has attempted to introduce the definition of GST.
It is defined as any tax on the supply of goods or services that will subsume CENVAT, service tax, central excise duty, additional excise duties, excise duties levied under the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, service tax, additional customs duty (countervailing duty or CVD), special additional duty of customs (SAD), central surcharges and cesses, State VAT, State sales tax, entertainment tax not levied by local bodies, luxury tax, taxes on lottery, betting, and gambling, tax on advertisements, State cesses and surcharges related to supply of goods and services and entry tax not levied by local bodies.
The primary reason for the bill is to pave the way for the Centre to tax sale of goods and the states to tax provision of services. The bill further proposes that the central government will have the exclusive power to levy GST on imports and inter-state trade.
The bill has also recognised the need to have a GST council. The union finance minister, the union minister of state in charge of revenue or finance, and the minister in charge of finance or taxation or any other minister nominated by each state government would constitute the council to ensure that both the Centre and the states are on an equal footing.
In addition, the bill proposes to set up a Dispute Settlement Authority that would look into disputes between the states and the Centre. Appeals from the authority would directly lie with the Supreme Court.
For the time being, the bill has kept certain goods out of the purview of GST, which have been a point of contention between state governments and the Centre.
* Petroleum crude
* High speed diesel
* Natural gas
* Aviation turbine fuel
* Alcohol for human consumption.
States shall have the power to levy taxes on these items, except in the case of imports and inter-state trade.
Another important feature of the bill is a proposal to levy additional tax on supply of goods on inter-state trade. The additional tax will not exceed 1% and will be collected by the central government for a period of two years. Finally, the amount so collected will be assigned to the states from where the supply originates.
How does this help you?
A unified GST is an economically efficient solution even for the multinationals, which have to compete with the companies in the unorganised sector, as it simplifies the indirect tax structure to one general rate that can be paid by all companies.
Under the GST structure, every company gets a deduction on the taxes already paid by its suppliers. That results in every buyer ensuring that his supplier has paid his part to claim his deductions.
With the introduction of the bill, the signal that the Modi government seems keen to send is that all the key decisions could well be in the hands of the GST Council. With both representatives from the Centre and states in place, the latter would likely have a say in the implementation of tax laws in their territories.
Moreover, full compensation for the first three years for any kind of revenue loss may work wonders to dilute the initial apprehensions of the states regarding losing income post the introduction of GST.
With the Central government going that extra mile to take care of the interest of the states, one will have to wait and see if the states too return the favour by ratifying similar bills in their assemblies with the much needed two-third majority.
This article was originally published on qz.com.
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What do the different schemes mean?
A scheme is a set of standards and rules that govern a particular area of work. They exist to provide a common approach for all installations for a given work type as well as provide customers with a way of identifying appropriate businesses for the work they need undertaking.
Contractors who want to be recognised for their skills and experience in certain works will come forward for assessment against the relevant scheme documents.
We provide assessment across a number of building services disciplines:
- a scheme that covers general electrical installation work.
- a scheme licensed through the Department of Communities and Local Government that covers general electrical installation work in domestic properties only.
Competent Persons Scheme
- a scheme licensed through the Department of Communities and Local Government that covers all other building services work in domestic properties such as heating and plumbing.
Microgeneration Certification Scheme (MCS)
- a scheme created by the Department of Energy and Climate Change to cover installers of renewable technologies. The range of technologies include solar photovoltaic, solar thermal, heat pumps, biomass and wind turbines. Some finance is available to help support installation of these technologies and MCS registration is a key requirement to access the funds.
Green Deal Installer
- a scheme created by the Department of Energy and Climate Change to help householders install energy efficient measures to their properties. The typical measures include insulation, draught proofing, glazing and heating. Financial support is available to support the installation work and Green Deal registration is key to accessing the work.
Green Deal Advisor
- a scheme created by the Department of Energy and Climate Change to promote those businesses proficient in preparing property surveys that recommend the most beneficial energy saving measures that can be adopted. This is the first step when seeking to access Green Deal funding to subsidise the installation work.
- an industry scheme to support the installation of fire detection and alarm systems.
- an industry scheme to support those undertaking fire risk assessments.
- a scheme to support those contractors working in high risk areas.
Portable Appliance Testing (PAT)
- a scheme to support those in undertaking portable appliance testing (PAT).
- a scheme that recognises the differences in regulations governing general electrical installation work in Scotland.
To find the relevant contractor for the work you want doing, use our Find Contractors search facility
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Advanced financial accounting PowerPoint presentation. In this presentation we’ll take a look at the equity method and land transfer get ready to account with advanced financial accounting, land transfer intercompany. Within the context of our consolidation, then we’re talking about situations where land is transferred from subsidiary to parent like a sale from subsidiary to parent or from parent to subsidiary. That resulting in basically an intercompany type of transaction we’re going to have to deal with with the consolidation process and possibly with the recording of the equity method by the parent as they reflect their investment in the subsidiary. We talked a little bit last time about the land transfer being similar to the inventory transfer because typically you’ll have like a gain that will be involved in it and your physical inventory that is changing hands. It does not have the added complexity as the property plant and equipment type of transfer. That would be depreciable assets with regards to accumulated appreciation and appreciation.
So the parent company will need to make adjustments for preparation of consolidated financial statement for the entire time the acquiring company holds the assets. So in other words with the land transfers, when transfer happens from one to the other, you know, the person who is acquiring the land is now going to put that land on the books at whatever the purchase price is. And that’s basically how it will be every time we do the consolidation process, then, we’re going to have to basically account for that because the land isn’t moving, the land isn’t typically going to go anywhere. Unlike as we saw with the inventory with inventory, we expect that the inventory will typically be resold. So we expect it to be resolved fairly quickly.
With Land Of course, we expect it to be sticking on the books. In the end, the closing entries that we have here are going to be closing entries that we that aren’t permanent, they’re not going on either. They’re not going to go on either books. Therefore, we’re gonna have to keep on making the adjustment for it as long as the land is being held. Luckily, However, it should be assumed it should be the same transaction once we know what it is, it should roll forward as long as the land is being held, held to. So if land is transferred at book value, there’s no need for special adjustments in preparing the consolidated financial statements. So in other words, if if you had a seller that sold the land, let’s say it was for 100,000 and got cash of 100,000, they sold it for the amount that the land was no gain or loss. In other words, the purchaser would then put it on the books for the hundred thousand. And then when you have the consolidation process, all that would happen is it got transferred, it would be like a transfer from one department to the other. When you consolidate the two, obviously the cash then cancels out, and then the land within within basically cancel out between the two there would be no net change. So if it was sold, and there was no resulting gain or loss, in other words sold at book value, you wouldn’t have any problem if it’s not at book value. That’s when you typically have a problem that would look something like this if we imagine this situation because they are at The seller has the land on the books for 60,000. They take it off the books for 60,000. But they sell it for the 100,000 to a related Party, which means they now have a gain of the 40,000. What’s the purchaser going to do the related party within the consolidation? Well, they’re going to put it on the books for what they bought it for 100,000 and then you’re going to have the cash of the 100,000. So that means in this case, now, you can see that we have the cash nets each other out. But the land is now overstated, because it should be on the books for the original cost, because there’s no real sale that took place. So this is similar to the inventory transaction, we could think hey, you know, we should just reverse this entire thing. But or we can kind of distill this down to what we need to reverse we don’t need to reverse the cash because it nets each other out. The land nets out to a change of 40,000. So we’re gonna have to deal with that. And the gain basically, you know, we’re gonna have to do with the game as well should be basically removed. If we think Think about it as a as like a wholly owned subsidiary, then of course, we would just think about that as as needing to be removed. So, parent company has the option of using the fully adjusted equity method, it would result in adjusting investment and income from the subsidiary accounts to remove the unrealized gain. So using the fully adjusted equity method, you would basically be saying, Hey, I know that the subsidiary is not is not taking this into consideration, you know, they’re recording this item the land on the books at the 100,000. But when I do the consolidation, I know about basically this this adjustment that will be made for the consolidation and I’m going to take that into consideration with my equity method calculations. Therefore using you know, the fully adjusted equity method, where you would have a journal entry that would look like this, this would be a journal entry when the parent company is the accounting for their investment in the subsidiary company.
Now, this will all make a lot more sense. Once we do You know, this will be similar to the to the inventory transactions, but you want to do practice problems with these. And that’s the way this all, you know, pulled together. So we got the income from s AP the 40,000. And then the investment in s would be the credit of the 40,000. Land transfer at game consolidation. So once we have the consolidation entry, if we were using this basically fully adjusted equity method, and and the parent company recorded this transaction, then the consolidation entry would have to basically be removing the gain. So we’d have to basically remove the game and we’d have to put the land back to its original cost removing it and taking it down by that 40 we’re talking about this change here would then be recorded as part of our consolidation entries, land sale downstream. So we got the same kind of situation that we had with the inventory a little bit different between downstream and upstream. So we’re gonna have to think about is this a downstream or upstream sale so you’re visualizing when you’re considering downstream and upstream, a flowchart or parent on top, basically, and then the subsidiary owning the subsidiary. Right. So a downstream transaction then would be the sale of the land from the parent to the subsidiary upstream transaction sale of the subsidiary to the parent. So we’re talking about downstream transactions, which is a sale from the parent to the subsidiary, we have an unrealized gain will be on the parent company’s income statement. So if they sold it as a gain, then in other words, if you sold it as a game, the parents sold it to the subsidiary, they sold it out again. That means the parent company is going to be the one reflecting that game, they’re going to have a gain due to this intercompany transaction on their income statement. Since the non controlling interest shareholders do not own parent company stock, they do not share in the deferral of the unrealized gain. This is similar to what we saw with the inventory transactions. So downstream transaction, we’re basically not breaking it out between the controlling and non controlling interest upstream transactions. will be different. So then we have the parents will defer, defer the entire, the entire sale because It all belongs to the parent and its shareholders. If we look at the land sale for the upstream transactions now that going from the subsidiary to the parent, that’s going to be a sale from the subsidiary to the parent intercompany gain is recorded on the subsidiaries books. So now if there’s a gain within the transfer, it went from the subsidiary to the parent, the sale happened on the subsidiary side, if there’s a gain, it would be on the on the subsidiaries income statement. unrealized intercompany gains need to be eliminated during the consolidation. So we’re still going to remove any gains with with regards to the consolidation. However, the difference will be the game consolidation will reduce both the controlling and non controlling interest in the proportion in proportion to the to their ownership.
And again, we saw a similar kind of situation with inventory we’ll treat that in a similar way. If assets are sold upstream and parent resale them during the same period, parents equity method entries will as well as the consolidated entries will be the same as those in the downstream transact situation. And that would be similar to you know, an inventory situation where the inventory basically was sold. However, we would expect for the land that not typically it’d be the case right, we would expect there to be a transfer and typically the land would be sticking there and would unlike basically inventory that went one to the other which you would expect then a resale transaction. If assets are not resold by the period end, the consolidated entries will be different, will be different by the appropriation of the unrealized intercompany gain. So there’s going to be that difference between the upstream transactions and the downstream transactions in that case
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- How does salary differ from hourly?
- How do I know if I’m hourly or salary?
- What is the lowest salary you can make?
- How much money do you have to make to be salary?
- What is a annual salary?
- Is salary paid once a year?
- How many hours is too much for salary?
- What are the pros and cons of salary?
- What is a desired salary?
- What is the job that pays the most?
- What is a good hourly rate?
- Is it better to be hourly or salary?
- What is the world’s lowest paying job?
- What are the disadvantages of a salary?
How does salary differ from hourly?
A wage is a rate of pay commonly affixed to a period of time such as per hour, or per day.
A salary is a fixed regular payment agreed upon in an employment contract however is not affixed to the number of hours performed..
How do I know if I’m hourly or salary?
What is the Difference Between Hourly and Salary Employees?Hourly workers are paid an hourly rate for each hour they work and are entitled to overtime pay if they work over 40 hours per week.Salary employees are typically not given overtime pay, but company-provided benefits are often more substantial than those provided to hourly workers.
What is the lowest salary you can make?
The employee must receive the full salary of at least $684 per week if paid on a weekly basis. If the employee is paid every two weeks (bi-weekly), the minimum salary required is $1,368. If the employee is paid twice a month (semi-monthly), the minimum salary required is $1,482.
How much money do you have to make to be salary?
In general, an employee has to make at least $455 per week ($23,660 per year), be paid on a salary basis, and perform exempt duties that require discretion and independent judgment at least 50% of the time.
What is a annual salary?
Your annual salary is the amount of money your employer pays you over the course of a year in exchange for the work you perform. For example, if you earn a salary of $72,000 annually and you work a 40-hour week all year. … Before taxes, your salary breaks down to an hourly wage of $34.62.
Is salary paid once a year?
Therefore, when you refer to employees who are paid annually, it typically means they are salaried employees and not that they are paid just once a year.
How many hours is too much for salary?
Hourly employees and non-exempt salaried employees must be paid overtime if they work more than 40 hours in a week. A week is defined as a fixed time period of 168 hours, or seven consecutive 24-hour days.
What are the pros and cons of salary?
Salary jobs: Pros and cons Salaried workers often have more flexibility and can usually leave work occasionally if needed for medical appointments or family obligations. On the downside, salaried employees don’t get paid more for overtime work. Thus they may be expected to work longer hours.
What is a desired salary?
Desired salary is the compensation that you would like to receive for a new job. … It’s important to have a smart strategy for approaching the matter of your desired salary so you can quote a number that’s likely to get you fair compensation for the job.
What is the job that pays the most?
Here are the top 25 best-paying jobs of 2020, according to U.S. News & World Report.Lawyer.Sales manager. … Business operations manager. … Pharmacist. … Financial advisor. … Optometrist. Mean salary: $119,980 per year. … Actuary. Mean salary: $116,250 per year. … Political scientist. Mean salary: $115,300 per year. … More items…•
What is a good hourly rate?
The national average salary in the United States is $43,460, according to the National Compensation Survey. That works out to be $20.90 per hour. So in order to be above average, you have to earn more than $21 per hour.
Is it better to be hourly or salary?
In general, salaried employees are paid at a higher rate than hourly employees. Additional benefits of salaried work are that employees receive employment perks such as larger bonuses, benefits packages, retirement plans, and more paid vacation.
What is the world’s lowest paying job?
The 25 lowest paying jobs in the USLaundry and dry-cleaning workers.Combined food preparation and serving workers, including fast food.Dishwashers.Dining room and cafeteria attendants and bartender helpers.Food preparation workers.Cashiers.Maids and housekeeping cleaners.More items…•
What are the disadvantages of a salary?
DisadvantagesMany salaried employees are not eligible for overtime pay, no matter how many extra hours they may work.Many salaried workers are on-call every day, all week. … Miss benchmarks and you lose bonuses.As the senior hourly employee, you had protection from layoffs.
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Labour market information, or LMI for short, answers those and similar questions. But there are no simple answers and no one-size-fits-all resource for LMI; the labour market is a changing and eluding topic that depends on many factors nobody controls.
What exactly is LMI?
LMI can be broadly defined as “the information needed by individuals and organizations to make informed decisions about the labour market,” according to the Forum of Labour Market Ministers.
In other words, LMI answers questions such as: what geographic regions, industries and/or occupations have the highest employment prospects? What type of training, experience and certifications are required to work in different occupations? What trends are affecting this particular industry, occupation or business? What salaries are expected for this particular occupation?
Starting with the right questions
Because the information is so broad, you need to focus on the questions that apply to you. It is easy to become overwhelmed. The first step is to be clear about the type of job (occupation), the type of industry (sector) and the type of organization you want to work for. LMI will help you to determine and clarify if the path you chose is the right for you.
Questions you want to ask may include:
- What are the day-to-day responsibilities in this occupation? What is the environment like? What type of people tend to work in this occupation?
- Is this occupation regulated? What type of education, training or experience is required to work in this?
- What is the industry or sector where people in this occupation usually work?
- What trends are affecting this occupation? What factors are affecting or may affect this industry?
- Is this occupation growing, shrinking or changing in any ways? How? What’s affecting this?
- What are the main technical, essential and soft skills required to work in this occupation, sector or type of organization?
- What are the values, ethics and goals of this occupation or sector?
- What are the benefits and drawbacks of working in this occupation or sector? Salary range? Other perks? Typical challenges?
- Where do people from this occupation or industry hang out? What do they do with their time? Are there conferences or special networking or professional development events they attend?
With the above questions in mind, the next step is to start your research. Whether you are planning a career change, looking for a job in a new country or looking for ideas to start your own business, the tips below will help you to obtain the necessary information for educated decision-making.
Read specialized LMI sources. You will find these at public libraries, employment centres, human resources reports as well as government databases and websites like the Government of Canada’s Job Bank (see jobbank.gc.ca under “Job Market Trends and News”). All of them are open to the public and are free to use.
Have at least two to three informational interviews with people working in the industry, occupation or type of organization you are interested in. They have realistic, practical information beyond what you can ever read in any report.
Follow forums, groups and blogs specialized in the sector or occupation you like. Many have updated information you won’t find anywhere else, and they are also a great source for networking and training opportunities.
Check out a variety of job search boards and read the job descriptions carefully. Highlight the requirements, benefits and descriptions, and compare them to create your own “master job description.” This will help you to compare your own skills and knowledge gaps. The amount of jobs you are able to find will also give you an idea whether there is a demand or not.
Check occupation-specific or sector-specific regulatory bodies, councils, chambers and associations. They tend to have up-to-date information for the public and sometimes for members (you may have to pay a fee to become a member and be able to access some of the information).
Follow specialized publications. Most industries or professions have magazines and newsletters.
Use the “Canadian Company Capabilities” website (ic.gc.ca/eic/site/ccc-rec.nsf/eng/home) to search for organizations in your industry. Many jobs are posted on organization’s own websites and not in generic job boards.
Find a mentor. Mentors can provide industry-inside information, introduce you to their networks, provide feedback about required certifications, and so on. You can find mentors informally by asking someone already working in the industry or you can join a mentoring program, usually provided by immigrant services organizations.
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What Is WaltonChain? Introduction to WTC
Waltonchain is a joint project established in November 2016 between Chinese and Korean developers which aim to use blockchain technology and radio-frequency identification (RFID) to aid supply chain management, pushing forward to integrate blockchain and the Internet of Things.
Waltonchain was developed to incorporate physical assets into the blockchain by providing a decentralized network that can store and provide information regarding assets from all stages of their developmental process. Because of this decentralization, the developers thought of using RFID technology in Waltonchain to build an authentic, trustworthy, traceable, and transparent business ecosystem with data that can be completely shared.
The project was named after Charlie Walton, who was the developer of RFID tags. Since their creation in the 1960s, these tags have implemented on a global scale within diverse industries such as medicine, geo-positioning, and retail.
Two of the main components of Waltonchain are the RFID reader chips and RFID reader tags. The tags are physical devices that carry information such as the electronic product code (EPC). This code can be linked to traceable items such as medicines, electronic products, clothing and other types of goods.
The reader chip or the UHF recognizer is used to extract the coded data from the tags.
How Waltonchain Works
While the RFID readers are considered to function as nodes within the ecosystem, the tags are linked to products which are distributed within the supply chain. The linked data, which can be dispatch details as well as delivery info, is stored on the Waltonchain blockchain through the RFID system.
Small data sets that contain an item’s geo-position or weight are recorded in “child chains” which over time are collected and merged with the “master chain.” This lest the blockchain perform at a higher speed when it comes to data distribution as well as having a higher encryption level.
Another important feature of the platform is the Walton Genesis Block— which is the service module that facilitates a variety of functions ranging from WTC token management, internal monetary regulation, subchain management, smart contract deployment, etc.
Seeing as Waltonchain can track and authenticate the circulation of products within an extensive global network, it can drastically reduce financial expenses derived from product production, storage, auditing, and shipping. It also allows consumers to monitor the movement of their purchased items.
Moreover, the tags have been created to generate randomized public and private keys to ensure the safety of IoT applications and that product forgery or tampering does not occur.
Waltconchain tags can also be used to decrease the possibility of theft as well as provide a precise estimate of theft through the supply chain.
Can You Mine Waltonchain?
Waltonchain is not a coin that can be obtained through mining. Waltonchain employs a proprietary Proof of Stake & Trust (PoST) consensus within its blockchain. PoST works similarly to Proof of Stake (PoS) by rewarding token holders (nodes) with WTC payments.
Waltonchain also features a node reputation mechanism to reward quality and honesty in nodes.
How Can You Earn Waltonchain?
WTC is earned by staking. In order to start staking, you will be required to set up a Waltconchain native wallet. Then you will have to buy the coin from an exchange and send them to your wallet address. Once your coins have been transferred to your account the staking process can commence.
This means that just by being a WTC token holder, you’ll automatically receive dividends in your wallet.
Where Can You Buy Waltonchain?
Waltonchain trading is supported of a few crypto exchanges: Allbit, Binance, Bithumb, Bitrue, Cobinhood, Coindirect, COSS, Coinnest, Cress24, DragonEX, Ethfinex, HitBTC, Huobi, LATOKEN, Kucoin, OKEx. The most common trading pairs are those that are against BTC and ETH.
Waltonchain promises to revolutionize the supply chain management of many industries and help eliminate frauds as well as counterfeiting.
The token is currently ranked 59th on CoinMarketCap, trading at a price of $3.13 USD, with a market cap of $126,456,089 USD.
Image Source: Bitcoin Wiki
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International Commercial Arbitration is the process used by parties conducting international business to resolve contractual disputes. Some of the frequent reasons that parties often favor arbitration is the general mistrust and uncertainty in laws, lack of fairness in the legal process, lack of independence of judicial systems of other nations, procedural delays, and elevated costs of pursuing legal actions in foreign countries. Accordingly, parties have often favored arbitration to resolve international commercial disputes.
There are certain essential characteristics of arbitration agreements. One is the requirement of a written contract with a specific clause stating that the arbitration process will be used if a legal dispute arises under the contract terms. Parties also agree on the individuals or institutions administering the arbitration process. Another common term the decision rendered by arbitrators, known as arbitral reward, is final and binding.
There are two kinds of arbitration, ad-hoc and institutional. Arbitration ad-hoc is conducted by individuals the parties choose. The rules followed during the arbitration process are specified by the parties and their attorneys in advance. Institutional arbitration is conducted by a major institution and the rules followed during the process are independent and already in existence. Perhaps the best known arbitration institution is the International Chamber of Commerce (ICC) International Court of Arbitration. It is an experienced and renowned arbitration institution. The primary goal of the ICC is to make all the necessary efforts to overcome procedural obstacles and ensure fair awards. The International Court of Arbitration applies the ICC Rules of Arbitration, which can only be administered by the ICC Court.
In addition to private parties, governments also use arbitration as a way to resolve disputes. This is often seen when arbitration is incorporated into treaties, international agreements, and conventions. The United Nations has the United Nations Commission on International Trade Law (UNCITRAL), which provides a set of arbitration rules widely used in commercial relationships that include private parties in international commercial contracts, investors’ disputes with states, and disputes between states. The arbitration rules cover all aspects of the arbitration process, and UNCITRAL works constantly to improve the rules and procedures of arbitration administration.
The growing popularity of arbitration in the international commercial arena is reflected in the increasing number of cases submitted for arbitration, both in the ad-hoc and institutional context. The confidential character of the arbitration process makes this alternative very attractive. The parties involved understand, and in many cases require, that the arbitration process be confidential with respect to the legal determinations made by the arbitrators and laws governing the international commercial relationship.
Individuals and corporate entities engaged in international business should review the arbitration clauses in their contracts before deciding on alternative methods to resolve disputes. An experienced attorney practicing international contract law can explain the implications of your clause and how to enforce it.
- Gloria Miccioli, E-RG Electronic Resource Guide. International Commercial Arbitration. March 2015. https://www.asil.org/sites/default/files/ERG_ARB.pdf
- ICC International Court of Arbitration http://www.iccwbo.org/about-icc/organization/dispute-resolution-services/icc-international-court-of-arbitration/ (Last visited 12/15/15)
- United Nations Conference on Trade and Development. Dispute Settlement. International Commerce Arbitration. 5.1 International Commercial Arbitration. (2005) http://unctad.org/en/docs/edmmisc232add38_en.pdf
- UNCITRAL International Commercial Arbitration and Conciliation. http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration.html (Last visited 12/15/15).
- UNCITRAL Arbitration Rules. http://www.uncitral.org/uncitral/en/uncitral_texts/arbitration/2010Arbitration_rules.html (Last visited 12/15/15).
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Mediation is a process whereby clients work together to arrive at their own solutions or settlement proposals in relation to children or financial issues via negotiation and discussions facilitated by an impartial mediator. The mediator assists the clients in identifying the issues they need to resolve and finding the most sensible and practical solutions for the family. Mediation itself can take different forms. Below are details about the Resolution Model.
The ‘Resolution’ Model is so-called because it is approved by Resolution, an organisation previously known as the Solicitors’ Family Law Association. This model involves clients in a number of short mediation sessions (1½-2 hours) over a period of time in which they meet together with the mediator. In financial matters, one of the mediator’s tasks is to provide appropriate documentation (Forms E) to assist the clients in providing full and frank financial disclosure. The mediator may also flag up where further financial disclosure or expert reports may assist in the decision-making process. Mediators often recommend when a client may benefit from legal advice within the process, as the mediator’s task is not to advise on legal matters but to gather information from the clients and to give information where appropriate in order to assist them in reaching their solutions. Where children are involved the mediator can assist parents in focusing on their children’s needs and to create a tailor-made joint parenting plan.
At the end of the process the mediator provides the clients with a Memorandum of Understanding, which contains their acceptable proposals for settlement which are then taken to the clients’ respective legal advisors for the legal formalities to be completed and their ‘accord’ converted into a binding and enforceable order. Clients are also provided with an Open Financial Statement of their financial affairs as disclosed within the mediation process.
Mediation has the following advantages-
- Reduces tension and hostility
- Solutions are tailor made by the clients to their needs
- Decisions are made on an informed basis
- Clients are able to communicate and co-operate
- Clients are able to explore and examine options in a safe environment
- Clients are able to appreciate and consider the needs of their children
- Savings in costs as disputes may be resolved more quickly and efficiently
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Looking at the question Does
If by investing we refer to the conventional financial trading approach, I would assume that the algorithms used involve feedback loops that are typically associated with current future related systems dynamics models (i.e. the identifying and forecasting of patterns; the more recent the information that updates the pattern, the more accurate is the forecast likely to be, due to the momentum inherent in the current situation). Some may call this systemic. Does this create more value per dollar invested? I should think that one would make more money this way. Is any value created? Only in monetary terms; no value in terms of the real economy (i.e. of goods and service production) is created this way. One could even argue that more negative value for the real economy has been created – i.e. another step towards the next finance crisis that will impact negatively on the economy.
If by systemic we mean multi-dimensional development (especially if we can solve the measurement problem mentioned in the economic growth section) and if we start measuring impacts and co-production (instead of merely production), we would certainly create more value in terms of development for society and natural systems. But will we be able to measure this in dollars? And will that create more economic growth in the short-term, or at all? I don’t know. We would need to explore this (using fuzzy logic measures, perhaps).
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How Blockchain Works7524678
Blockchain is a piece of software made to create decentralized databases.
The device is entirely "open source", which means that anyone is able to view, edit and propose changes to the underlying code base.
Though it has become more popular then ever thanks to Bitcoin's growth - that it is been around since 2008, rendering it around 10 years old (ancient in computing terms).
The main point about NETWORKING would it be was designed to create applications that do not require a central computer service. Which means if you're using a system expand top of it (namely Bitcoin) - your data will be stored on 1,000's of "independent" servers around the globe (not belonging to any central service).
The way the service works is by creating a "ledger". This ledger allows users to create "transactions" with each other - obtaining the contents of those transactions saved in new "blocks" of each "blockchain" database.
Based on the application creating the transactions, they ought to be encrypted with assorted algorithms. Since this encryption uses cryptography to "scramble" the data stored in each new "block", the term "crypto" describes the process of cryptographically securing any new blockchain data that the application may create.
To completely understand how it works, you need to appreciate that "blockchain" just isn't new technology - it just uses technology in a slightly different way. The core of it can be a data graph called "merkle trees". Merkle trees are essentially ways for computer systems to keep chronologically ordered "versions" of your data-set, allowing them to manage continual upgrades to that particular data.
The reason this is important is really because current "data" systems are what is described as "2D" - meaning they do not have any approach to track updates to the core dataset. The info is basically kept entirely since it is - with any updates applied straight to it. Whilst you'll find nothing wrong using this, it does pose a challenge in that this means that data either needs to be updated manually, or his tough to update.
The solution that "blockchain" provides is essentially the creation of "versions" from the data. Each "block" included with a "chain" (a "chain" as being a database) gives a list of new transactions for your data. Which means that if you're able to tie this functionality into a system which facilitates the transaction of data between a couple of users (messaging etc), you can actually create a totally independent system.
This is what we've seen using the likes of Bitcoin. Contrary to popular belief, Bitcoin isn't a "currency" by itself; it's a public ledger of financial transactions.
This public ledger is encrypted to ensure that only the participants within the transactions can see/edit the data (and so the name "crypto")... but more so, the fact that the info is stored-on, and processed-by 1,000's of servers around the globe means the service can operate independently associated with a banks (its main draw).
Obviously, issues with Bitcoin's underlying idea etc aside, the underpin of the service is it's basically a system that works across a network of processing machines (called "miners"). They're all running the "blockchain" software - and attempt to "compile" new transactions into "blocks" that keeps the Bitcoin database as current as possible.
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The pandemic has presented many new opportunities for parents to be involved in their children’s education. Although teaching fractions with baking, historical reenactments of history in the living room, and science experiments in the backyard are fun, this is also a great opportunity for parents to offer some practical and beneficial learning about financial literacy, especially with teenagers.
Young Adults Are Unprepared to Manage Their Finances
According to the National Financial Educators Council annual survey, only 24% of student respondents, and 20% of parents, say that students are prepared to deal with real-world financial challenges.
That means more than 75% of young adults have some sort of fear and confusion about earning money, handling finances, and creating good systems that will help them throughout their lives.
4 Financial Literacy Skills For Teenagers
The Council for Economic Education, only 21 states in the country require a personal finance class to graduate high school and a majority of high school students say that they get most or all of their personal finance knowledge from their parents.
Below are some tasks that are important for everyone to know how to do, and can help start the conversation with your teen. Introducing them to terms and paperwork that you wish you’d known at their age will help give them the confidence and knowledge to act in their best financial interest.
Yes, these ideas might get you some eye-rolls and long-suffering sighs, but if you help your child become familiar with these concepts in adolescence, you will be helping them take a huge step toward adulthood and financial literacy.
1. Create a Budget
Most adults aren’t great at budgeting, as evidenced by year after year of failed New Year’s Resolutions. Reviewing your household budget with your child now is a great way to help them manage their finances in the future.
- Go over tools: If you use a spreadsheet or an app to track your money, show your child what categories your family needs and discuss what categories apply to them at this time of their life. If you don’t have a family budget yet, create one together using an online tool or app, like Mint or You Need a Budget.
- Have your child create their own budget: If your child is currently working or has a source of income, help them create their own budget and discuss with them the amount of money that goes into each category. Be sure to include savings, giving, and an entertainment budget.
- Research college costs: For older kids headed to college, have them research apartment rent around the schools they’re thinking about. How does that compare to what the cost of a dorm would be? Will they take (or need) a car? What about food and books?
Budgeting isn’t a glamorous process, but if you can get your teen into the habit before they leave home, they will have a head start for the rest of their lives.
2. Go Over Your W-2
Tax forms are confusing, especially if you’re new to the workforce. We only see them once a year and for many people, they are a trigger to one of the biggest adulthood stressors —
- Review your W2: When you download your W2, go over it with your teen and compare it to your end-of-year pay stub. Do the numbers add up? Can you see where and how the gross amount you made turned into the net amount through
taxes, FICA, and retirement savings?
- Explain a 1099: Did you get a 1099-NEC for contract work or a 1099-DIV from an investment account? 1099’s have a lot of information on them, but there are several youtube videos that walk you through what everything means, like this video from TD Ameritrade.
- Review a W4: This is also a great opportunity to download a W4 form and go over paycheck withholding using an online calculator. Show your child why you elect to withhold what you do, and in the process, you might find some changes you want to make to your current withholding.
Becoming familiar with these forms and what they mean now, while they have you as a resource, will give your child a running start in personal finance, and will give you some peace of mind about their abilities.
You and your teen have gone over most of the forms needed to finish your
- Tax Software: If you fill out your
taxeson your own, or use a software program, walk your teen through using it, especially if they have a part-time job, or have been gifted investment accounts in their name, and have to prepare taxesthemselves.
- Gather Documents: If you use a tax preparer or an accountant, gather all your documents and show your child what the preparer will ask for, how you organize documents, and how much it costs to have your
- Track Your Refund: Close the loop by either having them help pay the IRS (if
taxesare owed) or checking your bank account for your refund and discussing what you’re going to do with that money. Make sure to emphasize savings for at least some of it!
4. Research FAFSA or Other Financial Aid
College is expensive and even if you have a 529 College Savings account for your children’s education, chances are good there will be a gap. Sit down with them and discuss:
- How You Paid for College: Tell them the story of college that we don’t often talk about. Did you have to take out loans? How long has it taken you to pay them back (bonus points if you discuss both positive and negative compound interest), and talk about if there is anything you would do differently looking back.
- Introduce FAFSA: Introduce them to the Free Application for Federal Student Aid, or FAFSA, and if they’re old enough, start working on filling it out. You’ll need your most recent tax return to complete it, so have that handy.
- Understand Financial Aid Options: If they aren’t quite ready for college yet, review the Understanding Aid section of the FAFSA website, and get familiar with the process of financial aid. Discuss what their plans for the future might cost, and answer or research any questions they have about paying for things together.
Below are some books and websites that you and your child can read together. These books go into more detail on financial literacy for kids and are a good refresher for adults, as well as an introduction to concepts for teenagers. Just remember that no book is a substitute for parents teaching their children how to apply concepts in the real world.
- Why Didn’t They Teach Me This In School? 99 Personal Money Management Principles to Live By, by Cary Siegel
- Financial Basics: A Money Management Guide for Students by Susan Knox
- The Motley Fool Investment Guide for Teens: 8 Steps to Having More Money Than Your Parents Ever Dreamed Of by David and Tom Gardner
- O.M.G.: Official Money Guide for Teenagers by Susan Beacham and Michael Beacham
- National Financial Educators Council This website offers a lot of financial statistics but also has financial literacy tests, broken down by age, that you and your child can take together to test your financial knowledge.
- The Mint The US Mint’s website offers fun games for younger kids, and discussion topics and pitfalls of financial literacy for teenagers and parents.
- Transunion: Learning the Basics This site provides a general overview of compound interest, credit scores, and the actual cost of debt, and can be a good conversation starter for you and your teenager.
There are many more topics involved in financial literacy, including investing, insurance, and banking. The topics above are both pertinent to young adults as they enter the workforce, and also commonly not discussed when we first set out in the world. By providing a good foundation on these subjects, and continually having conversations about them as your child grows, you will have given them a head start in the world.
What do you want your teens to know about managing personal finances? Let us know in the comments below!
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A cryptocurrency wallet or simply wallet is a software application or hardware device that is used to receive and send cryptocurrencies. Unlike real-world wallet, a cryptocurrency wallet doesn't hold any cryptocurrencies. Instead, it stores a small secret in the form of a seed (or individual private keys), which is used to generate addresses for incoming transactions and to authorize outgoing transactions.
See also: cryptocurrency bank
Types of wallets
There are several types of cryptocurrency wallets. They differ in essential properties like security, privacy, interoperability, ease of use or cryptocurrency support. Based on the security, it is possible to divide cryptocurrency wallets into the following groups: less secure software wallets and more secure hardware wallets.
Wallets also differ in how they handle backups. A hierarchical deterministic wallet has to be backed up only once using a recovery seed, while non-deterministic wallets must be backed up each time a new private key is created.
What type of wallet is Trezor?
Trezor is a secure hierarchical deterministic hardware wallet with an easy-to-use Trezor Wallet browser interface and wide cryptocurrency support. Although Trezor is controlled from the Wallet, the seed never leaves the Trezor device, ensuring that there is no risk of losing funds even if the Trezor is exposed to a potentially infected computer.
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Financial disparities hinder BIPOC youth from marginalized identities from vulnerable backgrounds from being able to afford international & domestic travel experiences. Our goal is to cover the financial expenses for youth to participate. We believe, providing BIPOC youth from marginalized identities with a global education will provide them with a global lens, cultural context, systematic and social understanding of the world.
BIPOC youth from marginalized identities from vulnerable backgrounds don’t always have access to international and domestic travel opportunities, or the financial resources because the opportunity is not local. We believe making our Cultural and Educational Journey's free will allow for more BIPOC youth to have ACCESS to these opportunities.
Health and Wellness
Whether PTSD or personal or environmental stress, BIPOC youth from marginalized identities from vulnerable backgrounds experience a high amount of stress, anxiety and depression which impacts how they see themselves, feel about themselves, and feel about their opportunities/life in general. We make it our responsibility to support youth holistically. We know, in order to maintain longevity, one's health must be stable and or balanced. We believe by focusing on getting the youth to prioritize their health, we will be able to decrease the levels of anxiety, stress and depression youth feel.
Educational Advocacy Development, educating youth about inequality, inequities, systematic racism and social justice, prepares them to serve their community and beyond as advocates.
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Property bonds are available to private individuals that are searching for an alternative investment that provides above average returns. But what are property bonds, how do they work, are they safe, and what kind of returns should you expect? This quick, simple guide to property bonds provides everything would-be investors need to know.
What are property bonds?
Very simply, a property bond is a loan from an investor to a property developer. More and more property development companies are issuing bonds to raise the money they need to proceed with a project. Investors lend their money to the developer so the project can progress. In return, the investor receives a fixed rate of interest on the money they lend to the developer over a set period of time and once the bond matures, their initial investment (known as ‘the principle’) is repaid.
For investors, property bonds give them a chance to share in the profits made by professional property developers without any of the challenges associated with building, selling or letting the homes.
Every property bond is a legally binding contract between the investor (the lender) and the property developer (the borrower). That agreement will specify:
- How the money can be used by the developer
- How much interest is paid to the investor and when
- How the investors’ money is secured
- When the initial investment will be repaid
How do property bonds work?
Property bonds are usually bought in cash, but it’s also sometimes possible for an individual with a self-administered pension like a SIPP to invest using their pension, too. The property developer will use those funds to purchase and renovate properties.
The investors’ funds will be secured with a legal charge that’s registered on the title of the property at the Land Registry. That has the act of securing the bond. So, if something were to go wrong, the investor has a share of the property that they can use to reclaim the money they are owed.
Secured lending of this kind is commonly seen in a mortgage. We all know that if we are unable to make the repayments on a mortgage, the bank our mortgage is with will repossess and sell the property to recover the money they are owed.
It’s very similar in the case of a property bond. If the developer is unable to repay the make the necessary payments, the property will be sold so the investor can be repaid.
Other investments property bonds can be mistaken for
It’s not uncommon for investors to confuse other investment products with property bonds. For example, some investors assume a property bond must be a type of mortgage bond. There are a number of key differences between the two that make a significant difference to your investment.
Mortgage bonds were a big part of the cause of the financial crash in 2007. Mortgage bonds are secured against a mortgage or collection of mortgages. The problem comes when the mortgage a bond is secured against is a bad loan that the homeowner cannot afford to repay.
Property bonds are not secured against good mortgages, bad mortgages or mortgages of any kind. Instead, they are secured against a physical asset, namely property. If the bond issuer defaults on their payments or goes out of business, that property can be legally claimed by the investor to recover the cost of their initial investment.
Holiday property bonds
Holiday property bonds, more commonly known as timeshares, are products that give investors the option to use a holiday home throughout the year in return for their investment. There is no financial return for the investor in a holiday property bond. Again, this a very different product to a property bond.
Why are property bonds becoming increasingly popular?
The uncertainty surrounding Brexit caused domestic property investments to stall. That encouraged investors who were interested in the property investment class to look for another way to earn a healthy income on their capital. Rather than buying, renovating, selling and letting properties themselves, many investors have turned to investment vehicles such as property bonds.
They are convenient and easy to manage
Investing into the bricks and mortar of a property yourself takes time, costs money and can be stressful. There are also a huge number of considerations such as stamp duty, maintenance fees, tenancy issues, insurance payments and legal costs to take into account. With a property bond, you are not involved in the day-to-day development issues. All you do is invest your cash and generate returns from day one.
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The abstract to Brian Riedl’s Heritage Foundation paper, ‘Why Government Spending Does Not Stimulate Economic Growth: Answering the Critics‘ reads:
Despite decades of repeated failure, President Obama and Congress continue to promote the myth that government can spend its way out of recession. Heritage Foundation economic policy expert Brian Riedl dispels the stimulus myth, lays out the evidence that government spending does not end recessions–and presents the evidence for what does end recessions. Hint: It’s not another “stimulus package.”
These are strong words. The arguments presented in the paper, in contrast, are not. Picking the arguments apart is an easy task, but may be instructive and also serve a purpose given the influence right-wing think tanks seem to have on the policy debate.
Riedl makes a serious and basic error at the beginning of the section, ‘Why Government Spending Does Not End Recessions’.
Spending-stimulus advocates claim that Congress can “inject” new money into the economy, increasing demand and therefore production. This raises the obvious question: From where does the government acquire the money it pumps into the economy? Congress does not have a vault of money waiting to be distributed. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another.
Congress cannot create new purchasing power out of thin air. If it funds new spending with taxes, it is simply redistributing existing purchasing power (while decreasing incentives to produce income and output). If Congress instead borrows the money from domestic investors, those investors will have that much less to invest or to spend in the private economy. If they borrow the money from foreigners, the balance of payments will adjust by equally raising net imports, leaving total demand and output unchanged. Every dollar Congress spends must first come from somewhere else.
In a modern money system, government spending or lending logically must come first. Taxes and bond sales are only possible once government spending or lending has occurred. The currency-issuing government issues its money in the act of spending. The money the spending creates is in the form of reserve balances, held in special accounts at the central bank. Once created, these funds can be used to extinguish tax obligations or be exchanged for government bonds. Therefore, Riedl’s claim that “[e]very dollar Congress spends must first come from somewhere else” is incorrect. To the contrary, the funds used to pay taxes and purchase bonds come from prior government spending or lending. For instance, when the central bank, in the conduct of its monetary policy, enters repurchase agreements with primary dealers to neutralize the effects of a Treasury auction on reserve balances, the central bank advances reserves to non-government while requiring bonds as collateral. The reserves are newly issued government money, and the bonds the primary dealers put up as collateral only exist because of prior rounds of government spending. This point is discussed at considerable length elsewhere on the blog (at an elementary level in Fiat Money and its Social Significance; in much more detail in Exercising Currency Sovereignty Under Self-Imposed Constraints). In the present post, the focus is instead on Riedl’s denial that government net spending can affect total output and employment or “create new purchasing power”.
The claim that net government spending (government spending G > tax revenue T) has no impact on real output is only true when the economy is at full employment. Otherwise, government spending can be undertaken to purchase real goods and services from non-government. To meet this demand, non-government must increase output. The effect of taxation, in contrast, is to withdraw non-government spending power, which taken in isolation acts to reduce real output. However, since the government has net spent (G > T), the overall effect is an increase in output.
The claim that net government spending creates no new spending power is also false. We can look at this in two ways, either in terms of net financial assets or in terms of the quantity of money M (meaning reserves plus deposits).
Consider, first, the situation in terms of net financial assets, which are defined as the sum of currency on issue, reserve balances, and outstanding government bonds. When government net spends, it pays more into non-government bank accounts than it withdraws in taxes. There is a net increase in bank reserves held in the central banking system and a corresponding increase in bank deposits. Net financial assets held by non-government increase as a result. Any swap of reserves for government bonds, as occurs when banks enter a repurchase agreement with the central bank as part of the latter’s conduct of monetary policy, merely alters the form in which net financial assets are held. Overall, the government net expenditure adds net financial assets. This enhances non-government’s capacity to spend.
To see this more clearly, think of the reverse scenario of a government surplus (T > G). By Riedl’s reasoning, net taxing would have no impact on the amount of net financial assets held by non-government. But net taxation clearly will reduce net financial assets, and reduce non-government’s capacity to spend. A government surplus withdraws more funds from non-government bank accounts through taxing than it adds through spending. To make the net tax payments, non-government has to run down bank balances or sell bonds back to government in order to meet its tax obligation. The effect of the government surplus is therefore unambiguous: net financial assets decrease.
Now consider the implications of government net spending in terms of the quantity of money M. Viewed from this perspective, the effect of government net expenditure is to credit non-government bank accounts (through spending) more than they are debited (through taxing). This in itself will cause a build up of non-government bank deposits, which constitutes an increase in M. The precise final impact on M will depend on any swapping of reserves for bonds, and on who purchases the bonds. To the extent that bonds are purchased by banks, through the debiting of reserve accounts, this will have no implications for M, since reserves are not included in the definition of the broader money supply (i.e. M). But to the extent that bonds are purchased by the non-bank public, the effect is not only to drain reserves but also to reduce non-government bank deposits (which subtracts from M). The overall impact on M of government net expenditure is, at minimum, zero, which occurs in the unlikely and extreme scenario of all bonds being purchased by the non-bank public. In all other cases, the overall impact on M will be positive. In no case will the overall impact on M be negative, contrary to Riedl’s claim.
So, to summarize, we have an increase in real output Y as a result of the government net expenditure. We have an increase in net financial assets, whether held in the form of reserves, bonds, or some combination. And we have either no change in M (in the extreme case of no bank purchases of bonds) or an increase in M. In other words, government net spending causes an increase in real output and net financial assets without diminishing (and probably adding to) M. So the M available for purchases of goods and services remains undiminished or enhanced and, more importantly, net financial assets and real output have both increased.
Riedl’s mistakes on the points just considered mean that the rest of his argument breaks down, since they are contingent on government net spending having no impact on output or the spending capacity of non-government.
But let’s continue for the sake of argument. Riedl then writes:
For example, many lawmakers claim that every $1 billion in highway stimulus can create 47,576 new construction jobs. But Congress must first borrow that $1 billion from the private economy, which will then lose at least as many jobs. Highway spending simply transfers jobs and income from one part of the economy to another. As Heritage Foundation economist Ronald Utt has explained, “The only way that $1 billion of new highway spending can create 47,576 new jobs is if the $1 billion appears out of nowhere as if it were manna from heaven.” This statement has been confirmed by the Department of Transportation and the General Accounting Office (since renamed the Government Accountability Office), yet lawmakers continue to base policy on this economic fallacy.
Two points can be made here:
First, the funds do appear like “manna from heaven”. Money, whether government money, bank money or an individual IOU, is always created ex nihilo. That is how any financial liability is issued. It can only be issued by its issuer. Government money (defined as currency plus reserves) is issued in the process of government spending. A currency-issuing government, via instructions from its fiscal agent to its monetary agent, spends by issuing reserves, which injects additional net financial assets. Whether non-government subsequently alters the form of these financial assets is immaterial to the point at hand.
Second, the claim that “[h]ighway spending simply transfers jobs and income from one part of the economy to another” is untrue if there are idle resources and the economy is operating below the full-employment level. The government’s decision to put some idle resources to work in no way prevents non-government from putting other idle resources to work. To the contrary, non-government now has more spending capacity than before, thanks to the positive impact of government net spending on its financial wealth.
To see the falsity of Riedl’s claim, imagine (purely as a thought experiment) that there was no money, just real resources. Currently, a lot of resources are idle. If the government chooses to make use of some but not all idle resources, clearly there will still be idle resources left over that can be put to use within the non-government sector. Operation of a currency does not change this aspect of the problem one iota. If government uses its currency to activate some but not all idle resources, it in no way prevents non-government from utilizing the remaining idle resources. Again, the government’s net spending has left M either undiminished or enhanced and increased net financial assets held by non-government. In no way does this inhibit non-government’s command over resources.
Riedl’s argument obscures what is actually going on in terms of real resources.
Riedl then quotes John Cochrane as follows:
First, if money is not going to be printed, it has to come from somewhere. If the government borrows a dollar from you, that is a dollar that you do not spend, or that you do not lend to a company to spend on new investment. Every dollar of increased government spending must correspond to one less dollar of private spending. Jobs created by stimulus spending are offset by jobs lost from the decline in private spending. We can build roads instead of factories, but fiscal stimulus can’t help us to build more of both. This form of “crowding out” is just accounting, and doesn’t rest on any perceptions or behavioral assumptions.
This passage is problematic from the opening sentence for the simple reason that government spending always creates government money in the form of reserves, every time, no exception. There is no choice between issuing or not issuing money when the government spends. Government spending always issues new government money (reserves are created), just as taxation always destroys government money (reserves are deleted from the system). This is true whether, alongside the government spending process, reserves are converted to bonds or simply left as reserves, a matter which will depend on the central bank’s preferred conduct of monetary policy (method of interest-rate setting) and have nothing to do with the government’s capacity to spend or the effects of its spending on the real economy. If the central bank pays the policy rate (possibly zero) on reserves, there is no need to convert reserves to bonds. The reserves can just be left to mount in reserve accounts. Otherwise, the central bank adds and drains reserves at various times to maintain interest-rate stability. Whether non-government holds its extra net financial assets in reserves or bonds, its capacity to spend is enhanced.
Since government spending always creates government money, the remainder of the passage is incorrect whenever the economy is operating below full employment. Whenever this is so, it is possible to produce more roads and more factories. Cochrane may as well say that if the private sector builds roads, it can’t also build factories, even if the building of roads still leaves idle resources available for building factories. For this reason, it is ironic that Cochrane’s very next paragraph commences with “investment is ‘spending’ every bit as much as consumption”. Of course it is. And government expenditure is spending every bit as much as private investment and consumption.
There is a further serious problem with the argument put forward by Cochrane and embraced by Riedl:
Keynesian fiscal stimulus advocates want money spent on consumption, not saved. They evaluate past stimulus programs by whether people who got stimulus money spent it on consumption goods rather than save it. But the economy overall does not care if you buy a car, or if you lend money to a company that buys a forklift.
This passage erroneously equates saving with investment. The implicit claim is that every act of saving is inevitably also an act of investment. Saving, or so it is supposed, calls forth investment. This claim has a name: Say’s Law. It was discredited first by Marx, then by Keynes and Kalecki, and later from within neoclassical theory itself. Some on the right wing of neoclassical economics continue to hold to the alleged law in the ‘long run’, but even on neoclassical grounds there is no justification for the idea in view of well known results established in general equilibrium theory. For those whose arguments implicitly rest on Say’s Law, the effects of a collapse in consumption will supposedly be nullified by a rise in investment, induced by lower interest rates. For some of the more extreme proponents of this view, who were quite vocal prior to the global financial crisis and Great Recession, the economy need not even deviate from full employment during a switch from consumption to investment. If it does, it is only because individuals commit random expectational errors that cause, to take one example, workers to demand higher wages than are consistent with their continued employment, resulting in layoffs.
There is no legitimate basis for this line of reasoning and is partly what the capital debates were about. First, it is a fallacy of composition to suppose an inverse, monotonic relation between the real rate of interest and aggregate private investment. Paul Samuelson, probably the leading neoclassical economist of the twentieth century and a chief participant in the debate, explicitly acknowledged this point in his famous ‘summing up’. An implication that directly follows is that, until established otherwise, Say’s Law cannot be said to hold, in the long run or otherwise. Second, it is invalid to suppose, in general, that a reduction in real wages will translate into higher aggregate employment. This, too, is a fallacy of composition, and another casualty of the capital debates. It is also a casualty of aggregation problems uncovered later by neoclassical general equilibrium theorists.
Government spending can affect long-term economic growth, both up and down. Economic growth is based on the growth of labor productivity and labor supply, which can be affected by how governments directly and indirectly influence the use of an economy’s resources. However, increasing the economy’s productivity rate–which often requires the application of new technology and resources– can take many years or even decades to materialize. It is not short-term stimulus.
The implicit claim in this passage is that growth is supply determined. There is an assumption that actions which increase potential output will automatically induce the full utilization of this higher potential output. It is the same argument as is used to claim an automatic tendency to full employment, and depends on discredited notions such as a well-behaved demand function for aggregate ‘capital’ and conformity to Say’s Law.
Riedl ends the section on an ideological note:
In fact, large stimulus bills often reduce long-term productivity by transferring resources from the more productive private sector to the less productive government. The government rarely receives good value for the dollars it spends. However, stimulus bills provide politicians with the political justification to grant tax dollars to favored constituencies. By increasing the budget deficit, large stimulus bills eventually contribute to higher interest rates while dropping even more debt on future generations.
The claim that the private sector is more productive or efficient than the public sector is a statement of faith and nothing else. But leaving that to one side, a couple of observations can be made. One observation is that leaving resources idle is not productive, so the bar is exceedingly low when it comes to finding better uses for those resources. Utilizing resources in the public sector that otherwise would be left idle enhances allocative efficiency and adds to output. Another observation is that productivity behaves procyclically. Productivity will improve more rapidly in a high-demand, ‘high-pressure’ economy than in a low-demand, ‘low-pressure’ economy. In the latter, unemployment is high and organized labor weak, meaning that profit maximization can be pursued through wage reductions rather than productivity improvements and enhanced technical efficiency. In a high-pressure economy, in contrast, the onus is on productivity growth and efficiency gains through technical and organizational innovation.
Riedl also asserts, at the end of the passage, that government spending in excess of taxation causes higher interest rates and imposes a debt burden on future generations. The interest-rate claim is without substance. Government spending in itself, by causing an influx of reserves, puts downward pressure on interest rates, compelling the central bank to intervene (either by selling bonds or paying interest on reserves) if it wishes to maintain a positive interest rate. Bill Mitchell discusses this point here. The depiction of public debt as a burden on future generations is also without substance. Public debt, as a matter of accounting, is just the flipside of the non-government’s accumulated financial wealth. It does not carry an intergenerational burden for countries that have their own currencies.
Riedl, in the remainder of his paper, goes on to anticipate some possible arguments against his critique of government spending. There is little point responding to these, because his refutations depend for their validity on his prior claims (already addressed above) being correct, which they are not.
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Introduction Cathay Pacific, based in Hong Kong, is an Asian commercial airline founded in 1946. The company offers passenger services and cargo services to 120 destinations world-wide (Cathay Pacific, 2010).
Airline business has been noted to be the most competitive business in the world. Market executives should be competitive to cope with the challenges of this kind of business. Porter’s Five Forces model applied to the organization 1. Traditional Competitors Airline business is a challenging business.Highly competitive industries generally earn low returns. A highly competitive market might result from sharing market space with competitors (Laudon, 2010). The development of key marketing capabilities has been identified as one of the primary ways firms can achieve the competitive advantage.
Cathay Pacific is able to determine and segment its target market. The airline, through information such as the customers’ behavior, preference and backgrounds, makes its products and services more attractive.For example, the company is committed to increase flight frequencies, meet on-time performance goals and growth international route network to meet market demand (Cathay Pacific, 2009). 2. Customers “A profitable company depends in large measure on its ability to attract and retain customers” (Laudon, 2010, p. 97). More and more corporations are adding value to their corporate offering through services. Cathay pacific uses differentiation as its target market position strategy.
A differentiation strategy is one where wide product ranges and higher quality offered for the convenience of customer as well as added services (Porctor, 2000). The company is determined to provide their customers with greater ease and conveniences. According to the Cathay Pacific, it was the world’s first airline to offer an online air ticket auction in late 2000 and first in Asia to enable to change booking online in 2010, allowing frequent flyer members of its Marco Polo Club and Asia Miles program to bid for exciting offers through the Web site (www. cathaypacific. om) .
3. New Market Entrants The airline industry has proceeded along the path towards globalization. New companies are entering the marketplace easily. Many airlines entered into alliances, ranging from marketing agreements and code-shares to franchises and equity transfers to open up new markets, epically developing countries.
Cathay Pacific is known to be Hong Kong’s leading airlines gives them the opportunity to acquire more customers and generate more revenue. Cathay Pacific uses information system to tighten linkage with customers (Cathay Pacific 2010).The airline’s online booking gives more convenience to their customer and attract people who have no time to go to airlines branches for booking. 4. Substitute Products and Services Customers may use substitutes if the prices are lower (Laudon, 2010). Competition between high-speed train and airplanes is becoming a hot issue nowadays. Barron reports market share ranging from 10% to 97% for high-speed rail compared to the airplane.
Cathay Pacific plans to expand its service across China by increasing the frequency of its flights and adding new routes, Chief Executive Tony Tyler told.On the other hand, the Ministry Railways is planning to build 16,000 kilometers of new high-speed railways to provide high-speed rail access to over 70% of key cities in China by 2020 (Wikipedia, 2010). Cathay rather focuses on the quality of service rather the price competitive strategy. The airline made repaid progress towards its aim of becoming Asia’s leading e-Business airline. Passengers enjoy state of the art services throughout their journey. The technological advancement will improve the quality of passenger services and increase its efficiency and effectiveness.
. Suppliers The market power of supplier is one of the factors the impact on the firm profits (Laudon, 2010). Cathay Pacific uses technology and the power of the Internet to build an effective procurement platform.
In 2001, the company invested over $250m in e-business (Oracle Corp. , 2001). Internet Procurement helps to reduce the airline’s total expenditure with much of the savings coming from online purchasing and a substantial reduction in inventory carrying. Conclusion/RecommendationThe delivery of supporting technology across Cathay Pacific has been improved by a more adequate IT infrastructure and the airline uses the power of the internet to reduce communication costs and increase the flexibility of its operations. The airline continues to increase its competitive advantages through updating the Internet technology.
Reference List Bahnasy, R. , 2001, Cathay Pacific Airways Flies High With Oracle Internet Procurement, Oracle Mobile, viewed November 26, 2010, Barron de Angoti, I. , 2007, High speed Rail: The big picture, International Railway Association (UIC). Cathay Pacific, 2009, Cathay Pacific Airways Limited 2009 Annual Report, Swire, viewed November 26, 2010, , Cathay Pacific, 2010, Cathay Pacific Airways Limited 2010 Interim Report, Swire, viewed November 26, 2010, , Cathay Pacific, 2010, Cathay Pacific first in Asia to enable passengers to change bookings online, viewed November 26, 2010, , Laudon, K. C. & Laudon, J. P.
, 2010, Management Information Systems. Management the Digital Firm. (11th Ed), Prentice Hall, New Jersey. Procter, T 2000, Strategic Marketing: An Introduction, Routledge, London.
Wikipedia, 2010, High-speed rail in China, viewed November 22, 2010, ,
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5 myths about 'green' energy
...The article is worth reading in full. Most of these problems have been noted before here.
1. Solar and wind power are the greenest of them all.
Unfortunately, solar and wind technologies require huge amounts of land to deliver relatively small amounts of energy, disrupting natural habitats. Even an aging natural gas well producing 60,000 cubic feet per day generates more than 20 times the watts per square meter of a wind turbine. A nuclear power plant cranks out about 56 watts per square meter, eight times as much as is derived from solar photovoltaic installations. The real estate that wind and solar energy demand led the Nature Conservancy to issue a report last year critical of "energy sprawl," including tens of thousands of miles of high-voltage transmission lines needed to carry electricity from wind and solar installations to distant cities.
2. Going green will reduce our dependence on imports from unsavory regimes.
In the new green economy, batteries are not included. Neither are many of the "rare earth" elements that are essential ingredients in most alternative energy technologies. Instead of relying on the diversity of the global oil market -- about 20 countries each produce at least 1 million barrels of crude per day -- the United States will be increasingly reliant on just one supplier, China, for elements known as lanthanides. Lanthanum, neodymium, dysprosium and other rare earth elements are used in products from high-capacity batteries and hybrid-electric vehicles to wind turbines and oil refinery catalysts.
3. A green American economy will create green American jobs.
In a global market, American wind turbine manufacturers face the same problem as American shoe manufacturers: high domestic labor costs. If U.S. companies want to make turbines, they will have to compete with China, which not only controls the market for neodymium, a critical ingredient in turbine magnets, but has access to very cheap employees.
4. Electric cars will substantially reduce demand for oil.
Nissan and Tesla are just two of the manufacturers that are increasing production of all-electric cars. But in the electric car's century-long history, failure tailgates failure. In 1911, the New York Times declared that the electric car "has long been recognized as the ideal" because it "is cleaner and quieter" and "much more economical" than its gasoline-fueled cousins. But the same unreliability of electric car batteries that flummoxed Thomas Edison persists today.
5. The United States lags behind other rich countries in going green.
Over the past three decades, the United States has improved its energy efficiency as much as or more than other developed countries. According to data from the Energy Information Administration, average per capita energy consumption in the United States fell by 2.5 percent from 1980 through 2006. That reduction was greater than in any other developed country except Switzerland and Denmark, and the United States achieved it without participating in the Kyoto Protocol or creating an emissions trading system like the one employed in Europe. EIA data also show that the United States has been among the best at reducing the amount of carbon dioxide emitted per $1 of GDP and the amount of energy consumed per $1 of GDP.
In addition to the battery technology problem with electric cars is the fundamental problem of range. You are not going to be able to take a cross country drive in an electric auto. You can in a hybrid, but even if they have zero emissions like the new Honda CR-Z, they still do not get as good a mileage as the most efficient diesel engines. That is because the hybrids depend on braking to generate electricity for their efficiency. They do well in stop and go city driving, but on the highway their mileage is not so great.
We are finding great new supplies of natural gas. It is relatively inexpensive, very efficient and very dependable. Gas and nuclear power are the best alternative energy available right now.
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Deferral accounts, or Prepaid expenses accounts, as defined by Larson, Jensen and Carroll(2002) are asset accounts. These deferral accounts contain payments made for assets to be used in the near future. As these assets are used up, the costs of the used assets become expenses.
AccountingCoach.com website points out the difference between accruals and deferrals: “an accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt. There are accruals for expenses and for revenues. There are deferrals for expenses and for revenues”.
A few examples where deferrals are usually employed are Office Supplies, Prepaid Insurance, Prepaid Rent, Tax Registration for cars in countries like Denmark or Singapore.
With NAV 2016, Microsoft allowed users to automate the process of deferring not only the expenses, but also the revenue over a pre-defined schedule. To set-up a deferral code is fairly easy. Just type: Deferral in the Search field in RTC, and launch Deferral Template List page. I will go into creating a deferral code a bit later in this article.
Let’s consider this leasing car example, in which an accounting employee at Goldman Bags Bank – Danish subsidiary – is recording an invoice for customer Henrik Jensen for the Danish registration tax for his newly acquisitioned Mercedes SLC, which amounts for 30,000.00 DKK payable in 6 months. The deferral schedule with the 6 monthly adjustments should look like below:
How would this use case be applied in NAV?
NAV 2016 RTC
- Create a 6 months deferral code
- Open General Journal and post the transactions below(note the deferral code on the second transaction):
Alternatively you could assign Deferral Code = ‘Leasing’ to the G/L account 86000 by opening G/L Account card and filling up “Default Deferral Template” with the desired deferral code in which case the Deferral Code will be automatically populated in the Gen. Journal Line.
- Open the General Ledger Entries to check the effect of the 2 transactions posted above (filter by Document No. and sort by Entry No.):
Each month-end a deferred 5,000.00 DKK will be applied against G/L Account 86000. In the contra account(86100) an equal and opposite sign amount will get posted each month end.
What about my processes? How can I automate my processes to post to deferral accounts via C/AL code?
First, let’s look into how Microsoft implemented invoices with sales lines defined with deferral codes.
Microsoft implementation of Deferrals in Sales Invoices
In CU80, at the end of FillInvPostingBuffer we find the following code snippet:
The highlighted method will populate buffers for 1701 (Deferral Header), 1702 (Deferral Line) and 1703(Deferral Post. Buffer), buffers that will be used by codeunit 12 to validate and post these buffers.
When coming in Codeunit 12, Sourcecode = Sale, therefore, the Deferral Post. Buffer(record 1703) is ready and will be processed as part of PostDeferralPostBuffer.
When coming from the General Journal, PostDeferral method will process 1701 and 1702 records to create deferred general ledger entries:
Custom Deferral Posting:
For your customized processes, it is not enough to generate a general journal line and post it.
Below is an easy to follow template for injecting deferrals in your business processes:
- populate the General Journal Line fields
- “General Journal Line”.”Deferral Code” should be validated against the “Default Deferral Template Code”(if not empty) of G/L Account recorded in “General Journal Line”.”G/L Account No.”.
- If “General Journal Line”.”Deferral Code” <> ” , you need to use something similar to what Microsoft did with the sales invoices:
- populate deferral records(1701,1702)
- populate deferral buffer(1703)
- now everything is ready for processing and posting – in a similar fashion as it takes place with Sales Invoices with deferrals- as part of the Codeunit 12 RunWithCheck() method
Some code to get you started here.
AccountingCoach. What is the difference between an accrual and a deferral [blog post]. Retrieved from http://www.accountingcoach.com/blog/accrual-deferral
Larson K., Jensen T., Carroll R. 2002. “Financial Accounting Principles” Tenth Canadian Edition (p.141)
Totovic.(September 10, 2015) How deferrals work in NAV 2016[Blog post]. Retrieved from https://totovic.com/2015/10/09/how-deferrals-works-in-nav-2016/
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In an attempt to remove risk from the grain-producing economy, India guarantees that it will purchase at generous prices and mill at no cost to producers every kernel of wheat and almost every grain of rice that its farmers grow.
NARAIGARH, Haryana, India — Ashoka and Vinod Gupta, both in their 50s, own and manage the Shivshakti Rice Mill, which they founded 27 years ago after working for their father as grain buyers during their adolescence. The mill — one of 13 in the immediate area — dries, processes, and loads into burlap sacks 2,000 to 2,500 metric tons of rice annually. Still, much of what is produced and processed nationally is not reaching the hundreds of millions of poor Indians who need it, especially in the nation’s teeming cities. Though India provides rice and wheat at subsidized prices to its poor, those prices are still too high for tens of millions of families to afford. Additionally, India’s system for delivering rice to market is hampered by inefficient distribution and corruption. All of these barriers, in turn, reduce shipments of grain to market and add to the surpluses that are piled in Punjab and Haryana.
Click the photos below to enlarge the photo slideshow to learn more about Haryana’s grain processing.
This slideshow accompanies Scarcity in a Time of Surplus: Free Water and Energy Cause Food Waste and Power Shortage in India, the second story by Keith Schneider in Circle of Blue’s Choke Point: India series. Photos by J. Carl Ganter and Aubrey Ann Parker, Circle of Blue’s director and news editor, respectively. Reach them at circleofblue.org/contact, or contact Keith Schneider directly.
Choke Point: India is produced in collaboration with the Woodrow Wilson International Center for Scholars and its China Environment Forum, with support from Skoll Global Threats Fund. The Wilson Center’s Asia Program, which provided research and technical assistance, produces substantial work on natural resource issues in India, including articles and commentaries on energy, water, and the links between natural resource constraints and stability.
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Making money-related decisions is one of the main and probably most stressful responsibilities of a business owner. In order to make these decisions the right way, you need to base them on reliable financial statements.
And a crucial step in creating these accurate accounting books is choosing the right basis of accounting.
The basis of accounting relates to the timing when transactions get recorded. The two bases businesses can choose from are either cash basis or accrual basis accounting.
In this article, we will explain their characteristics and differences in detail, along with choosing the right basis of accounting for your small business.
Read on to learn about:
- What Is the Basis of Accounting?
- Difference Between Cash Basis Accounting and Accrual Basis Accounting
- What Is Cash Basis Accounting?
- What Is Accrual Basis Accounting?
- Should Your Small Business Use Cash Basis or Accrual Basis Accounting?
What Is the Basis of Accounting?
Every business records revenues and expenses into its financial statements at a specific time. This timing of documentation is known as the basis of accounting.
There are two main types of accounting methods: cash basis accounting and accrual basis accounting.
A third option is the hybrid (or modified) cash basis method, which is a combination of the two above.
The IRS allows small businesses to pick whichever type they prefer, but they must stick to this chosen method until the very end.
On the other hand, public companies and those generating over $25 million for 3 years are obligated to use accrual basis accounting.
We will explain why as we go along. But first, let’s check out the main differences between cash basis and accrual basis accounting.
Difference Between Cash Basis Accounting and Accrual Basis Accounting
Cash and accrual accounting make similar journal entries, but the key difference between the two lays in the timing of recording.
Cash accounting recognizes money only when it is received or paid. While accrual, recognizes revenue the second it gets earned, and expenses right when they get billed.
Listed on the table below you’ll find a summarization of the main distinctions between the two:
Now that we got an idea of how cash and accrual accounting differ, let’s explain each one in detail.
What Is Cash Basis Accounting?
Cash basis accounting documents revenues only when the money is received, and expenses only when they get paid. This means, there are no recordings of receivables or payables.
The same principle applies to taxation. In cash basis accounting, taxes get paid only when income is received.
The most common businesses that opt for cash accounting are:
- Sole proprietorships and partnerships, because these types of ownerships don’t have to publish their financial books.
- Businesses who use single-entry bookkeeping, instead of double-entry bookkeeping.
- Businesses with few transactions and employees.
- Businesses with no inventory.
- Businesses who don’t sell or buy on credit.
Now, this method may be the simplest to manage, but it’s not the most accurate. Cash basis accounting easily distorts the idea of how much your business can afford to spend.
For instance, assume the two following financial transactions occurred:
Purchase of $300 dollars of materials whose invoice arrives next month.
- Received $1000 from sales.
With cash-basis accounting, your profit for the month would be $1000, even though there was a $300 bill spent on materials. This can easily cause the business to overspend an extra $300 they can’t afford, and not be able to pay the invoice expense next month.
What Is Accrual Basis Accounting?
Accrual basis accounting measures a business’ financial performance by recognizing financial transactions when they occur, regardless of when the cash exchange takes place. In simpler terms, expenses are recorded when they get billed, and revenues when earned.
For example, a finished project will be recorded as income for the business, even if the customer hasn’t paid yet.
This method is considered as the standard accounting practice for most companies. In fact, the law requires public businesses such as C-corporations, and those who generate over $25 million in revenue for 3 preceding tax years, to use accrual accounting.
But what makes accrual accounting so necessary?
Well, first and foremost, it provides a more realistic and accurate picture of finances. It allows a business to realize the true profit they’re making, in real-time. And so, preparing budgets and other financial plans becomes way easier.
This method doesn’t just affect the business’s internal decision-making, however. Investors and creditors also prefer finances kept with accrual accounting.
Now, although accrual accounting is more used as an accounting basis, it has its own downsides.
The process is more complex, so it takes up extra time and resources to manage. Also, it could mess up the short-term view of your finances.
For example, say you send out invoices worth $10,000 every month. Accrual basis shows you have earned the cash, even if your business bank account is dry and empty. This “illusion” could affect the business’ ability to pay bills or even employee payrolls.
What Is the Modified Cash Basis Accounting?
The goal of modified cash basis accounting is to profit from the best of both worlds. This strategy combines elements from both cash and accrual accounting.
To be more specific, short term assets are recorded using a cash basis, while long-term ones through an accrual basis.
This approach is less costly, in comparison to full-accrual accounting.
However, it’s not allowed by GAAP or IFRS, so it should be used for internal purposes only.
Should Your Small Business Use Cash Basis or Accrual Basis Accounting?
Again, as far as the law is concerned, accrual accounting is only required for public businesses, and those generating over $25 million in a three year period.
If your small business doesn’t fall under these categories, you’re free to pick and choose any basis of accounting.
With that being said, cash basis accounting works best when the business has little cash in hand and is dealing with few transactions. It prevents cash flow issues from crippling these operations.
On the other hand, if you’re the owner of a busier business with more financial activity, it’s best to go for accrual accounting.
Now you’re probably wondering, can you switch from one method to the other
Short answer, yes.
However, it’s a lengthy process, which needs permission from the IRS to take place. You have to add up your accrued and prepaid expenses, subtract customer prepayments, file for a Form 3115, and make more adjustments.
Accounting software like Deskera automates your accrual basis accounting for you. By integrating directly with your bank accounts, any payments or purchases made get immediately posted to the appropriate ledger account.
You can also use our professional invoice creation tool to easily send and receive bills, which get automatically entered into the right payable and receivable accounts.
Not convinced Deskera is the right choice for you?
Well, you can try it out yourself with our free trial! No credit card required.
And that’s a wrap! We hope our guide to the basis of accounting was helpful.
To recap, here are the main points we’ve covered:
- The basis of accounting refers to the timing varieties when financial events get recorded.
- The two main types of bases are cash basis and accrual basis accounting.
- Cash basis records finances when money exchanges hands, while accrual basis when the transaction occurs, whether or not any cash has been received or paid.
- Public businesses and those with over $25 million in revenue are required by law to use accrual accounting. Small businesses, on the other hand, are free to choose their own basis.
If you want to learn more about doing accounting for your business, check out our Related Guides below.
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One of the most controversial topics in today's automotive industry is the green car. Although the green car industry is still in its fledgling stages, there are many advantages to investing in a green vehicle, from the economic to the environmental. Here are a few of the highlights in the green car debate.
Green cars are, by nature, more friendly to nature than regular fuel guzzlers. Electric or hybrid motors give off fewer harmful emissions than petrol-powered motors and cause less damage to the atmosphere. Additionally, green vehicles use less of the earth's rapidly diminishing fossil fuels.
There are two types of green, 'save the planet' green and 'save the pocketbook' green. Most of these cars hit both of these marks at once, saving hard-earned cash while saving the world at the same time. Fuel savings are hard to estimate because of the huge differences in driving habits, fuel costs, and electricity costs, but many experts estimate that green vehicle owners spend from five to ten times less on fuel. Even though they still have to plug in at night, which usually causes a spike in their electric bill, electricity is much cheaper than fuel in most places. Green cars, especially hybrid cars, are flexible and can be used as needed. Hybrid cars can stay in electric mode for short drives, allowing their owners to get to work and back without using a single drop of petrol. This can save huge amounts of money over the long term. Then, when they are needed for longer trips, hybrid green cars can be immediately switched into petrol mode and easily undertake a cross country outing. The owner has complete control over the way the hybrid car is driven. These cars are not limited to short distances, and they are also not limited to perpetual pollution of the planet. They can drive on pure, electric-only mode when possible and still get all the benefits of a regular car when necessary.
Another huge benefit to green cars is the reduction in road and fuel taxes their owners are able to enjoy. Most road taxes are set according to the type of fuel the car uses as well as the amount of emissions it releases into the atmosphere. Most green autos have low enough emissions levels that they are exempted from road taxes. Also, because they use less fuel, their fuel tax level is greatly reduced.
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When the economy begins taking a turn for the worst, knowing what to do to survive is essential, and this can change depending on the conditions you find yourself in. In any scenario, though, saving up enough money and resources for basic sustenance is the first step. This preparation will reduce your dependency on your job and grocery stores. Ideally, with zero income, your savings should be enough to sustain you for at least six months, and even then, it would be better to be able to rely upon alternative income sources to generate additional earnings. Here's what you can do to be always financially prepared.
1Assess Your Lifestyle And Expenses
Consider your current lifestyle in terms of your future. Do you and your family spend money like there's no tomorrow? If you do, when tomorrow does come, you're likely to find it particularly difficult. Making a few changes now can vastly strengthen your situation.
Start thinking about what's essential for you and your family and budget for these things. Once you have these necessities taken care of, then you can include non-essential luxuries in your budget. Look for ways to supplement your income and save even more. If there's anything that you can be sure about, it's that you surely can't have too much money for the difficult times that may be looming ahead. Accumulating gold and silver is particularly smart, since the current currency may yield little to no value in a failed economy.
2Stock More Than Enough Of The Basics
Having the basics, like food, water, and tools, will enable you to survive. Having extra to sell or trade will help you prosper. Ensure you're sufficiently stocked up on food supplies, water, hygiene items, and other necessities. If you can, purchase a piece of land outside the city, especially one with a fresh water supply you'll have access to and the means to produce more, fresh food and water.
3Scale Up Your Survival Skills
Strengthen survival skills like living off the land and natural medicine. Your community may offer inexpensive classes to increase your knowledge and skills. In an economic collapse, these skills will not only help you survive, but others will gladly pay for your services as well.
4Learn To Work With Others
While the urge for you to "do it alone" may be powerful, the truth is that surviving all by yourself will indeed be a challenging and cumbersome task. Historically, humans had always flourished the best when they worked together. Being able to work together with others will be among the most important survival skills that you can have at your disposal.
Strengthen your bonds with your friends or neighbors and make plans together. For example, you could stockpile complementary items to share. As cold as the world may become before the imminent collapse, your kindness and compassion towards others will undoubtedly pay you dividends which you would've never expected otherwise!
Yes, you can survive - and even prosper - if the country suffers a financial collapse. You can prepare for an economic collapse by preparing financially, stocking up on the essentials, and enhancing your survival skills. Starting on these preparations now will give you greater confidence in your ability to provide for your family in the years to come.
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Zcash – ZEC Permissionless Cryptocurrency Payment Confidentiality?
Cryptocurrency can be described as a form of digital currency that is created as well as managed via the use of certain advanced encryption methods known as cryptography. It made the significant leap that transformed it from an academic concept to reality. This development was marked by the invention of Bitcoin in the year 2009. Cryptocurrency can be utilized as an actual currency and as an effective medium of exchanging things.
Cryptocurrency is usually created electronically and stored in the same manner. This means that it can only be stored on websites and computers. It can be used to purchase virtual things, to shop online, and to purchase physical services and physical goods with online payment. Cryptocurrency is beneficial to people who have lost trust in the traditional banking system.
What Are Cryptocurrencies?
The following are some of the cryptocurrencies that are currently available in the market and the dates that they were introduced:
- Primecoin that was introduced in 2013
- Mastercoin that came into use in 2013
- Namecoin that was created in 2011
- Dagecoin that was made in 2013
- Peercoin that came into the market in 2012
- Auroracoin, invented in 2014
- Litecoin that came into the market in 2011
- Ripple that came into use back in 2013
- Bitcoin, which is the oldest and started being used in 2009
- Many others, such as Dash and Ether
There is an upcoming cryptocurrency called ZCash. It can be defined as an open source and decentralized cryptocurrency. It is set to bring fungibility to the growing cryptocurrency, and it achieves this through the unlinking of shielded coins that is from their blockchain history.
Z cash is bringing blockchain technology cutting-edge cryptography. This is because zero-knowledge proofs permit the confirmation of fully encrypted transactions as valid. Z cash will allow users to benefit from the use of public blockchain but still protect their private information.
There are several benefits that are associated with cryptocurrency, the main ones are as outlined below:
Fast And Easy Payment
It allows for both easy and fast payment. This is because one that does not require any document or credit card, the address of the organization or person that the money is being transferred to should suffice. Furthermore, the processing of the payment transfer is quite fast as it takes just a few seconds. This is useful in such a fast-paced life.
When military grade cryptography is used it guarantees security in transactions. This is because no one else except the person who owns a wallet can make payments or transfers using it. There is no need to trust any person when using cryptocurrency.
Payment Processing companies and banks normally charge some fees to conduct fund transfer and payments, but these can be eliminated with cryptocurrencies. The network is responsible for compensating the miners.
Since cryptocurrency is a digital product, it cannot be counterfeited or reversed as it is the case with credit cards. This helps in curbing the menace of fraud that many people fall a victim to.
Cryptocurrency eliminates third party approvals, especially in buying real property.
The use of cryptocurrency in business has the benefit of mutual exposure. Both parties benefit from an arrangement when they sign on with a vendor.
Bank accounts and credit cards can be problematic for international transactions, but this is not the case with cryptocurrency. This is because cryptocurrency is not bound to the status or rules of any government, country-to-country transaction fees, interest rates, and exchange rates.
ATM, debit, and credit cards are usually linked to home address, name, and other unique personal information. No transaction that involves cryptocurrency contains any kind of personal information. This is to say that it promotes privacy.
Cryptocurrency is gaining good reputation as well as a sense of legitimacy, with both vendors and customers.
The above benefits of cryptocurrency are not exhaustive as they are numerous.
There are a few limitations that cryptocurrency have, and these are:
Losing Your Wallet
There is no way of recovering digital currencies that were stored in the system or mobile that got lost. In addition, a complaint cannot be filed with the police.
There are not many companies or websites who have widely accepted the use of cryptocurrencies. This means that people have to conduct research to confirm if a service provider will accept the use of cryptocurrency. This is mainly because many individuals are unaware of cryptocurrency.
Cryptocurrency lacks a central point in the processing of payments. This means that if a user makes a mistake in the transfer process there is no refund or option to dispute.
Overall, it is a long way before cryptocurrency can replace traditional currencies and credit cards. It is still in its infancy and still requires several years of exposure to the world system before the masses can begin to accept its use. The challenge still lies in the limited knowledge of cryptocurrencies as many people do not know about them or have limited knowledge concerning them.
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The impact of COVID-19 on the global economy is just beginning to become clear. On 7 April, the International Labour Organization (ILO) cited expected worldwide job losses at 195 million.[i] The ILO Director General, Guy Ryder, urged that maintaining relationships between workers and their enterprises to keep them in the labour market will pay dividends when it comes to the recovery.
The World Travel and Tourism Council calculates that in 2019, tourism contributed $8.9 trillion to the world’s GDP and accounted for one in ten jobs around the world. In much of the world, tourism and nature are co-dependent as nature-based tourism relies upon natural capital to drive economic stability and conservation.
Beaches, mountains, scenery and wildlife are key draws. Without robust natural resources, the impetus for tourism would be sharply diminished. Without earnings from tourism, there would be much less incentive to invest in the conservation of resources. The tourism sector is the largest market-based contributor to the finance of protected areas such as national parks, according to the World Bank.[ii]
For nature-based tourism, COVID-19 related losses may be prolonged, or even permanent, unless decisive action to conserve and protect the natural capital base is taken.
There is a risk that natural capital may be lost because of major economic shocks when they hit a natural capital rich country without a social safety net. This is a global problem, but it is particularly acute in the case of wildlife tourism in Africa.
- In Kenya, the tourism sector, which is almost exclusively nature-based tourism focused on wildlife, earns an average of $1 billion annually.
- In Namibia, nature-based tourism based in community conservation contributed $488 million in 2018 to net national income and created 5,147 jobs from 1990 to 2016.[iii] Namibia’s GDP in 2018 was $14.2 billion.
- In Uganda, gorilla nature-based tourism contributes $34 million to the local economy.[iv]
- In Africa, the World Travel and Tourism Council estimates that 3.6 million people are employed in the nature-based tourism industry, worth $29 billion in 2018.
- Globally, natural protected areas receive eight billion visitors annually generating (up to) an estimated $600 billion compared to (est.) $10 billion spent on protecting these sites.[v]
In Kenya, 15 Mara Conservancies form a 140,500 hectare protected wildlife area bordering the northern Maasai Mara National Park. Part of a major community conservation programme, Mara Conservancies’ land is leased from 14,500 Maasai landowners by 40 tourism partners. Using conservation fees generated from guests, these tourism partners pay lease fees, create employment and provide education and health services to local communities and landowners. Without income from tourism, wildlife conservation will be compromised as no funding will be available to pay lease fees. As a result, the landowners will be incentivized to convert their land into agriculture production with significant negative consequences for wildlife and the economies that depend on wildlife.[vi]
Loss of protected areas and wildlife is the functional equivalent of eating one’s seed corn.
A wildlife economy, according to Stellenbosch University’s African Wildlife Economy Institute, understands nature as an economic asset, utilizing undomesticated animals and plants and the ecosystems in which they live to produce goods and services for human benefit.
The world needs to manage these risks by directly investing in natural capital economies.
There is no question that a humanitarian crisis is looming, and that relief will be urgently needed very soon. Our global challenge is to invest in relief in ways that will accelerate recovery and help all countries to come back stronger. The COVID-19 pandemic is an inflection point in world history, a point at which we can either take a path upwards towards sustainability and resilience or choose one that takes us lower into the world of shocks and crises.
In much of the world, recovery will be best served if we provide bridge support to the unemployed through jobs programmes that directly invest in natural capital. A green infrastructure strategy can provide necessary skills and wages to draw down our environmental deficit – through replanting mangroves and watersheds, removing invasive species, upgrading and rewilding our conservation areas, building fire breaks and restoring areas damaged by wildfire in natural forests, restoring shorelines, rebuilding tourism infrastructure to minimize environmental impacts and installing better waste management and energy systems. Investment in recovery should help us to build the world that we want, rather than shore up the old one.
A modern model would include a focus on capacity development especially for local communities and would advance social equity through opportunities for women and youth.
Among the most hard-hit components of the “nature-based tourism wildlife economies” are fragile small businesses in the developing world and communities surrounding protected areas that rely on tourism for income.
Governments can support these critical conservation efforts by issuing temporary tax waivers, encouraging banks to renegotiate loans, granting tax breaks to prevent firms collapsing, thereby preserving jobs and economic activity to earn export revenues in the recovery. Nature-based tourism businesses can engage philanthropy to request stop-gap funding measures and critical supplies to enable conservation outcomes. Businesses and individuals can support these nature-based tourisms activities via paying ahead of time for trips and paying now for “remote safaris” similar to how individuals now “visit museums remotely”.
With foresight and investment, we can help developing countries dependent upon a wildlife economy to build back better.
John Waugh, Principal Global Practice Specialist – Environment, DAI, contributed to this blog.
[i] McKeever, CNBC (8 April 2020). Coronavirus is set to cost 195 million jobs in the second quarter, UN labor agency predicts.
[ii] World Bank (2018). Supporting Sustainable Livelihoods through Wildlife Tourism.
[iii] World Bank (2018). Supporting Sustainable Livelihoods through Wildlife Tourism.
[iv] World Bank (2018). Supporting Sustainable Livelihoods through Wildlife Tourism.
[v] Balmford et al., PLOS Biology (2015). Walk on the Wild Side: Estimating the Global Magnitude of Visits to Protected Areas.
[vi] The Maasai Mara Wildlife Conservancies Association (MMWCA) was formed in 2013 to serve as a membership organization for current and future wildlife conservancies in the Greater Maasai Mara with a mandate from landowners and tourism parties to play an overarching coordination role for Greater Mara Ecosystem stakeholders. The MMWCA focuses on ensuring the prosperity of biodiversity and wildlife, the regional Maasai population, recreation, tourism, and the nation of Kenya for generations to come. The MMWCA is a member of the Kenya Wildlife Conservancies Association (KWCA) that comprises 12 regional wildlife conservation associations across Kenya.
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Expenses & Debt
In recent years, we’ve seen a dramatic shift in costs associated with attending a traditional college or university.
Goldman Sachs says many students are better off not going to college, if it’s a mediocre one. They report that college graduates
of mediocre schools earn less, on average, than high school graduates. They even warn those who are considering mid-tier colleges as
well, due to the costs and the opportunities the education may or may not provide. “The average on going to college is falling,”
Goldman Sachs researchers wrote. In 2010, the typical college student had to work 8 years to break even on their bachelor's degree
investment, Goldman found. And it’s only getting worse. Future traditional education will still require the same amount of credit
hours be achieved, but the price tag for those credit hours will continue to increase. The current student debt is over
$1 trillion now and employers are frustrated that they can’t find graduates with the right skills – they’d prefer to
hire based on experience and professional achievements. Simply put, tuition is rising quicker than the average income potential (1).
A separate study shows 71% of all college graduates carry student loans with an average of $29,400. It’s only worth
going into debt with education if the earnings are there, based on your plan and objectives. Both the amount of debt and your ability
to pay it off in a reasonable amount of time are determined greatly on the school you attend and the field of study or degree you earn.
Do your research and plan according to your earnings potential (both dollar and time) and your passion (2).
Time a typical college student spent working to break even on bachelor degree investment in 2010
Current Student Debt in U.S. for Traditional education
of all college students carry student loans with an average of $29,400
Quality of Education
Although not always the case, there are many experts who say going to college is not as much about gaining an education and learning skills, as it is
about simply paying to have a degree. Academically Adrift: Limited Learning on College Campuses found that 36% of college students
“did not demonstrate any significant improvement in learning” during their college educations. While it appears that a traditional
education provides the environment and resources for a student to gain an education, there are far too many who simply aren’t
learning the valuable skills necessary to build a successful career (3).
According to the Bureau of Labor Statistics, of the 30 fastest growing jobs between 2010 and 2020, five do not require high school diplomas, nine
require high school diplomas, four require associate degrees, six require bachelor degrees, and six require graduate degrees.
Many students are graduating from college with little understanding of math, reading, civics, or economics. In 2011, 35% of students enrolled
in college reported they studied 5 hours or less per week and there was a 50% decline in the number of hours a student studied and prepared for
classes compared to a few decades ago. In 2013, 56% of employers thought half or fewer of graduates had the skills or knowledge to advance
within their companies. 30% of college students felt that college did not prepare them well for employment, specifically in areas of
technical and quantitative reasoning skills. A 2011 Pew Research survey found that 57% of Americans felt higher, or traditional education,
did not provide students with good value compared to the money spent (4).
This isn’t to say that there are not great colleges and universities who provide an extremely high level of learning, but we’re seeing a major shift
in the internet age and due to various economic factors.
of college students “did not demonstrate any significant improvement in learning” during college education
employers thought half or fewer of graduates had the skills or knowledge to advance within their companies.
of college students felt that college did not prepare them well for employment
of Americans felt higher, or traditional education, did not provide students with good value compared to the money spent
A traditional education provides an opportunity for interpersonal relationships and skills and exposes students to a wide array of culture and diversity.
Many lifelong friendships are found and a network of likeminded individuals is created. It’s difficult to put a price tag on these relationships but you’d
be hard pressed to find anyone willing to pay close to $20,000/yr just for the relationships. With the cost of traditional education going up each year,
it’s causing more and more students to live at home with their parents. Those relationships may not be the ones they’re looking to develop. A key aspect
you might consider when evaluating your learning method.
Why are some people successful in reaching their career path, while others are not?
Many people who go to a college or university go on to live a perfectly happy life, obtaining everything they set out to accomplish. There are far too many,
however, who go through years of college only to end up in a career unrelated to their degree. We all know someone with a college degree from a
good school but who don’t like their job or don’t have the pay they expected to receive when meeting with college and university counselors. And, there are
some who never obtain a degree at all but go on to build wildly successful careers.
The key to “success” is not just obtaining a degree – it’s obtaining an education and doing something with that education. Some of the most
accomplished people in the world are self-educated. These are the people who are really engaged, focused and driven and you’ll find these people from all walks
of life and with varying degrees of education. These are the people who learn so that they can make a difference in the world – not to necessarily pad their
resumes with degrees and credentials. These are people who learn when they’re not on a deadline or budget – they learn because they want to.
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Tags: Essay Writing About TeamworkSample Business Plan CafeShort Essay On Internet AddictionE.B.White EssaysEssay Topics For 6th Graders2007 Ap Lang Synthesis EssayHow To Solve Printer ProblemsAn Essay Concerning Human Understanding Book 1 Summary
Modified accrual accounting is commonly used by government agencies.
Modified accrual accounting borrows elements from both cash and accrual accounting, depending on whether assets are long-term, such as fixed assets and long-term debt, or short-term, such as accounts receivable (AR) and inventory.
Businesses that wish to use this method must do so for internal purposes and then convert transactions recorded under a cash basis to accrual accounting to get them signed off by auditors. The Government Accounting Standards Board (GASB), which is recognized as the official source of GAAP for state and local governments, establishes modified accrual accounting standards.
Modified accrual accounting is used and accepted by governmental agencies because they focus on current-year obligations.
As a result, expenses are recorded in the same period as the revenues they generated.
While the revenue recognition and matching principles are rather straight forward, their application is often subject to seemingly arbitrary rules and requires the use of estimates(Cooper, Lyman, 2002).
Modified accrual accounting is an alternative bookkeeping method that combines accrual basis accounting with cash basis accounting.
It recognizes revenues when they become available and measurable and, with a few exceptions, records expenditures when liabilities are incurred.
Revenue Recognition Principle By matching revenues with expenses the accrual concept became the cornerstone of accounting.
By comparing cash with the cost of generating it an investor can develop an understanding for the profitability of a business.
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It is a physical reserve of grain that is owned by the government and is used to moderate the volatility of the price of food.
The government sets a price band for grain. This consists of a maximum price for consumers and a minimum price for farmers. The governments monitors the market price. If the market price starts to rise and there is a risk that it will rise above the maximum price, the government offers to sell grain from the buffer stock on the open market. This expands the supply of grain on the market and prevents the market price from rising above the maximum price. If the market price starts to falls and there is a risk that it will fall below the minimum price, the government offers to buy grain from the farmers. This expands the demand for grain and prevents the price from falling below the minimum price.
Yes. The government uses the market forces of supply and demand to keep the free market price within its pre-determined price band. There is no need for the government to create any ‘administrative’ prices. The government buys and sells grain at the free market price.
Yes, a buffer stock is fully compatible with international trade. Trade between countries in food and agricultural commodities is, in principle, beneficial and should be encouraged. A buffer stock enables a government to keep the domestic price of food within its pre-determined band if the world market price rises above the maximum price or falls below the minimum price.
Those countries that have a memory of famine tend to have a buffer stock. In some countries, the horrors of famine have faded from the collective memory and these countries no longer have buffer stocks. They believe that they will always be able to buy enough food from the world market. But this is naïve – if there is a world-wide shortage, the price of food on the world market may well become unaffordable, even for countries who consider themselves rich. Buffer stocks can prevent world food crises.
In principle, it is better to have a regional buffer stock, shared by several countries. This is cheaper (economies of scale) and provides a greater degree of food security. The participating countries have to agree how to share the costs and benefits.
A government has to procure the grain in the first place. It also has to build storage facilities. Those are the initial capital costs. Thereafter the government has to meet the annual running costs: management and the maintenance of the storage facilities. On the revenue side, the government should be able to make a profit, because it buys low but sells high.
A price stabilisation policy aims to reduce the amplitude of fluctuations in price, in other words to moderate price volatility. To do this, the government establishes a price band, defined by a minimum price and a maximum price. By means of a buffer stock, the government buys grain when the market price falls to the minimum price and sells grain when the market price rises to the maximum price, thereby keeping the market price within the price band. Among the beneficiaries of price stabilisation are consumers (food remains affordable) and farmers (farming remains profitable).
A price support policy aims to increase the price that farmers receive for their products. The government sets a ‘support price’. If the market price falls to the support price, the government buys grain to prevent the price falling below it. The government may find that it buys up large quantities of grain and has no profitable way of disposing of these ‘surplus stocks’. The beneficiaries of price support are farmers. Consumers do not benefit – they have to pay higher prices for their food.
We are of the view that price support should be avoided, unless there are very special circumstances such as an urgent need to quickly boost farm output. The problem with price support is that it can over-incentivise farmers, stimulating them to produce more food than consumers are willing to buy at the support price. This can result in an wanted surplus of food. We believe that farmers should receive free market prices. Free market prices tend to be volatile which can disorientate farmers and, if the price plummets, can wipe out their profits. To reduce the amplitude of price fluctuations, the government should keep the free market price within a pre-determined band. It can do this with a buffer stock.
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LONDON – In the future, March 2016 may be viewed as a turning point in how the federal governments of some developed nations address sugar’s contribution to obesity and its negative public health consequences. Within a matter of weeks, both the United Kingdom and Canada announced plans to improve public health by attempting to alter consumer food and beverage consumption habits.
On March 16, George Osborne, the U.K.’s Chancellor of the Exchequer, introduced a tax on sugary beverages that will take effect in April 2018. Under the plan, beverage companies will pay a tax on drinks with added sugar. It will apply to beverages with total sugar content above 5 grams per 100 milliliters, with a higher rate for more than 8 grams per 100 milliliters. The tax will not be levied against milk-based drinks or fruit juices.
The money raised will be used to enhance physical education programs in schools. Mr. Osborne’s department estimated the amount raised per year will be approximately £320 million ($464 million).
|George Osborne, the U.K.’s Chancellor of the Exchequer|
“You cannot have a long term plan for the country unless you have a long term plan for our children’s healthcare,” Mr. Osborne said in a speech before the British Parliament on March 16. “Here are the facts we know: 5-year-old children are consuming their body weight in sugar every year; experts predict that within a generation over half of all boys, and 70% of girls, could be overweight or obese.
“Here’s another fact that we all know: obesity drives disease. It increases the risk of cancer, diabetes and heart disease – and it costs our economy £27 billion a year. That’s more than half the entire NHS pay bill.
"And here’s another truth we all know: one of the biggest contributors to childhood obesity is sugary drinks. A can of cola typically has nine teaspoons of sugar in it. Some popular drinks have as many as 13. That can be more than double a child’s recommended added sugar intake.”
Noting that many beverage companies are already reformulating products to reduce their sugar content, Mr. Osborne said beverage makers can act with the right incentives.
“I am not prepared to look back at my time here in this Parliament, doing this job and say to my children’s generation: ‘I’m sorry. We knew there was a problem with sugary drinks. We knew it caused disease. But we ducked the difficult decisions and we did nothing,’” he said.
|Duncan Selbie, chief executive of Public Health England|
Duncan Selbie, chief executive of Public Health England, called the announcement “fabulous news” and added, “This will reduce the risks of obesity, tooth decay and other life threatening diseases. This is public health in action and a great foundation ahead of the child obesity strategy later this summer.”
The British Soft Drinks Association responded swiftly, calling the plan “absurd."
|Gavin Partington, director general of the British Soft Drinks Association|
“We are extremely disappointed by the government’s decision to hit the only category in the food and drink sector which has consistently reduced sugar intake in recent years -- down 13.6% since 2012,” said Gavin Partington, director general of the association. “We are the only category with an ambitious plan for the years ahead. In 2015 we agreed a calorie reduction goal of 20% by 2020.
“By contrast sugar and calorie intake from all other major take home food categories is increasing, which makes the targeting of soft drinks simply absurd.”
On March 1, the Canadian Senate published a report titled “Obesity in Canada,” that, among other recommendations, called for the consideration of a tax on sugary drinks and the implementation of subsidies to encourage the consumption of healthier foods and beverages.
“The committee recommends that the federal government assess the options for taxation levers with a view to implementing a new tax on sugar-sweetened as well as artificially sweetened beverages,” the report said. “And conduct a study, and report back to this committee by Dec. 2016, on potential means of increasing the affordability of health foods …”
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“Luck is where the crossroads of opportunity and preparation meet.” Seneca, first-century Roman Philosopher
You have worked hard on building a business and deserve the fruits of your labor.
How do you know what to expect? The answer is in the valuation of your business.
Business valuation is a process of proven procedures used to estimate the value of an owner’s interest in a business. The valuation method is used to determine the price a seller would be willing to accept to sell the business to a prospective buyer based on the company’s current worth in the marketplace.
The value of the business depends on the assumptions underlying it. For example, the valuation is affected by the economic conditions at the time of sale (expansion versus recession) and how the business is sold. Is there a plan in place to sell the business or will the assets be sold at auction or in a “fire sale?”
There are four ways to measure the worth of an enterprise. They are the Asset, Income, Market, and Synthesis approaches.
The asset approach is based on the economic principle of “substitution.” What will it cost to create another business like the current one that can produce the same economic benefits for its owners in the future?
The value of the business is deemed to be the difference between its assets and liabilities. This is the owners’ equity in the business.
The process includes determining which assets and liabilities to include in the valuation, choosing an agreed upon standard for measuring their value and deciding what each asset and liability is worth. The excess of the assets over liabilities is the value of the business.
An income approach looks at the present value of receiving a future stream of income. It is based on the economic principles of “expectation” and “risk management.” When a business owner invests time, money and effort in a business, what economic benefit will accrue to the buyer of that business and when?
Since the benefit is to be received in the future over a specific period of time, there is both an expectation and a sense of risk borne by the buyer. This economic condition is represented in the calculation of the value of the business by “discounting” the right to receive a predetermined amount in the future by the probability of not receiving all of the money. The higher the risk of not receiving all of the earnings the higher will be the discount rate. The higher the discount rate the lower the value of the business because there is a larger probability that all the promised income will not be received within the specified time period.
The market approach relies on the economic principle of “competition.” What are other businesses worth that are similar to the existing business?
The assumption is if you are a buyer looking for a particular type of business you will research what people are paying for similar businesses. Alternatively, if you are a seller of a specific type of business, you will investigate what owners are accepting for similar businesses.
The idea is that there will be a “price equilibrium” that a willing buyer will pay and seller will accept that determines the “fair market value” of the business. The buyer and seller’s data must support each of their price proposals based on their market research.
Business Value Synthesis
Combining the above methods is called the synthesis approach. It compares and contrasts the asset, income and market methods to form a single, integrated value for the business. This approach tends to yield a more agreeable value when the business has uneven income streams, high-risk conditions such as pending litigation, loss of intellectual property rights or there is a disagreement about which valuation method should be used.
How We Can Help You
Pacific Crest Group provides professional services that keep your business focused on your critical objectives. We provide strategic Accounting and Human Resource (HR) services created specifically to help you meet your goals. Through exemplary customer service, clearly defined policies and procedures as well as a forward looking perspective, we provide the outsourced solutions your business needs to grow. A PCG professional is happy to meet with you to discuss solutions for your unique requirements designed to maximize all of your business opportunities.
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The value of an asset is the present value of its expected returns. Specifically, you expect an asset to provide a stream of returns during the period of time you own it. To convert this estimated stream of returns to a value for the security, you must discount this stream at your required rate of return.
Estimate Expected Return
This process of asset valuation requires estimates of (1) the stream of expected returns and (2) the required rate of return on the investment.
An estimate of the expected returns from an investment encompasses not only the size but also the form, time pattern, and the uncertainty of returns, which effect the required rate of return.
The returns from an investment can take many forms, including earnings, cash flows, interest payments, or capital gains during a period. Analysts consider several alternative valuation techniques that use different forms of returns. As a example, one common stock valuation model applies a multiplier to a firm’s earnings, whereas another valuation model computes the present value of a firm’s operating cash flows, third model estimates the present value of dividend payments. Returns or cash flows can come in many forms, and you must consider all of them to evaluate an investment accurately.
You cannot calculate an accurate value for a security unless you can estimate when you will receive the returns or cash flows. Because money has a time value, you must know the time pattern and growth rate of returns from an investment. This knowledge will make it possible to properly value the stream of returns to alternative investment with a different time pattern and growth rate of returns or cash flows.
Require Rate of Return
The required rate of return on an investment is determined by
- the economy’s real rate of return, plus
- the expected rate of inflation during the holding period, plus
- a risk premium that is determined by the uncertainty of returns.
All investments are affected by the risk-free rate and the expected rate of inflation because these two variables determine the nominal risk-free rate. Therefore, the factor that causes a difference in required rates of return is risk premium for alternative investments. In turn, this risk premium depends on the uncertainty of returns or cash flows from an investment.
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As many as 483,172 people have lost their jobs during the first quarter of this year, due to the economic impact of the COVID-19 pandemic.
The Department of Census and Statistics released its latest report on the Labour Force Survey which identifies that the current unemployment rate is at 5.7 percent—an all time high, in years.
In economics, the unemployment rate is defined as the proportion of the unemployed population to the total labour force.
In 2019, the country's unemployment rate was recorded at 4.8 percent, ranking it third among South Asian countries with high unemployment rates.
Data released by the Department indicated that the unemployment rate was at its lowest (of 4 percent) in the fourth quarter of 2011 and largely remained under 5 percent for most of the decade.
Not Since The War
The country has not seen this level of high unemployment since the end of the 30-year war in 2009. That year, the unemployment rate spiked a staggering 6 percent, available data indicated. However, the end of the war saw a boom in development and construction in the country.
The country also saw an injection of investments, funded partially by foreign funds, that increased labour demand. As a result, the economy witnessed a gradual drop in the unemployment rate.
The COVID-19 crisis is seen as the biggest factor in the rise of unemployment this year. In addition to affecting several key sectors/industries, it caused a drop in the largest income generator in the country: tourism, when the airport shut down in March and islandwide curfew ensued.
Read the full report released by the Department of Census and Statistics here.
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Alternative fuels are derrived from resources other than petroleum. Some are produced domestically, reducing our dependence on imported oil, and some are derived from renewable sources. Often, they produce less pollution than gasoline or diesel.
To promote alternative fuels, the Federal government offers tax incentives to consumers purchasing qualifying alternative fuel vehicles.
Ethanol is produced domestically from corn and other crops and produces less greenhouse gas emissions than conventional fuels.
Ethanol is an alcohol-based fuel made by fermenting and distilling starch crops, such as corn...Read More
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A new craze is growing.
Around the world people are pledging money to help get projects they believe in off the ground, opening up a whole new funding channels for social enterprises and sustainable solutions – and it’s called crowdfunding.
A recent report by Massolution revealed that in 2011 that there were 452 crowdfunding platforms worldwide. They generated $1.5 billion for over 1 million campaigns – predicted to rise to $2.8 billion in 2012.
Crowdfunding describes the concept of people pooling their time, cooperation and most importantly money to support initiatives, led by others, get off the ground. It could be providing the capital for a new film, developing software and products or kick-starting a community energy scheme.
In a world where banks are increasingly reluctant to offer loans to small and medium-sized businesses, it also hands some power back into the hands of consumers who can help fund projects and companies they want to do well.
This is good news for renewable energy and other companies operating in the ‘green’ sector – offering a chance for new technologies to attract the finance they need to grow.
“Maybe an organisation hasn’t been accepted by the traditional funding options,” Alex Budak from crowdfunding platform startsomethinggood.com told RTCC.
“For example on Kickstarter [a crowdfunding website] there is a project called Pebble Watch. They tried the traditional funding route and were rejected by venture capitalists – instead they went directly to the community and let the market speak for itself.”
Startsomethinggood.com is a platform which aims to fund initiatives for social good – whether that be non-profit or profit based projects – around the world.
Budak argues they provide a solid base not only to seek funding but to also build support and engagement in ideas and innovations.
“We talk about ourselves as a platform of raising funds and growing a community of supporters, and we have heard from people who have used our site who say actually growing that community of supporters has been equally and in some cases even more important than the funds themselves,” says Budak.
“You might get 100 people who donate to your campaign and help get you started but those 100 people may also provide volunteer work, connections, people who want to be part of the venture as possible workers or interns.”
Crowdfunding is not a new concept to sustainability organisations. The 2009 climate change documentary Age of Stupid was funded by over 600 supporters. NGO 10:10’s Solar School project aims to aid schools to crowdfund for solar panels.
And earlier this year the Bicycle Academy, which runs bike-making workshops, sending the frames to Africa, raised £40,000 in just six days. It was Peoplefund.it’s first success – and it’s interesting to note that the sums involved are not vast (relatively speaking).
“It is relatively hard to get funds from foundations, from venture capitalists, until you have proven your model,” Budak says.
“So especially early on, the idea of connecting with your initial group of supporters, your peers, your tribes can be a great way of getting started and test your model, test your idea, see if it even works before you go from there”.
Education & funding
The project aims to make a solar tree which will power a rain-fed irrigation system at the Edible Futures’ nursery.
The pledged money will help fund workshops where the local community can learn to build solar PV panels – which will then form the leaves of the tree.
As well as raising the necessary finance, Daniel Quiggin from Demand Energy Equity told me Crowdfunding offered a great chance to raise the profile of their project.
“It forces you to tell people about the project – I suppose in a way it is killing two birds with one stone,” he said. “Also the whole project relies on funding of different sorts and it is about getting a diverse set of approaches so you are not always rely on applications. Otherwise you run out of funders.”
Peoplefund.it have teamed up with website energyshare.com who agreed to match any funds from other investors. £5,000 came from people’s pledges and another £5000 from energyshare.com.
Quiggin says it is a lot of work. He says the key to the projects success would be having an existing presence – particularly online and on Twitter – and getting the word out about your project.
He also admitted that while crowdfunding online offers the chance for a range of people to help fund your project, you are still fairly reliant on the people you know and your existing supporters.
“They were mostly family and friends [who donated],” he said. “There were a few people who weren’t family and friends but it was mostly people who knew us. Doing it through Peoplefund.it, however, gave us the legitimacy that we wouldn’t necessarily have been able to get on our own.”
Crowdfunding as an investment
The potential for clean energy projects to be crowdfunded is growing and companies including Solar Mosaic in the US and Abundance Generation in the UK are already successful applying the crowd funding model to such projects.
Many of these companies are starting to move the concept of crowdfunding away from charitable donations and more towards existing investment models.
Sometimes this works in the form of a loan. Whatever you have put in you will see returned once the project is up and running. Increasingly common are investments that offer a specified ‘rate of return’ on their input.
This is called ‘equity crowdfunding’, and it’s still technically illegal in the US, but a new piece of legislation – the Jumpstart our Business Startups or JOBS Act – could soon see it take off.
How does it work?
Users of the Abundance platform, for example, purchase debentures – essentially an IOU – and will receive a regular cash sum, your share of the money made from generating electricity.
Users can still invest as little as £5 in a project but now they will receive an average of 5-9% return on their investment.
Their first project aims to raise between £300,000 and £1,400,000 – each person can pledge between £5 and £50,000– to build a 0.5MW wind turbine at Great Dunkilns Farm in the Forest of Dean.
“We call it ‘democratic finance’, says Bruce Davis, co-founder of Abundance Generation. “Enabling small investors, starting at as little as £5, to produce a regular return from the generation and sale of 100% green electricity from wind, solar, hydro and other renewable energy sources.”
And while investors can still invest small amounts, Baduk sees no reason why this funding model could not be scaled up massively.
“I think it is hugely scalable,” he says. “In our case the smallest campaign we had was $200 and the largest was $101,000 so it really is scalable. Kickstarter has had campaigns that have raised multiple millions of dollars so really more of an issue of the people running the venture, how they can tell their story. There are really no limitations on it.”
Five tips for future crowdfunders:
1) Which website? With hundreds of potential sites to choose from, it is important to find the right one for your project. While Kickstarter looks to fund creative projects, if your looking for funding for something more socially minded Startsomethinggood is more for you. There are also a wide range of energy specific sites out there, like Abundance Generation.
2) Clarity: People like to know exactly what they are paying for and what they are going to get in return for their cash. You should be clear about where your budget is going. And whether it is equity or donation funding with a few perks added in (some projects will offer goods and services for free) make sure you let people know what they can expect.
3) Goals: Many funding sites have the rule that if you don’t meet your full target in the designated time then you won’t get anything at all. Make sure that you set your target is realistic and find the balance between raising enough to while making sure you can meet your target.
4) Shout! While Crowdfunding websites are great, don’t forget about all the other ways to can get the word out. Demand Energy Equity found using Twitter and other social media platforms a huge help, while hitting the streets locally and raising awareness in person about your project will also help you drum up support.
5) Plan: With a time limit set on your crowdfunding, make sure you plan ahead. Analysis from Kickstarter shows that there are peaks in funders at the start and end of a funding period so make sure you have regular emails going out and plenty of action on Twitter planned for the space in between to keep the interest for your project going.
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How can these two technologies work together?
Both machine learning and blockchain have become increasingly popular in the past few years. However, they are mostly seen as separate entities and not something that can work together. It seems that the two will start working together, something that might end up being extremely helpful.
The main focus of machine learning is to offer machines a way to function without human attention. It’s important for us because it helps remove the hassle and it makes it easier to focus on the day to day stuff. Machine learning is also designed to use large amounts of data in order to find patterns. Once they do that, they will have a much more efficient system since it learns from mistakes. There are many machine learning systems out there like fitness tracking hardware, speech recognition tools, and so on.
There are also machine learning algorithms in the works that will help identify financial risks before anything might happen. It helps companies make better decisions and figure out any kind of risks that might appear without even knowing!
The blockchain is designed to be one of the most secure databases in the world. It helps save data instances in a ledger, all of which are decentralized. It relies on a digital signature to ascribe ownership of entities. As a result, you have a decentralized ledger that’s very resistant to any type of censorship. That’s why you can store data safely on the blockchain because the risks are pretty much zero. However, the blockchain is great if you want to store information that’s not going to change anytime soon.
Machine learning with the blockchain
Different blockchain platforms such as Cardano or Ethereum provide the tools needed to interact with both, items in the physical world and a tokenized version inside a blockchain (representing fractions of ownership or a value stake). Machine Learning focuses on the use of large data quantities so it can create accurate prediction models of the data stored in any blockchain.
Machine Learning Analytics can be used to:
Predict future behaviors of a data series recorded in the blockchain (temperature inside an industrial oven, for example)
Find and better understand Supply Network flows.
Detect abnormal behaviors or outliers in data (Finance movements for fraud detection)
Search for clusters of agents acting together. Transaction groups or sequences.
Classify transactions according to some metrics to help Anti-Money-Laundering (AML) policies.
Find similarities in different datasets or timeframes.
Analyze how a Smart Contract is used and find logical weaknesses inside it.
Find causality between different blockchain recordings: Intellectual property analysis to verify Mathematical proof authorship, for example.
However, there’s a lot of work needed since the data needs to be acquired, processed, and then audited. ML
With help from blockchain technology and smart contracts, data can be transferred quickly. Normally you will have data acquired by trackers, then it’s sent to a facility where auditors go through it to see if it’s authentic and then data scientists receive it. With smart contracts, things are better because digital signatures improve the overall speed and efficiency. Smart contracts can be programmed to share data directly with scientists so they can create machine learning models. Companies like Tikblue, in Spain, are implementing Blockchain and Machine Learning techniques in their products aimed to ease Digital Transformation for their clients.
The combination of machine learning and blockchain can revolutionize the business world. It helps acquire, process, and analyze data a lot faster. It can be great for just about any field, especially the financial world where you can figure out and stop any signs of fraud. That’s why we need to focus on combining blockchain and machine learning as much as possible because the potential is huge here!
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BLOCKCHAIN - INTRODUCTION AND FUNDAMENTALS
TECHNICAL DETAILS OF BLOCKCHAINS
SUITABILITY CHECKLIST – IS A BLOCKCHAIN THE RIGHT SOLUTION?
BLOCKCHAIN & DISTRIBUTED LEDGERS
A distributed ledger is essentially an asset database that can be shared across a network of multiple sites, geographies or institutions. All participants within a network can have their own identical copy of the ledger. Any changes to the ledger are reflected in a matter of seconds. The assets can be financial, legal, physical or electronic. The security and accuracy of the assets stored in the ledger are maintained cryptographically through the use of ‘keys’ and signatures to control who can do what within the shared ledger. Entries can also be updated by one, some or all of the participants, according to rules agreed by the network.
Underlying this technology is the ‘block chain’, which was invented to create the peer-to-peer digital cash Bitcoin in 2008. Block chain algorithms enable Bitcoin transactions to be aggregated in ‘blocks’ and these are added to a ‘chain’ of existing blocks using a cryptographic signature. The Bitcoin ledger is constructed in a distributed and ‘permissionless’ fashion, so that anyone can add a block of transactions if they can solve a new cryptographic puzzle to add each new block.
BUT THE TECHNOLOGY IS NOT ABOUT BITCOIN
It is about the algorithmic technologies that enable Bitcoin and their power to transform ledgers as tools to record, enable and secure an enormous range of transactions. So the basic block chain approach can be modified to incorporate rules, smart contracts, digital signatures and an array of other new tools.
Distributed ledger technologies have enormous potential in a variety of public and commercial applications. They can help governments to collect taxes, deliver benefits, issue passports, record land registries, assure the supply chain of goods and generally ensure the integrity of government records and services. In the public health sector, the technology offers the potential to improve health care by improving and authenticating the delivery of services and by sharing records securely according to exact rules. For the consumer of all of these services, the technology offers the potential, according to the circumstances, for individual consumers to control access to personal records and to know who has accessed them.
Existing methods of data management, especially of personal data, typically involve large legacy IT systems located within a single institution. To these are added an array of networking and messaging systems to communicate with the outside world, which adds cost and complexity. Highly centralised systems present a high cost single point of failure. They may be vulnerable to cyber-attack and the data is often out of sync, out of date or simply inaccurate.
In contrast, distributed ledgers are inherently harder to attack because instead of a single database, there are multiple shared copies of the same database, so a cyber-attack would have to attack all the copies simultaneously to be successful. The technology is also resistant to unauthorised change or malicious tampering, in that the participants in the network will immediately spot a change to one part of the ledger. Added to this, the methods by which information is secured and updated mean that participants can share data and be confident that all copies of the ledger at any one time match each other.
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Examples of a Target Market
A target market is a specific group of people that you have determined to be desirable as part of your customer base. How you define that group will vary depending on the products and services you offer, and where you offer them, so looking at examples of target markets can be a helpful exercise. Once you've decided which factors apply to your own situation, you can move on to an actual marketing plan.
The Influence of Geography
Geography can be one way to help determine your target market. For example, a company that makes snow tires would be more interested in the consumers located in the northern parts of the United States and in the mountainous regions. When using geography as your target market, make sure that your product is something that will appeal to a broad range of other types of consumers. Snow tires would appeal to anyone who owns a car, which is a group that cuts across several other marketing demographics.
Markets by Age
As people grow older, their tastes and preferences change. Entertainment is an industry that frequently uses the age demographic to determine a target market. For example, a television show may be given a particular time slot because market research shows that people ages 13 to 18 watch television during that time and that is the target market the show is going for.
Age is a demographic that becomes very specific to other factors: People ages 13 to 18 in the southern United States might listen to a different kind of music than those in the western states.
Markets by Gender
Breaking down your target market by sex can be dangerous if you do not do your market research. If you believe that your target market is female, then much of your advertising will be geared towards a female audience. This tends to alienate the male audience and eliminates any chance your product may have had at appealing to males. Do comprehensive market research on the male or female preference of your product before breaking down your target audience.
Combining Demographic Factors
A comprehensive target market profile usually encompasses a combination of the major demographic elements. For example, the newest male teenage singing sensation will want to market his music to the teenage females throughout the world. Another example of combining target market components is using sports commercials with scantly clad women to market beer during the broadcast of sporting events. The beer companies have done their research and have determined that heterosexual males who are sports fans are beer consumers, and their commercials are geared to a very specific target market.
George N. Root III began writing professionally in 1985. His publishing credits include a weekly column in the "Lockport Union Sun and Journal" along with the "Spectrum," the "Niagara Falls Gazette," "Tonawanda News," "Watertown Daily News" and the "Buffalo News." Root has a Bachelor of Arts in English from the State University of New York, Buffalo.
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The first strategy implemented in this case is that the changes in the relation with the prior changes illustrate the growth of the China and the first strategic changes will enhance the growth of the China. The New Zealand had lost the preferential trade relations which had grown out in the British colonialism. The maintenance of the Britain is seen with the adoption of the statue of the Westminster in the years of the Post-war. The relationship enables the exporter to have an appropriate growth in the country, and the representation can be seen in the path of the lucrative way. The enhancement of the factors is depicted to be enforced for the enhancement of the integration of the international commission which is used for structuring the economy of the country. This enabled the formation of the relations which establish the growth of the economic relations between the two countries. The enhancement of the work can be easily imported for the development of the work and also the increase in the skilled labours can be established with the transaction of the various skilled labours. The challenges created by slowing the traditional markets and the shock are created in the traditional markets that develop the businesses for the purpose of diversifying the focus on the world economy (Ambrose, Diop and Yoshida, 2016). The establishment of the capital can be appropriately established for the development of the factors and also the establishment of the work is structured by establishing the development of the strategy. The positive impact is illustrated by the actively establishing the positive impact on the business and also the enhancement of the structure is illustrated. The development of the factors can be easily maintained by maintaining the norms of the business, and the impact is depicted by showing the purchasing in a most efficient way. Therefore, the efficient achievement of the goals can be made by the establishment of the relation between the China and the New Zealand. This is the overall logical argument which is established for the company, and the appropriate structuring of the system for the economic growth can be illustrated (Baldwin, 2017).
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Teaching your kids to understand money doesn’t have to be difficult.
Are you worried that your kids are not going to have the skills to manage their finances once they’re on their own?
Most parents want their kids to reach the dream of owning their own home, but sadly, that dream is become harder to reach as time goes on. To help put your mind at ease, we have gathered a few tips that we think will be useful for you when trying to develop your kids finance knowledge.
It’s important to start young
Children tend to soak up information about money from their surroundings. You might not have realised yet, taking your child shopping and paying for your items with cash is teaching them them very basic money handling skills. If you want to help further these skills more, get them to tell you how much change you should get back, or, you could give them your wallet to get out the amount needed. A lot of kids will see this as a big responsibility and will enjoy it. Try and make it fun if you can, they will enjoy it much more!
Explaining the basics concepts of saving & budgeting
As your kids get older, you can start explaining to them the concepts of saving and budgeting. Help them learn how to budget for essential spending (such as food and bills) and how to save for those discretionary expenses, like going out for a movie or dinner. Set them up a savings account and let them join in on the set up process. Explain that here they can make regular deposits with their pocket money to save towards something special. Do they have a savings goal date and amount? Sit with them and work out how much they would need to save every week to reach that goal.
A lot of kids are unaware of what the cost of things are… It might be worthwhile to take them on a tour of the house, show them how much items cost (television, microwave, dining table etc), to give them a good idea of how they will need to budget their money to buy these essentials in the future. Depending on what age your kids are, you could show them the utilities bills. It may not mean anything to them now, and they may seem uninterested, but they will get a basic understanding of the amount they may be paying when they move out of home.
Explaining the concept of weekly deposits into a savings account is one thing, but explaining that the money can gain interest is a whole new ball game. Learning about interest is a very important financial tool for your kids. Explaining this concept may be difficult, but use ASIC’s MoneySmart Calculator to help show how much interest they can earn using a long-term strategy. Basically, if you explain the concept in a simpler form – save money and getting ‘free’ money on top of that if you save over a long period of time – they may understand and be more interested.
Encouraging casual work
Sometime they might get comfortable with the concept of receiving regular pocket money and may not be interested in earning money of their own. But, it’s very important to encourage your kids to get a casual job (once they’re at an appropriate age obviously). This is very important as they will learn a good work ethic (hopefully) that can then be carried on into their adult work-life. Most importantly, it shows them what a dollar or two is worth to work for and that is when the value of money is made.
Explaining property data
As your kids get older, you can start to explain more complex financial information to them – such as investments and rising property prices.
It may be worthwhile to gather property data and teaching them the basics of inflation by showing how property prices have risen over the years. Remember the more you explain the more knowledgeable they will be and the more confident you can then feel letting them out of the ‘nest’.
Start teaching them these simple things from a young age and continue doing so for as long as possible. Providing them with knowledge from your own experience is priceless!
If you’re thinking about buying your kids a home now or in the future, that’s where we come in. We can help you find the right option.
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About this Research Topic
One of the side effects of the global financial crisis was the leading of tremendous efforts toward a path much less damaging to the environment and society. Some of the policy initiatives derived thereof were portrayed as the drive for slowly moving towards a green economy, in which low-carbon energy systems must play a vital role.
The reduction of carbon dioxide emissions during energy generations is an issue attracting a great deal of attention from several viewpoints, and all major players in the energy scenario have undertaken substantial efforts to come up with breakthroughs in this exciting market (to name just a few examples, the “Climate Action” of the European Commission or the National Energy Technology Laboratory of the U.S. Department of Energy). While the ultimate target remains crystal clear, the available knowledge is rather fragmented and major gaps (theory, methods, and scaling-up to meet consumer demands) remain in the horizon of a green economy and low-carbon energy systems. Carbon materials have unique chemical, optical, electronic, and/or mechanical properties, which can be the cornerstone for the development of a wide range of applications including Low Carbon Energy Technologies with enhanced efficiency and relatively low cost.
This Research Topic aims to offer a wide, specialized perspective by presenting the reader a selection of recent original work in the field of carbon materials for their application in low carbon energy-related technologies. Papers suitable for publication in this Research Topic need to highlight the novel properties or applications of the carbon materials studied, or feature original synthetic works which are of significance and importance to scientists working in energy fields with a special emphasis on cost-effectiveness and minimization of the carbon footprint of the process. Papers covering interdisciplinary research areas are encouraged, in particular those addressing emerging and quickly developing energy related technologies.
Potential topics include, but are not limited to:
• Carbon materials as active materials for applications in energy-related devices (fuel cells, blue energy systems, batteries or photovoltaic devices);
• Biomass-derived carbon materials for electrochemical energy storages
• Energy storage and harvesting in carbon materials (Hydrogen, flexible high performance supercapacitors; superior Lithium storage performance);
• Carbonaceous materials as a counter electrode in Dye-Sensitized Solar Cells (DSSC);
• Carbon materials in in the clean energy economy;
• Carbon materials as catalyst or catalytic support for energy intensification devices;
• Carbon materials to alleviate the carbon footprint (CO2 capture, enhanced product selectivity);
• Energy and costs saving by using novel carbon materials in established processes;
• Carbon materials for future energy-focused nanotechnologies.
Important Note: All contributions to this Research Topic must be within the scope of the section and journal to which they are submitted, as defined in their mission statements. Frontiers reserves the right to guide an out-of-scope manuscript to a more suitable section or journal at any stage of peer review.
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What Is Alcedo Crypto – A Cryptocurrency, as specified by Wikipedia is “a digital currency designed to function as a medium of exchange for the transfer of digital assets “. It was produced as an option to standard currencies such as the US dollar, British pound, Euro, and Japanese Yen. Nowadays, more people and businesses are recognizing the potential of utilizing a cryptocoin as a payment technique. A good example of such an organization is the online payments company PayPal, who has now integrated cryptocoin payments into their web-based payment system.
No central bank is included in the management of these currencies. The circulation of the cryptocoin is normally done through a process called “minting ” in which a particular amount of the digital possession is produced in order to increase the supply and consequently decrease the need. In the case of the Cryptocurrency ledger, this transaction is done by cryptographers, which are groups that specialize in producing the needed evidence of authenticity required for appropriate transaction to occur.
While a lot of Cryptocurrencies are open-source software options, some exist that are exclusive. This remains in contrast to the open source software application that defines most cryptocurrencies, which are established by any variety of private contributors. A significant distinction between the two is that open source software application can alter its underlying code and cause problems if a modification is required. On the other hand, a centralized authority does not require to change its underlying code to allow for a modification in the supply or need of the cryptocoin.
The developer of Litecoin, Robert H. Jackson, was trying to create a safe and secure alternative to Cryptocurrency when he was required to leave the business he was working for. By developing this version of Litecoin, which has a much lower trading volume than the initial, he hoped to provide a trustworthy however secure form of Cryptocurrency.
One of the most promising applications for the future of Cryptocurrency is the idea of “blockchain. ” A “blockchain ” is simply a large collection of encrypted files that are tape-recorded and kept on computer systems around the globe. As soon as tampered with, each block of details is secured by mathematical algorithms that make it difficult to reconstruct the information. The cryptography utilized in the chain is also mathematically secure, which permits transactions to be smooth and confidential. Because each deal is secured by an extremely safe encryption algorithm, there is no possibility of impersonating owners of properties, hacking into computer systems, or dripping info to third parties. All deals are recorded and encoded using complex mathematics that safeguards information at the very same time as guaranteeing that it is accessible just to authorized individuals in the chain.
Encrypted ledgers have actually been used as a kind of ICO that tracks the ownership history of a specific possession. The major problem with traditional journals is that they are susceptible to hacking which permits someone to take control of a business ‘s funds. This makes it difficult for business to trace where their money has actually gone. By utilizing crypto innovation, a company ‘s ledger can be encrypted while keeping all the details of the transaction private, ensuring that only they know where the cash has gone.
A “virtual currency ” is just a stock or digital commodity that can be traded like a stock on the exchanges. Virtual currencies can be traded online just like any other stock on the standard exchanges, and the advantage of this is that the exact same incentives and guidelines that use to real markets are likewise appropriate to this type of Cryptocurrency transaction.
As more Crypto currencies are created and made offered to consumers the advantages end up being clear. There are currently several effective tokens being traded on the major exchanges and as more enter the marketplace to the competition will reinforce the strength of the existing ones.
In basic, if you buy cryptographic currencies, you ‘re generally acquiring Crypto currency. It ‘s essentially just like trading in shares.
Now, if you ‘re not knowledgeable about how to buy and trade crypto currencies, this can be quite frightening stuff. Well, it really isn ‘t that scary. Nevertheless, there are certain safety measures you require to take. You will wish to get a broker either a full service FX broker or a discount broker that charges a little fee. They will then supply you with an interface for your application and software application.
You will likewise want to set up a “tiny account “. When you trade in the open market with real money, there is no such thing as a small account. Since you ‘re trading in the crypto market with ” cryptocoins “, it ‘s perfectly acceptable.
The MegaDroid goes one action even more and permits you to start trading with your favorite coins at any time. It also allows you to do things like buy or offer your limits. Some people may be a little wary of this feature. It does give you the capability to do some “quick ” trades, however that ‘s about the limit.
Maybe you must be if you ‘re wary of quick trades! If this was the only advantage of utilizing the MegaDroid, it would be great! It ‘s not. What traders actually like about this unbelievable robotic is the fact that it provides complete control over their projects. Some traders still claim that it ‘s a hassle to manually handle a campaign. I know that it ‘s easier than by hand managing numerous campaigns on your PC, however it does have a couple of advantages over the others.
One advantage is atomic swaps. With the new version, every trader can set up their own account. They can then transfer funds into their account and immediately use them to trade. This eliminates among the primary headaches related to a person or business holding an account. Rather, they can handle their funds using their own wallets. Considering that all transactions are held digitally, you put on ‘t requirement to handle brokers or dealing with trading exchanges – everything is kept strictly within your own personal computer.
The last significant perk is that it no longer holds ether and pennybase. The 2 largest exchanges by volume (Euromoney and MegaDroid) are now managed by the separate creators of Cryptocorx. If you desire to trade on these 2 large exchanges, this suggests that you will have to download and set up the software on your own computer system. Despite the fact that this may sound like a discomfort, it has actually considerably increased the liquidity of the two coins. All you ‘ve got to do is visit their sites and you ‘ll be able to see their estimate.
Although this may not appear essential to someone new to the market, however it is exceptionally crucial if you are thinking of utilizing cryptos for everyday trading. You require to know how the market will move so that you can be prepared when you do decide to trade. This is done through enjoying the short-term charts on these two significant exchanges. If you do this correctly, you will understand precisely when you ought to leave the market and get in – for this reason you can make better decisions with your trades.
Now that we ‘ve gone over the pros and cons, let ‘s take an appearance at some technical analysis methods. If you are a technical expert and are familiar with the market patterns, then it shouldn ‘t be an issue.
With this details, you ought to be able to analyze the rate action on the 2 exchanges very quickly and make good trades. As I said in the past, the significant distinction between the two exchanges is the technique of buying and offering coins through the private secrets. There are numerous different methods to offer and execute this buy action, so you ‘ll want to choose one that you ‘re comfy with. Normally this is the exact same for both the Cryptocurrency Xchange and the CryptoAMEX.
A Cryptocurrency, as specified by Wikipedia is “a digital currency created to function as a medium of exchange for the transfer of digital possessions “. ” A “blockchain ” is simply a big collection of encrypted files that are tape-recorded and maintained on computer systems around the world. A “virtual currency ” is simply a stock or digital product that can be traded like a stock on the exchanges. Because you ‘re trading in the crypto market with ” cryptocoins “, it ‘s perfectly appropriate.
It does provide you the capability to do some “fast ” trades, but that ‘s about the limitation. What Is Alcedo Crypto
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“I think there is a bigger question regarding climate change - should New Zealand Oil & Gas fossil fuel exploration activities continue at all?
Should the company be investigating alternative options that will align with a low carbon future?
By the time resources come online we are likely to be quite a different world with greater renewable energy resources”
[NZOG Community Panel questions and discussion]
The world is reducing its carbon emissions.
Following the Paris COP21 agreement at the end of 2015, New Zealand’s Government, and regulators and citizens around the world are increasingly committed to initiatives to reduce carbon emissions.
Domestically, recent legislation changes have included New Zealand’s Zero Carbon Act and revisions to the Emissions Trading Scheme, our primary tool to achieve emission reductions.
We expect significant policy action and behaviour change is required to reduce carbon emissions, both domestically and across the world.
We have a positive role to play.
Together oil and gas help to power our current way of life, providing more than half of the world’s primary energy. The transition to low carbon forms of energy will take decades, while new technologies are refined, or even developed, and the costs of new energy sources fall to levels that make them realistic replacements in the energy mix.
The World Energy Outlook produced by the International Energy Agency (IEA) projects significant and rapid growth in a range of renewable technologies. Alongside this the IEA anticipates that oil and gas (as well as coal) remain in the mix in a low carbon future. This includes in the IEA sustainable energy scenario where policy/market mechanisms are in place to meet 1.5 degrees – i.e. a low carbon economy. The IEA expects natural gas will supply a quarter of all global energy demand into the 2030s in all scenarios it models.
We need to provide for our current energy needs during this transition. The challenge we face is how to work smarter and more efficiently, to ensure affordable quality of life and opportunity, while decoupling environmental effects.
With appropriate policy settings the oil and gas industry in New Zealand can continue to develop, making an increasing contribution to our economy and contributing to the global transition off higher-emitting energy sources.
What are we doing?
We recently released our Climate Change Policy. This policy recognises that addressing climate risks is a priority for our generation and will be for those to come.
We have committed to reporting according to the Taskforce for Climate Related Financial Disclosures framework.
We support the transition to clean-burning, low emission natural gas, especially to replace coal in the global energy mix. We have a preference for gas within our portfolio.
We support the New Zealand Emissions Trading Scheme as the primary policy instrument to achieve reductions targets. We support a meaningful price being placed on carbon as the best means to achieve an efficient carbon market that treats all sectors of the economy equally, based on their carbon impact.
We work with other businesses to understand likely climate outcomes and support advocacy for high quality policy outcomes, directly and through our membership of the Business New Zealand Energy Council. We contributed towards the Council’s study of New Zealand’s energy future, and the range of trade-offs and choices that may be needed as patterns of energy use change and disruptive technologies emerge.
We are open about our view of our role in the economy and the role of our products in the energy mix. We work with regulators, industry and others to grow mutual understanding of climate policy issues. We disclose publicly our involvement in any advocacy on climate policy. We inform our community about our stance on the issues and we seek feedback.
We are actively managing our own carbon impact. We have reviewed our approach to flying, ensuring that the only the necessary trips are made. However, the nature of our business does require us to travel a reasonable amount where videoconferencing is not viable. In recognition of this we’ve also made a commitment to offset the emissions from our corporate air travel, initially through the Air New Zealand FlyNeutral programme.
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Why do consumer prices and wages adjust so slowly to changes in market conditions? The rigidity or stickiness of price setting in business is central to Keynesian economic theory and a key to understanding how monetary policy works, yet economists have made little headway in determining why it occurs. Asking About Prices offers a groundbreaking empirical approach to a puzzle for which theories abound but facts are scarce. Leading economist Alan Blinder, along with co-authors Elie Canetti, David Lebow, and Jeremy B. Rudd, interviewed a national, multi-industry sample of 200 CEOs, company heads, and other corporate price setters to test the validity of twelve prominent theories of price stickiness. Using everyday language and pertinent scenarios, the carefully designed survey asked decisionmakers how prominently these theoretical concerns entered into their own attitudes and thought processes. Do businesses tend to view the costs of changing prices as prohibitive? Do they worry that lower prices will be equated with poorer quality goods? Are firms more likely to try alternate strategies to changing prices, such as warehousing excess inventory or improving their quality of service? To what extent are prices held in place by contractual agreements, or by invisible handshakes?
Asking About Prices offers a gold mine of previously unavailable information. It affirms the widespread presence of price stickiness in American industry, and offers the only available guide to such business details as what fraction of goods are sold by fixed price contract, how often transactions involve repeat customers, and how and when firms review their prices. Some results are surprising: contrary to popular wisdom, prices do not increase more easily than they decrease, and firms do not appear to practice anticipatory pricing, even when they can foresee cost increases. Asking About Prices also offers a chapter-by-chapter review of the survey findings for each of the twelve theories of price stickiness. The authors determine which theories are most popular with actual price setters, how practices vary within different business sectors, across firms of different sizes, and so on. They also direct economists' attention toward a rationale for price stickiness that does not stem from conventional theory, namely a strong reluctance by firms to antagonize or inconvenience their customers. By illuminating how company executives actually think about price setting, Asking About Prices provides an elegant model of a valuable new approach to conducting economic research.
ALAN S. BLINDER is Gordon S. Rentschler Memorial Professor of Economics
ELIE R. D. CANETTI is an economist for the International Monetary
DAVID E. LEBOW is an economist at the Board of Governors of the
JEREMY B. RUDD is senior economist at the Council of Economic Advisers, Washington, D.C.
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Artificial intelligence and machine learning are two technologies that have been growing in sophistication for a number of years now. The potential capabilities of modern machine learning algorithms are truly staggering. It is these algorithms that underpin a diverse range of technologies, including driverless vehicles, and enable computers to not only learn but to teach themselves.
There are a great many different problems that machine learning could potentially solve, and we are only just beginning to scratch the surface of what we might be able to tackle by using this modern approach. Machine learning algorithms have enabled us to turbocharge the efficiency of artificial intelligence and have meant that we can now train AIs to do things that we ourselves do not fully understand.
Of the many applications of machine learning, it is increasingly being used to provide security for financial institutions and help them identify fraudulent transactions automatically. Not only can machine learning identify fraudulent loan applications, but it can also be used to trace money through the financial system when attempts are made to hide it.
In short, machine learning has completely changed the way that financial institutions approach digital lending and has enabled them to lend money with more confidence in their fraud prevention methods.
Whether you are applying for a mortgage or a payday loan, like one of these 24 cash loans from BingoLoans, there is a number of criteria that will be used to assess whether you are a worthy creditor or not. naturally, your previous financial history will be considered. This is something that a human user can look through easily enough.
In assessing your financial history, credit lenders are looking at your previous character. In other words, they want to know whether you have kept up with previous repayment obligations. They will also look at the current amount of capital you have access to and will sometimes consider what collateral you have available if the loan justifies it.
The more data points that these businesses consider, the more accurately they can assess each applicant and decide whether they are worth lending to or not. However, that more data points that there are, the more work is required to look through them and identify any patterns that might exist. On the other hand, a machine learning algorithm that has been trained in how to spot suspicious patterns in financial histories will be able to accurately sift through all this data much faster than a person ever could and with similar or greater accuracy.
How Does It Work?
Computers are essentially very powerful calculators and are, therefore, excellent at solving certain types of problem. However, in order for a computer to solve any problem it has to be shown how to solve ut by a human. This means that unless we ourselves know how to formulate the problem in the language of a computer, we have no way of writing a piece of code that will tell a computer how to solve it.
However, machine learning has changed this dynamic somewhat. By utilising neural networks that are able to learn over time, we are able to train algorithms that are then able to formulate their own solutions.
For example, if you want to train a machine-learning algorithm on how to spot cars, you give it a huge database of photos, some of which are cars and some of which are not. By telling the algorithm which are the correct answers and which are not and by feeding it enough raw data, we can have the algorithm learn how to differentiate between a car and not a car.
Needless to say, the machine learning that underpins autonomous vehicles is considerably more complex than this. However, the basic principle is the same and remains the same for all implementations of the technology no matter how complex.
In the case of financial lending, machine learning algorithms are shown large databases of financial transactions, some of which are suspects and others of which are not. The machine learning algorithm learns how to spot patterns in the vast amounts of financial data and can cross-reference as many data sources as it is given in order to identify potentially fraudulent applications.
Is It Accurate?
Machine learning algorithms have the potential to do things that humans would find impossible. They also enable us to teach machines how to do things that we don’t know how to teach them. However, while both of these implementations are very powerful in their own right and enable us to solve many problems, they are not entirely accurate.
The accuracy of machine learning algorithms has been often impressive, especially when you consider that these algorithms have essentially trained themselves. Rather than entirely outsourcing decisions to machine learning algorithms, most financial institutions are instead using them to monitor data and flag up any potentially fraudulent activity. Once this potential activity has been brought to the attention of a human, it can then be checked and pursued if necessary.
One of the most significant limitations of machine learning technology is that it can only ever be as good as the raw data that is used to train it. In other words, if there are any biases or inaccuracies in the underlying data, the final algorithm will suffer accordingly.
As we mentioned above, the quality of the data used to train a machine-learning algorithm can limit its ultimate effectiveness. However, this is just one potential limitation of machine learning technology. As machine learning becomes more prevalent in our daily lives and begins to make more decisions for us and the businesses around us, it is important that we understand both the advantages and disadvantages of this approach.
One significant problem with using machine learning algorithms to make financial decisions is that in order to prevent discrimination, governments require that lenders provide sound arguments for rejecting a loan application. There is no way of ascertaining how a machine learning algorithm comes to the decisions that it does, and therefore, there is no way of explaining its decision.
Machine learning algorithms enable us to tackle problems that would have previously been insurmountable for our computers. Among the many applications of machine learning that are appearing all around us, it’s use as a guardian of our financial system is one of the most promising. A machine learning algorithm will be able to analyse data far more quickly than a human could ever hope to and can still draw accurate conclusions from it.
Machine learning is changing the way that a number of businesses operate, and digital lenders are just one example of a business that is now beginning to benefit from machine learning.
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Before a bookkeeper can engage in accounting activities, it is first necessary to understand the basic underpinnings of accounting, as well as the general flow of accounting transactions. In this article, we describe the concept of an accounting framework and accounting principles, on which all accounting activities are based. We then give an overview of how accounting transactions are recorded and aggregated into financial statements, which involves the use of double-entry accounting and journal entries. We conclude with a discussion of the accrual and cash bases of accounting.
Financial Accounting Basics
This introductory section is intended to give an overview of financial accounting basics. Its orientation is toward recording financial information about a business. First, what do we mean by “financial” accounting? This refers to the recordation of information about money. Thus, we will talk about issuing an invoice to someone, as well as their payment of that invoice, but we will not address any change in the value of a company’s overall business since the latter situation does not involve a specific transaction involving money.
A transaction is a business event that has a monetary impact, such as selling goods to a customer or buying supplies from a vendor. In financial accounting, a transaction triggers the recording of information about the money involved in the event.
For example, we would record in the accounting records such events (transactions) as:
- Incurring debt from a lender
- The receipt of an expense report from an employee
- Selling goods to a customer
- Paying sales taxes to the government
- Paying wages to employees
We record this information in accounts. An account is a separate, detailed record about a specific item, such as expenditures for office supplies, or accounts receivable, or accounts payable.
There can be many accounts, of which the most common are:
- Cash. This is the current balance of cash held by a business, usually in checking or savings accounts.
- Accounts receivable. These are sales on credit, which customers must pay for at a later date.
- Inventory. This is items held in stock, for eventual sale to customers.
- Fixed assets. These are more expensive assets that the business plans to use for multiple years.
- Accounts payable. These are liabilities payable to suppliers that have not yet been paid.
- Accrued expenses. These are liabilities for which the business has not yet been billed, but for which it will eventually have to pay.
- Debt. This is cash loaned to the business by another party.
- Equity. This is the ownership interest in the business, which is the founding capital and any subsequent profits that have been retained in the business.
- Revenue. This is sales made to customers (both on credit and in cash).
- Cost of goods sold. This is the cost of goods or services sold to customers.
- Administrative expenses. These are a variety of expenses required to run a business, such as salaries, rent, utilities, and office supplies.
- Income taxes. These are the taxes paid to the government on any income earned by the business.
How do we enter information about transactions into these accounts? There are two ways to do so:
• Software module entries. If accounting software is being used to record financial accounting transactions, there will probably be on-line forms to fill out for each of the major transactions, such as creating a customer or an invoice or recording a supplier invoice. Every time one of these forms is filled out, the software automatically populates the accounts for the user. At Tianlong Services, we use Xero for our clients, a cloud-based accounting software.
• Journal entries. A journal entry form can be accessed in the accounting software. Alternatively, journal entries can be created by hand; this is a more customized way to record accounting information. Xero is also able to create journal entry electronically.
The accounts are stored in the general ledger. This is the master set of all accounts, in which are stored all of the business transactions that have been entered into the accounts with journal entries or software module entries. There may be subsidiary ledgers in which are stored high-volume transactions, such as sales or purchases. Thus, the general ledger is the go-to document for all of the detailed financial accounting information about a business.
If you want to understand the detail for a particular account, such as the current amount of accounts receivable outstanding, access the general ledger for this information. In addition, most accounting software packages provide a number of reports that give better insights into the business than just reading through the accounts. In particular, there are aged accounts receivable and aged accounts payable reports that are useful for determining the current list of uncollected accounts receivable and unpaid accounts payable, respectively.
The general ledger is also the source document for the financial statements. There are several financial statements, which are:
- Balance sheet. This report lists the assets, liabilities, and equity of the business as of the report date.
- Income statement. This report lists the revenues, expenses, and profit or loss of the business for a specific period of time.
- Statement of cash flows. This report lists the cash inflows and outflows generated by the business for a specific period of time.
In summary, we have shown that financial accounting involves the recording of business transactions in accounts, which in turn are summarized in the general ledger, which in turn is used to create financial statements. We will now walk through the building blocks of an accounting system, starting with the accounting frameworks from which accounting rules are derived.
The accounting profession operates under a set of guidelines for how business transactions are to be recorded and reported. There is a multitude of transactions that an organization might enter into, so the corresponding guidelines are also quite large. These guidelines can be subject to interpretation, so there are standard-setting bodies that maintain and support the guidelines with official pronouncements.
Not every organization operates under the same set of guidelines. There may be different guidelines for different types of entities, and slight differences in guidelines by country. Each of these unique guidelines is referred to as an accounting framework. Once an organization adopts a certain accounting framework, it continues to record transactions and report financial results in accordance with the rules of that framework on a long-term basis.
Doing so provides the users of its financial reports with a considerable amount of reporting continuity. Also, because an accounting framework provides a consistent set of rules, anyone reading the financial statements of multiple companies that employ the same framework has a reasonable basis for comparison.
The required accounting framework in Singapore is SFRS, which is short for the Singapore Financial Reporting Standards.
The accounting information in this book is based on the SFRS
There are a number of accounting principles upon which the accounting frameworks are based. These principles have been derived from common usage, as well as from the documentary efforts of several standard-setting organizations. The principles are:
The concept that accounting transactions should be recorded in the accounting periods when they actually occur, rather than in the periods when there are cash flows associated with them. This is the foundation of the accrual basis of accounting (as described in a later section). It is important for the construction of financial statements that show what actually happened in an accounting period, rather than being artificially delayed or accelerated by the associated cash flows. For example, if a company ignores the accrual principle, it records an expense only after paying for it, which might incorporate a lengthy delay caused by the payment terms for the associated supplier invoice.
The concept that expenses and liabilities should be recorded as soon as possible, but revenues and assets are recorded only when it is certain that they will occur. This introduces a conservative slant to the financial statements that may yield lower reported profits, since revenue and asset recognition may be delayed for some time. This principle tends to encourage the recordation of losses earlier, rather than later. The concept can be taken too far, where a business persistently misstates its results to be worse than is realistically the case.
The concept that, once a business adopts an accounting principle or method, the company should continue to use it until a demonstrably better principle or method comes along. Not following the consistency principle means that a business could continually jump between different accounting treatments of its transactions that make its long-term financial results extremely difficult to discern.
The concept that a business should only record its assets, liabilities, and equity investments at its original purchase costs. This principle is becoming less valid, as many accounting standards are heading in the direction of adjusting to the current fair value of many items.
Economic entity principle
The concept that the transactions of a business should be kept separate from those of its owners and other businesses. This prevents the intermingling of assets and liabilities among multiple entities.
Full disclosure principle
The concept that one should include in or alongside the financial statements of business all of the information that may impact a reader’s understanding of those financial statements. The accounting standards have greatly amplified this concept in specifying an enormous number of informational disclosures.
Going concern principle
The concept that a business will remain in operation for the foreseeable future. This means that a business would be justified in deferring the recognition of some expenses, such as depreciation, until later periods. Otherwise, the company would have to recognize all expenses at once and not defer any of them.
The concept that, when revenue is recorded, all related expenses should be recorded at the same time. Thus, a business charges inventory to the cost of goods sold at the same time that it records revenue from the sale of those inventory items. This is a cornerstone of the accrual basis of accounting.
The concept that one should record a transaction in the accounting records if not doing so might have altered the decision-making process of someone reading the company’s financial statements. This is quite a vague concept that is difficult to quantify, which has led some of the more picayune accountants to record even the smallest transactions.
Monetary unit principle
The concept that a business should only record transactions that can be stated in terms of a unit of currency. Thus, it is easy enough to record the purchase of a fixed asset, since it was bought for a specific price, whereas the value of the quality control system of a business is not recorded. This concept keeps a business from engaging in an excessive level of estimation in deriving the value of its assets and liabilities.
The concept that only those transactions that can be proven should be recorded. For example, a supplier invoice is a solid evidence that an expense has been recorded. This concept is of prime interest to auditors, who are constantly in search of the evidence supporting transactions.
Revenue recognition principle
The concept that one should only recognize revenue when a business has substantially completed the earnings process.
Time period principle
The concept that a business should report the results of its operations over a standard period of time. This may qualify as the most glaringly obvious of all accounting principles but is intended to create a standard set of comparable periods, which is useful for trend analysis.
It may not initially appear that accounting principles are
of much use on a day-to-day basis. However, when there is a question about the
proper treatment of a business transaction, it is sometimes useful to resolve
the question by viewing the guidance in the relevant accounting framework in
light of these accounting principles. Doing so may indicate that one solution
more closely adheres to the general intent of the framework, and so is a better
The Accounting Cycle
The accounting cycle is a sequential set of activities used to identify and record an entity’s individual transactions. These transactions are then aggregated at the end of each reporting period into financial statements. The accounting cycle is essentially the core recordation activity that a bookkeeper engages in, and is the basis upon which the financial statements are constructed. The following discussion breaks the accounting cycle into the treatment of individual transactions and then closing the books at the end of the accounting period.
The accounting cycle for individual transactions is:
1. Identify the event causing an accounting transaction, such as buying materials, paying wages to employees, or selling goods to customers.
2. Prepare the business document associated with the accounting transaction, such as a supplier invoice, customer invoice, or cash receipt.
3. Identify which accounts are affected by the business document.
4. Record in the appropriate accounts in the accounting database the amounts noted on the business document.
The preceding accounting cycle steps were associated with individual transactions.
The following accounting cycle steps are only used at the end of the reporting period, and are associated with the aggregate amounts of the preceding transactions:
5. Prepare a preliminary trial balance, which itemizes the debit and credit totals for each account.
6. Add accrued items, record estimated reserves, and correct errors in the preliminary trial balance with adjusting entries. Examples are the recordation of an expense for supplier invoices that have not yet arrived, and accruing for unpaid wages earned.
7. Prepare an adjusted trial balance, which incorporates the preliminary trial balance and all adjusting entries. It may require several iterations before this report accurately reflects the results of operations of the business.
8. Prepare financial statements from the adjusted trial balance.
9. Close the books for the reporting period.
In the following sections, we expand upon a number of the
concepts just noted in the accounting cycle, including accounting transactions
and journal entries. Ledgers and the trial balance are described separately in
The Ledger Concept article.
An accounting transaction is a business event having a monetary impact on the
financial statements of a business. It is recorded in the accounting records of an
organization. Examples of accounting transactions are:
- Sale in cash to a customer
- Sale on credit to a customer
- Receive cash in payment of an invoice owed by a customer
- Purchase fixed assets from a supplier
- Record the depreciation of a fixed asset over time
- Purchase consumable supplies from a supplier
- Investment in another business
- Borrow funds from a lender
- Issue a dividend to investors
- Sale of assets to a third party
Types of Transaction Cycles
A transaction cycle is an interlocking set of business transactions. Most business transactions can be aggregated into a relatively small number of transaction cycles related to the sale of goods, payments to suppliers, payments to employees, and payments to lenders.
We explore the nature of these transaction cycles in the following bullet points:
- Sales cycle. A company receives an order from a customer, examines the order for creditworthiness, ships goods or provides services to the customer, issues an invoice, and collects payment. This set of sequential, interrelated activities is known as the sales cycle, or revenue cycle.
- Purchasing cycle. A company issues a purchase order to a supplier for goods, receives the goods, records an account payable, and pays the supplier. There are several ancillary activities, such as the use of petty cash or procurement cards for smaller purchases. This set of sequential, interrelated activities is known as the purchasing cycle, or expenditure cycle.
- Payroll cycle. A company records the time of its employees, verifies hours and overtime worked, calculates gross pay, deducts CPF and other self-help group funds, and issues paychecks to employees. Other related activities include the payment of withheld income taxes to the government, as well as the issuance of annual IR8A forms to foreign employees. This cluster of activities is known as the payroll cycle.
- Financing cycle. A company borrows money from lenders, followed by a series of interest payments and repayments of the debt. Also, a company issues stock to investors, in exchange for periodic dividend payments and other payouts if the entity is dissolved. These clusters of transactions are more diverse than the preceding transaction cycles, but may involve substantially more money.
A key role of the accountant is to design an appropriate set
of procedures, forms, and integrated controls for each of these transaction
cycles, to mitigate the opportunities for fraud and ensure that transactions
are processed in as reliable and consistent a manner as possible.
Source documents are the physical basis upon which business transactions are recorded. They usually contain the following information:
- A description of the transaction
- The date of the transaction
- A specific amount of money
- An authorizing signature (in some cases)
Examples of source documents and their related business transactions that appear in the financial records are:
- Bank statement. This contains a number of adjustments to a company’s book balance of cash on hand that the company should reference to bring its records into alignment with those of a bank.
- Cash register record. This can be used as evidence of cash sales, which supports recording of sales. Can be printed out from a Point-of-sale (POS) machine.
- Credit card statement/petty cash voucher. This can be used as evidence for a disbursement of funds from petty cash.
- Packing slip. This describes the items shipped to a customer, and so supports the recordation of a sale transaction.
- Receipt. This document is used as evidence that goods have been purchased.
- Sales order. This document, when coupled with a bill of lading and/or packing list, can be used to invoice a customer, which in turn generates a sale transaction.
- Supplier invoice. This document supports the issuance of a cash, check, or electronic payment to a supplier. A supplier invoice also supports the recordation of an expense, inventory item, or fixed asset.
- Time card. This supports the issuance of a paycheck or electronic payment to an employee. If employee hours are being billed to customers, the time card also supports the creation of customer invoices.
Double Entry Accounting
Double entry accounting is a record keeping system under which every transaction is recorded in at least two accounts. There is no upper limit on the number of accounts used in a transaction, but the minimum is two accounts. There are two columns in each account, with debit entries on the left and credit entries on the right. In double entry accounting, the total of all debit entries must match the total of all credit entries. When this happens, a transaction is said to be in balance. If the totals do not agree, the transaction is out of balance. An out of balance transaction must be corrected before financial statements can be created.
The definitions of a debit and credit are:
- A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is positioned to the left in an accounting entry.
- A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account. It is positioned to the right in an accounting entry.
An account is a separate, detailed record associated with a specific asset, liability, equity, revenue, expense, gain, or loss. Examples of accounts are noted in the following table:
Characteristics of Sample Accounts
The key point with double-entry accounting is that a single transaction always triggers the recording in at least two accounts, as assets and liabilities gradually flow through business and are converted into revenues, expenses, gains, and losses. We expand upon this concept in the next section.
The Accounting Equation
The accounting equation is the basis upon which the double-entry accounting system is constructed. In essence, the accounting equation is:
Assets = Liabilities + Shareholders’ Equity
The assets in the accounting equation are the resources that a company has available for its use, such as cash, accounts receivable, fixed assets, and inventory. The company pays for these resources by either incurring liabilities (which is the Liabilities part of the accounting equation) or by obtaining funding from investors (which is the Shareholders’ Equity part of the equation). Thus, there are resources with offsetting claims against those resources, either from creditors or investors.
The Liabilities part of the equation is usually comprised of accounts payable that are owed to suppliers, a variety of accrued liabilities, such as sales taxes and income taxes, and debt payable to lenders.
The Shareholders’ Equity part of the equation is more complex than simply being the amount paid to the company by investors. It is actually their initial investment, plus any subsequent gains, minus any subsequent losses, minus any dividends or other withdrawals paid to the investors.
This relationship between assets, liabilities, and shareholders’ equity appears in the balance sheet, where the total of all assets always equals the sum of the liabilities and shareholders’ equity sections.
The reason why the accounting equation is so important is that it is always true – and it forms the basis for all accounting transactions. At a general level, this means that whenever there is a recordable transaction, the choices for recording it all involve keeping the accounting equation in balance.
ABC Company engages in the following series of transactions:
1. ABC sells shares to an investor for $10,000. This increases the cash (asset) account as well as the capital (equity) account.
2. ABC buys $4,000 of inventory from a supplier. This increases the inventory (asset) account as well as the payables (liability) account.
3. ABC sells the inventory for $6,000. This decreases the inventory (asset) account and creates a cost of goods sold expense that appears as a decrease in the income (equity) account.
4. The sale of ABC’s inventory also creates a sale and offsetting receivable. This increases the receivables (asset) account by $6,000 and increases the income (equity) account by $6,000.
5. ABC collects cash from the customer to which it sold the inventory. This increases the cash (asset) account by $6,000 and decreases the receivables (asset) account by $6,000.
These transactions appear in the following table.
In the example, note how every transaction is balanced within the accounting equation – either because there are changes on both sides of the equation, or because a transaction cancels itself out on one side of the equation (as was the case when the receivable was converted to cash).
The following table shows how a number of typical accounting transactions are recorded within the framework of the accounting equation:
Here are examples of each of the preceding transactions, where we show how they comply with the accounting equation:
- Buy fixed assets on credit. ABC buys a machine on credit for $10,000. This increases the fixed assets (asset) account and increases the accounts payable (liability) account. Thus, the asset and liability sides of the transaction are equal.
- Buy inventory on credit. ABC buys raw materials on credit for $5,000. This increases the inventory (asset) account and increases the accounts payable (liability) account. Thus, the asset and liability sides of the transaction are equal.
- Pay dividends. ABC pays $25,000 in dividends. This reduces the cash (asset) account and reduces the retained earnings (equity) account. Thus, the asset and equity sides of the transaction are equal.
- Pay rent. ABC pays $4,000 in rent. This reduces the cash (asset) account and reduces the accounts payable (liabilities) account. Thus, the asset and liability sides of the transaction are equal.
- Pay supplier invoices. ABC pays $29,000 on existing supplier invoices. This reduces the cash (asset) account by $29,000 and reduces the accounts payable (liability) account. Thus, the asset and liability sides of the transaction are equal.
- Sell goods on credit. ABC sell goods for $55,000 on credit. This increases the accounts receivable (asset) account by $55,000, and increases the revenue (equity) account. Thus, the asset and equity sides of the transaction are equal.
- Sell stock. ABC sells $120,000 of its shares to investors. This increases the cash account (asset) by $120,000, and increases the capital stock (equity) account. Thus, the asset and equity sides of the transaction are equal.
A journal entry is a formalized method for recording a business transaction. It is recorded in the accounting records of a business, usually in the general ledger, but sometimes in a subsidiary ledger that is then summarized and rolled forward into the general ledger (see The Ledger Concept article).
Journal entries are used in a double entry accounting system, where the intent is to record every business transaction in at least two places. For example, when a company sells goods for cash, this increases both the revenue account and the cash account. Or, if merchandise is acquired on account, this increases both the accounts payable account and the inventory account.
The structure of a journal entry is:
- A header line may include a journal entry number and entry date.
- The first column includes the account number and account name into which the entry is recorded.
- This field is indented if it is for the account being credited.
- The second column contains the debit amount to be entered.
- The third column contains the credit amount to be entered.
- A footer line may also include a brief description of the reason for the entry.
Thus, the basic journal entry format is:
Debit Account name / number $xx,xxx
Credit Account name / number $xx,xxx
The structural rules of a journal entry are that there must be a minimum of two line items in the entry and that the total amount entered in the debit column equals the total amount entered in the credit column.
A journal entry is usually printed and stored in a binder of accounting transactions, with backup materials attached that justify the entry. This information may be accessed by the company’s auditors as part of their annual audit activities.
There are several types of journal entries, including:
- Adjusting entry. An adjusting entry is used at month-end to alter the financial statements to bring them into compliance with the relevant accounting framework. For example, a company could accrue unpaid wages at month-end in order to recognize the wages expense in the current period.
- Compound entry. This is a journal entry that includes more than two lines of entries. It is frequently used to record complex transactions, or several transactions at once. For example, the journal entry to record a payroll usually contains many lines, since it involves the recordation of numerous tax liabilities and payroll deductions.
- Reversing entry. This is an adjusting entry that is reversed as of the beginning of the following period, usually because an expense was accrued in the preceding period, and is no longer needed. Thus, a wage accrual in the preceding period is reversed in the next period, to be replaced by an actual payroll expenditure.
In general, journal entries are not used to record
high-volume transactions, such as customer billings or supplier invoices. These
transactions are handled through specialized software modules that present a
standard on-line form to be filled out. Once the form is complete, the software
automatically creates the accounting record. This is also known as computer
generated journal entry or automatic journal entry.
Major Journal Entries
The following journal entry examples are intended to provide an outline of the general structure of the more common entries encountered. It is impossible to provide a complete set of journal entries that address every variation on every situation, since there are thousands of possible entries.
In each of the following journal entries, we state the topic, the relevant debit and credit, and additional comments as needed.
Revenue journal entries:
- Sales entry. Debit accounts receivable and credit sales. If a sale is for cash, the debit is to the cash account instead of the accounts receivable account.
- Allowance for doubtful accounts entry. Debit bad debt expense and credit the allowance for doubtful accounts. When actual bad debts are identified, debit the allowance account and credit the accounts receivable account, thereby clearing out the associated invoice.
Expense journal entries:
- Accounts payable entry. Debit the asset or expense account to which a purchase relates and credit the accounts payable account. When an account payable is paid, debit accounts payable and credit the cash account.
- Payroll entry. Debit the wages expense and payroll tax expense accounts, and credit the cash account. There may be additional credits to account for deductions from benefit expense accounts, if employees have permitted deductions for benefits to be taken from their pay.
- Accrued expense entry. Debit the applicable expense and credit the accrued expenses liability account. This entry is usually reversed automatically in the following period.
- Depreciation entry. Debit depreciation expense and credit accumulated depreciation. These accounts may be categorized by type of fixed asset.
- Cash reconciliation entry. This entry can take many forms, but there is usually a debit to the bank fees account to recognize changes made by the bank, with a credit to the cash account. There may also be a debit to office supplies expense for any check supplies purchased and paid for through the bank account.
- Prepaid expense adjustment entry. When recognizing prepaid expenses as expenses, debit the applicable expense account and credit the prepaid expense asset account.
- Fixed asset addition entry. Debit the applicable fixed asset account and credit accounts payable.
- Fixed asset derecognition entry. Debit accumulated depreciation and credit the applicable fixed asset account. There may also be a gain or loss on the asset derecognition.
See the preceding accounts payable and accrued expense entries.
- Dividend declaration. Debit the retained earnings account and credit the dividends payable account. Once dividends are paid, this is a debit to the dividends payable account and a credit to the cash account.
- Share sale. Debit the cash account and credit the share capital account.
These journal entry examples are only intended to provide an
overview of the general types and formats of accounting entries. There are many
variations on the entries presented here that are used to deal with a broad
range of business transactions.
The Accruals Concept
An accrual is a journal entry that is used to recognize revenues and expenses that have been earned or consumed, respectively, and for which the related source documents have not yet been received or generated. Accruals are needed to ensure that all revenue and expense elements are recognized within the correct reporting period, irrespective of the timing of related cash flows. Without accruals, the amount of revenue, expense, and profit or loss in a period will not necessarily reflect the actual level of economic activity within a business. Accruals are a key part of the closing process used to create financial statements under the accrual basis of accounting; without accruals, financial statements would be considerably less accurate.
It is most efficient to initially record most accruals as reversing entries. This is a useful feature when a business is expecting to issue an invoice to a customer or receive an invoice from a supplier in the following period. For example, a bookkeeper may know that a supplier invoice for $20,000 will arrive a few days after the end of a month, but she wants to close the books as soon as possible.
Accordingly, she records a $20,000 reversing entry to recognize the expense in the current month. In the next month, the accrual reverses, creating a negative $20,000 expense that is offset by the arrival and recordation of the supplier invoice.
Examples of accruals that a business might record are:
• Expense accrual for interest. A local lender issues a loan to a business, and sends the borrower an invoice each month, detailing the amount of interest owed. The borrower can record the interest expense in advance of invoice receipt by recording accrued interest.
• Expense accrual for wages. An employer pays its employees once a month for the hours they have worked through the 26th day of the month. The employer can accrue all additional wages earned from the 27th through the last day of the month, to ensure that the full amount of the wage expense is recognized.
• Sales accrual. A services business has a number of
employees working on a major construction project, which it will bill when the
project’s milestone has been completed. In the meantime, the company can accrue
revenue for the amount of work completed to date, even though the work has not
yet been billed.
The Realization Concept
The realization principle is the concept that revenue can only be recognized once the underlying goods or services associated with the revenue have been delivered or rendered, respectively. Thus, revenue can only be recognized after it has been earned.
Under the SFRS 15, you will have to satisfy your performance obligation in order to recognize revenue.
The best way to understand the realization concept is through the following examples:
• Advance payment for goods. A customer pays $1,000 in advance for a custom-designed product. The seller does not realize the $1,000 of revenue until its work on the product is complete. Consequently, the $1,000 is initially recorded as a liability, which is then shifted to revenue only after the product has shipped.
• Advance payment for services. A customer pays $6,000 in advance for a full year of software support. The software provider does not realize the $6,000 of revenue until it has performed work on the product. This can be defined as the passage of time, so the software provider could initially record the entire $6,000 as a liability and then shift $500 of it per month to revenue.
• Delayed payments. A seller ships goods to a customer on credit, and bills the customer $2,000 for the goods. The seller has realized the entire $2,000 as soon as the shipment has been completed, since there are no additional earning activities to complete. The delayed payment is a financing issue that is unrelated to the realization of revenues.
• Multiple deliveries. A seller enters into a sale contract under which it sells an airplane to an airline, plus one year of engine maintenance and initial pilot training, for $25 million. In this case, the seller must allocate the price among the three components of the sale, and realizes revenue as each one is completed. Thus, it probably realizes all of the revenue associated with the airplane upon delivery, while realization of the training and maintenance components will be delayed until earned.
The realization concept is most often violated when a
company wants to accelerate the recognition of revenue, and so books revenues
in advance of all related earning activities being completed.
Accrual Basis of Accounting
The accrual basis of accounting is the concept of recording revenues when earned and expenses as incurred. This concept differs from the cash basis of accounting, under which revenues are recorded when cash is received, and expenses are recorded when cash is paid. For example, a company operating under the accrual basis of accounting will record a sale as soon as it issues an invoice to a customer, while a cash basis company would instead wait to be paid before it records the sale.
Similarly, an accrual basis company will record an expense as incurred, while a cash basis company would instead wait to pay its supplier before recording the expense. The accrual basis of accounting is required under the Singapore Financial Reporting Standards 1.
The accrual basis tends to provide more even recognition of revenues and expenses over time than the cash basis, and so is considered by investors to be the most valid accounting system for ascertaining the results of operations, financial position, and cash flows of a business. In particular, it supports the matching principle, under which revenues and all related expenses are to be recorded within the same reporting period; by doing so, it should be possible to see the full extent of the profits and losses associated with specific business transactions within a single reporting period.
The accrual basis requires the use of estimated reserves in
certain areas. For example, a company should recognize an expense for estimated
bad debts that have not yet been incurred. By doing so, all expenses related to
a revenue transaction are recorded at the same time as the revenue, which
results in an income statement that fully reflects the results of operations.
Similarly, the estimated amounts of product returns, sales allowances, and
obsolete inventory may be recorded in reserve accounts. These estimates may not
be entirely accurate, and so can lead to materially inaccurate financial
statements. Consequently, care must be used when estimating reserves.
Cash Basis of Accounting
The cash basis of accounting is the practice of only recording revenue when cash is received from a customer, and recording expenses only when cash has been paid out. However, the cash basis of accounting is not allowed under the Singapore Financial Reporting Standards.
This is because, the cash basis of accounting suffers from the following problems:
- Accuracy. The cash basis yields less accurate results than the accrual basis of accounting, since the timing of cash flows does not necessarily reflect the proper timing of changes in the financial condition of a business. For example, if a contract with a customer does not allow a business to issue an invoice until the end of a project, the company will be unable to report any revenue until the invoice has been issued and cash received.
- Manipulation. A business can alter its reported results by not cashing received checks or altering the payment timing for its liabilities.
- Lending. Lenders do not feel that the cash basis generates overly accurate financial statements, and so may refuse to lend money to a business reporting under the cash basis.
- Audited financial statements. Auditors will not approve financial statements that were compiled under the cash basis, so a company will need to convert to the accrual basis if it wants to have audited financial statements.
- Management reporting. Since the results of cash basis financial statements can be inaccurate, management reports should not be issued that are based upon it.
However, it is widely used by smaller businesses in other countries such as the USA.
The main focus of this chapter was to reveal how business transactions are recorded in the accounting database. The level of detail given was intended to provide the reader with a basic understanding of the process, rather than the more detailed knowledge needed to actually operate such a system.
With this knowledge in hand, the next step is to see how accounting information is transformed into financial statements, which is one of the main work products of the bookkeeper. This process requires a number of intervening articles, where we will describe the chart of accounts, ledgers, and how to close the books in future articles.
Only then can we see the final output, which is the income statement, balance sheet, and statement of cash flows.
Do stay in tune for our articles next week.
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About six weeks ago, millions of homeowners across Texas suddenly found their water to be possibly contaminated—or lost access to it entirely—when freezing temperatures and the state’s decrepit infrastructure led to widespread blackouts.
Last week, on the other side of the planet, Taiwan cut water supplies to areas including a key hub of semiconductor manufacturing, thanks to the worst drought in decades.
These back-to-back crises are emblematic of a global catastrophe that is only now getting the attention it deserves. And unlike other calamities that may recede over time, this one is only going to get worse. The World Health Organization estimates that in less than four years, half of the world’s population will be living in water-stressed areas.
“These risks are only expected to grow as climate change effects intensify,” said Thomas Schumann, the founder of Thomas Schumann Capital, a firm that’s created investable water indexes for the U.S. and Europe. “Not only that, but the business costs associated with these risks are projected to be $300 billion…or five times greater if left unaddressed.”
The world is in a water crisis, & children’s lives and futures are at risk. Today, over 1.42 billion people – including 450 million children – live in areas of high or extremely high water vulnerability.
— UN-Water (@UN_Water) March 29, 2021
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Debt is the capital a businessperson borrows from an outside source and agrees to return within a specific period along with a specific proportion of interest. Debt has negative effects on business, but most start-up businesses have to borrow finances to begin operations. Even well-established businesses often take on debts. The most common source of debt is banks, other companies, friends, and family.
Companies need to borrow money while making purchases like equipment and heavy machinery, etc. Debt is the real killer of a company. It can be compared to a tiger that will consume your company one day if you don’t eliminate it. The reputation of your company can be ruined. If suppliers don’t supply you on credit, you may not be able to offer salary increments, bonuses, and insurance, and a drastic effect on the business finances can take place if you aren’t careful.
Here are a few drastic effects which companies face due to debt:
A Credit rating is impacted:
Whenever a company needs to make large purchases, start new ventures, or take steps for marketing, finances are required to support these operations. The company may find it easy to borrow money from available resources. This practice is known as “Levering up”. Borrowing money to fulfill financial needs is not a good practice because the loan will affect the credit rating of your company. Every time you borrow money, it is noted in the credit report of the company. The higher the debt, the more the risk. Lenders don’t lend money easily because of your previously unpaid loans, and you have to borrow money on greater interest rates than the previous ones on every following loan. There will come a time when all of your profit and income is being utilized only to pay interest and debts. The company will fail if you do not have control of debt.
Repayment is a term often used in business. It means paying back loans periodically with interest. When you take the loan from a lender on certain agreed terms and conditions, then repayment becomes your sole-responsibility. Your company is not gaining profits and likely not achieving goals. Even if the company fails, you have to make repayments on time. Whatever the circumstances, your company is facing lenders that will forcefully declare your company bankrupt if it fails to make repayments. All assets of the company are used to pay debts by legal proceedings. A company’s credit rating is drastically affected and, soon, the declination of the company is at its peak.
If a company is borrowing money, again and again, interest rates will be increased. Interest rates are increased due to many reasons, which are as follows:
- Credit history of the company
- Personal credit history of the business owner
- Banking history of the company
- Credit rating of the company
- Macro-economic conditions
The higher the interest rates are at which you are borrowing money, the greater the risk will be, which will mean bad implications for your business. The bigger is the tiger running after your company to hunt.
Effects of Debt on Human Resource:
Debt has a negative effect on the human resources of a company as it is unable to facilitate and retain employees by incentives. It cannot offer a salary raise, bonuses, or insurance, which results in numerous resignations of experienced employees. This also earns a bad name for the company in the market, leaving your company all alone in the sea of debt.
Mature debt is a serial killer:
The older and more mature the debt becomes, the more difficult it will be to handle. The older the history of debt in your bookkeeping, the more stressful situation will be.
Failure to satisfy customers:
When there is an increase in leverage, the company may try to cut down costs by compromising on the quality of products or services delivered. This lower standard decreases your customers and ultimately results in less income.
Debt cannot be good for a company. At all costs, companies should have minimum debts to ensure the growth and prosperity of the business. While it is understandable that sometimes a business may need to borrow money, the debt needs to be a priority to clear, so it never overtakes the business causing it to fail.About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud-hosted desktop where their entire team and tax accountant may access the QuickBooks™️ file, critical financial documents, and back-office tools in an efficient and secure environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
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In the transition within the energy market from fossil fuels to low-carbon sources, the need for battery storage is becoming ever greater.
Take domestic heating, for example. In order to meet Britain’s 2050 climate goals, the country needs to move away from natural gas for heating and switch to electricity. At present, gas meets about 67% of domestic energy demand in the UK, and a lot of that goes to heating. According to a report published today by the U.K. Energy Research Centre, cutting back on carbon emissions from the heating sector is “one of the toughest challenges the country faces in its low-carbon transition”.
When the UK’s kettles switch on in the morning and the demand for energy reaches its morning peak, gas is used that has been stored in pipelines overnight. At this moment in time the electricity system cannot replace gas and provide this peak, especially in winter, as there is not enough electricity storage capacity. Significantly increasing thermal storage capacity is desperately needed, alongside other measures such as energy efficiency and adequate insulation of buildings.
Another major driver of the need for battery storage is the rise of electric vehicles (EV). The UK Government announced this week that more than 8 million people in Britain are considering buying or leasing an electric vehicle in the next 5 years. In their Future Energy Scenarios, National Grid report an expected 36m electric vehicles on UK roads by 2040. Battery storage and rapid charging facilities will be instrumental in supplying the electricity demand associated with this increase.
It is to be expected that there will be a real boost in planning applications for energy storage facilities submitted to councils up and down the country. That means that planning committees have the power to greatly influence how quickly the necessary roll-out of energy storage facilities will materialise. As with so many things, yet again, changes that are needed on a national scale are to be realised at the local level. Cratus is there to support all parties involved and secure the best possible outcome for all.
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- What is nominal GDP?
- Which country has highest GDP 2020?
- What happens when nominal GDP increases?
- Does nominal use real GDP?
- What is the difference between nominal and real GDP quizlet?
- What is PPP vs nominal GDP?
- Is GDP nominal or ordinal?
- What is real and nominal?
- What country is #1 in economy?
- What does GDP in PPP mean?
- What is nominal GDP used for?
- Can nominal GDP increase while real GDP decreases?
What is nominal GDP?
Nominal GDP measures a country’s gross domestic product using current prices, without adjusting for inflation.
Contrast this with real GDP, which measures a country’s economic output adjusted for the impact of inflation..
Which country has highest GDP 2020?
Click on any of the links to gain more in-depth reviews of these top countries.United States. GDP: $19.48 trillion. … China. GDP: $12.23 trillion. … Japan. GDP: $4.87 trillion. … Germany. GDP: $3.69 trillion. … India. GDP: $2.65 trillion. … United Kingdom. GDP: $2.63 trillion. … France. GDP: $2.58 trillion. … Brazil. GDP: $2.05 trillion.More items…
What happens when nominal GDP increases?
An increase in nominal GDP means an increase also in economic activity. Since nominal GDP accounts for all final goods and services in an economy at current market prices, growth in this economic measure can be attributed to either an increase in quantity or price.
Does nominal use real GDP?
Key Takeaways Nominal GDP is the total value of all goods and services produced in a given time period, usually quarterly or annually. Real GDP is is nominal GDP adjusted for inflation. Real GDP is used to measure the actual growth of production without any distorting effects from inflation.
What is the difference between nominal and real GDP quizlet?
Used goods are included in GDP. … The difference between nominal GDP and real GDP is that nominal GDP: measures a country’s production of final goods and services at current market prices, whereas real GDP measures a country’s production of final goods and services at the same prices in all years.
What is PPP vs nominal GDP?
GDP comparisons using PPP are arguably more useful than those using nominal GDP when assessing a nation’s domestic market because PPP takes into account the relative cost of local goods, services and inflation rates of the country, rather than using international market exchange rates, which may distort the real …
Is GDP nominal or ordinal?
While in ordinal level variables we know the position of each case compared to each other, it is only with interval/ratio level we know how far apart each case value is to one another. Other Examples of Interval/Ratio Variable: Country GDP – $2.35T; $6.42T; $675B; $1.43T.
What is real and nominal?
A real interest rate is an interest rate that has been adjusted to remove the effects of inflation to reflect the real cost of funds to the borrower and the real yield to the lender or to an investor. A nominal interest rate refers to the interest rate before taking inflation into account.
What country is #1 in economy?
United StatesRankCountryPeak year1United States2019—European Union20082China20203Japan201223 more rows
What does GDP in PPP mean?
purchasing power parityGDP PPP (purchasing power parity) is gross domestic product converted to international dollars using purchasing power parity rates. An international dollar has the same purchasing power over GDP as a U.S. dollar has in the United States.
What is nominal GDP used for?
Nominal GDP measures the value of the goods and services produced in a country at current prices, providing a snapshot of a country’s current output in the current moment. It tells us the present-day value of a country’s products and services.
Can nominal GDP increase while real GDP decreases?
It is impossible for real GDP increase to be coupled by a decrease of nominal GDP. FALSE. Real GDP changes only when the quantity of final goods and services produced changes. Nominal GDP changes when either the quantity and/or the price of final goods and services produced changes.
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What is Arbitration?
A rbitration, a form of Alternative Dispute Resolution (ADR), is a legal technique for the resolution of disputes outside the courts, where the parties to a dispute refer it to one or more persons (the “arbitrators”, “arbiters” or “arbitral tribunal”), by whose decision (the “award”) they agree to be bound. It is a resolution technique in which a third party reviews the evidence in the case and imposes a decision that is legally binding for both sides and enforceable. Arbitration is often used for the resolution of commercial disputes, particularly in the context of international commercial transactions. The use of arbitration is also frequently employed in consumer and employment matters, where arbitration may be mandated by the terms of employment or commercial contracts.
Arbitration can be either voluntary or mandatory (although mandatory arbitration can only come from a statute or from a contract that is voluntarily entered into, where the parties agree to hold all existing or future disputes to arbitration, without necessarily knowing, specifically, what disputes will ever occur) and can be either binding or non-binding. Non-binding arbitration is similar to mediation in that a decision cannot be imposed on the parties. However, the principal distinction is that whereas a mediator will try to help the parties find a middle ground on which to compromise, the (non-binding) arbitrator remains totally removed from the settlement process and will only give a determination of liability and, if appropriate, an indication of the quantum of damages payable. By definition arbitration is binding and so non-binding arbitration is not arbitration.
Arbitration is a proceeding in which a dispute is resolved by an impartial adjudicator whose decision the parties to the dispute have agreed, or legislation has decreed, will be final and binding. There are limited rights of review and appeal of arbitration awards.
Types of Disputes Arbitrated at the Centre
The Centre administers simple two-party disputes to complex multi-party matters, local and international, with claims ranging from several thousand to millions of dollars. The Centre is experienced in arbitrating the following types of claims:
1. Contact the DRC to request arbitration services
2. The DRC forwards its Request for Arbitration form to be completed by both parties or a joint letter is sent to the DRC with all relevant information. Parties may decide on an individual or a joint submission of this form.
3. Upon receipt of the completed form(s,) the Centre will prepare a list of potential arbitrators for consideration by the parties. Included will be the arbitrator’s profile and fees and the Centre’s administrative fees. This information is sent simultaneously to both sides. The cost of the arbitration is shared equally by the parties.
4. Upon notification of the agreed arbitrator, the DRC will coordinate with the arbitrator and the parties to commence the arbitration process
Rates are shared equally by the Parties and subject to VAT
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The quick ratio (also known as the acid-test ratio) offers insight into how well a company can meet its short-term obligations. As in chemistry, an acid test provides fast results, showing how quickly a company can convert short term assets to pay short term liabilities. Essentially, it’s a measure of company liquidity.
What Is a Good Quick Ratio?
Once you calculate the quick ratio, you can determine if:
A company is able to meet its short-term obligations by converting its short-term assets into cash.
A company is able to meet its obligations without selling off inventory.
A company is over-leveraged.
The quick ratio represents the amount of short-term marketable assets available to cover short-term liabilities, and a good quick ratio is 1 or higher. The greater this number, the more liquid assets a company has to cover its short-term obligations and debts.
A number less than 1 might indicate that a company doesn’t have enough liquid assets to cover its current liabilities.
Quick Ratio Formula
There are two ways to calculate the quick ratio:
Quick Ratio Formula 1
Cash + Marketable Securities + Accounts Receivable
Quick Ratio Formula 2
Current assets - inventory
Formula 1 includes only the most liquid current assets. Formula 2 counts all assets except inventory as liquid. Some (such as prepaid expenses) may not actually be able to be turned into cash to cover liabilities, however.
Why Isn’t Inventory Included in the Quick Ratio Formula?
The quick ratio doesn’t include inventory because it’s not a liquid asset (or an asset that can be quickly and easily converted into cash). Inventory turnover takes considerable time and effort. It cannot be converted into cash as quickly as, say, marketable securities or accounts receivable.
How to Calculate the Quick Ratio
First, look at a company’s balance sheet and locate the numbers listed for cash on hand, marketable securities, accounts receivable, and current liabilities. Add these assets to find the numerator, then use the number on the balance sheet for current liabilities as the denominator. Divide to find the quick ratio.
Or, simply use the total of current assets and subtract inventory to find the numerator. Then use the number on the balance sheet for current liabilities as the denominator.
Pros and Cons of Quick Ratio
The advantage of using the quick ratio is that it is a highly conservative figure.
The quick ratio is also an easy number to calculate for almost any company. If you have a balance sheet available, it’s easy to plug the numbers into the formula and find this number within seconds.
On the other hand, quick ratios don’t take into account the fact that a company – particularly during an economic downturn – may have difficulty collecting its receivables.
Limitations of Quick Ratio
Despite it being both an easy and popular metric to assess a company’s current financial health, there are limitations to quick ratio analysis.
Can Only Compare Ratios within an Industry
When using the quick ratio to make comparisons between companies, it’s important to compare ratios among companies in the same industry – not across industries. This is because certain industries may have longer credit collection cycles than others, thus impacting accounts receivable, for example.
The quick ratio is an easy and fast calculation that provides useful insight into a company’s ability to pay its short-term obligations. It’s important to remember, however, that more detailed calculations will need to be made to accurately assess a company’s financial health.
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Bad credit can keep you from many things. You cannot buy a home, finance your education or even get a job. You can completely forget about getting a personal loan for a business. On top of that, having no credit is just as awful as having a bad credit score.
What Is Credit and What Is It Used For?
If you are trying to build credit, it is important to understand what it is. It is essentially borrowed money. You can use this money for getting a car, getting affordable internet plans, buying groceries or a new home. While borrowing, you make an agreement to pay back the amount to the lender later. There is usually a fee involved. You are leveraging someone else’s money to make personal purchases.
This history shows that you are a responsible individual when it comes to paying back the borrowed amount. We all need to make larger purchases at some point in life. If you have a credit history that shows a record of accomplishment of borrowing and paying habits, you will face no problems qualifying for those purchases.
Importance of a Credit Score
Before moving on to credit building, you need to know why credit matters. To be honest, it affects your life in ways you could not imagine. This includes:
- Cost of insurance: A bad or no credit means your premiums will be through the roof. That includes premiums of auto insurance, health insurance, and even renter’s insurance.
- Renting an apartment: Landlords these days ask for a credit check. If your credit is not good, this could mean you will not qualify for the apartment, to begin with. You might have to ask someone to co-sign if you really need that place.
- Utilities: Whenever you are about to open an account with a cell phone company, gas/electric company or a cable company, they check your credit. If they find you unreliable, you will have to pay a deposit.
- Getting a job: You must be thinking about what credit has to do with being employed. Unbelievably, some employers have started evaluating candidates based on their credit. They use it to gauge personal responsibility.
In short, without a credit history, you are a nobody. So you better start working on building one right away.
Tips to Build a Credit Score When You Have No Credit
Building credit requires careful planning. These tips will help you with not just building credit (if you do not have one) but improving it too:
- Get a credit card: For starters, make sure you only sign up for one. You borrow money and pay it back on time. This transaction would look great on a credit report.
You will get a secured credit card in case you do not have any history. You have to back it up with a cash deposit. It serves as a guarantee that if you become a defaulter, the lender can use that deposit. Such cards are expensive because you have to pay the deposit up front. Nevertheless, it is worthwhile. It is recommended to sign up for a card with a low credit limit so that you don’t have to bear heavy fee. Once you become regular in making payments, you can trade this card for a better one.
- Pay your bills on time: The best way to do that is to set them to auto-pay. Late payments are reported to the credit bureau and this would look bad on your history. You must not forget that your payment history is used for calculating 35 percent of your credit score. Other than this, these records stay on your score for almost 7 years.
If setting your bills to auto-pay is not viable, then make sure you mark the due dates on your calendar. Plus, paying on time is always a good personal and financial habit.
- Find yourself a co-signer: Got a friend with a great credit score? Convince them to become your co-signer on a loan. As you repay the borrowed money, it will build your credit score. The only problem is if you fail to repay the loan, the other party will be personally liable for it. That is why not many people are willing to co-sign. It damages their credit rating too if they also fail to make payments.
- Get a store card: Retailers are willing to provide branded credit cards to their customers. You can get one even if you don’t have a credit history. These cards are a slow way of building credit. Instead of buying with cash, buy on credit. Pay the entire outstanding bill by the end of the month. Make sure you are not buying more than what you can repay. Ask the retailer to report your history to the credit bureau.
- Reduce your debt: The single best thing you can do for improving your credit is to owe less. Just because you are encouraged to get a credit card doesn’t mean you drown yourself in debt. Be careful with what you borrow.
Long story short, you have to have a credit history. It’s never too late to start building one. Once you start putting the work in, you will be surprised to see how quickly the numbers tick up. By the time you want to make a large purchase or get a loan for live trading or any other investment, you won’t have to face any rejection.
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Relevance:Finance Minister Nirmala Sitharaman thrust zero budget natural farming into the spotlight in the first Budget speech of the 17th Lok Sabha earlier this month, calling for a “back to the basics” approach.
Organic farming became an umbrella term that represented a variety of non-chemical and less-chemical oriented methods of farming. One-straw revolution and Madagascar’s System of Rice Intensification (SRI) were examples of specific alternatives proposed. In India, such alternatives and their variants included, among others,homoeo-farming, Vedic farming, Natu-eco farming, Agnihotra farming and Amrutpani farming.Zero Budget Natural Farming (ZBNF), popularised by Subhash Palekar, is the most recent entry into this group.
Zero budget natural farming (ZBNF) is a method of chemical-free agriculture drawing from traditional Indian practices.Mr. Palekar is against vermicomposting, which is the mainstay of typical organic farming, as it introduces the the most common composting worm, the European red wiggler (Eisenia fetida) to Indian soils. He claims these worms absorb toxic metals and poison groundwater and soil.
The basic premise in Zero Budget Natural Faring is that the soil has all the nutrients plants need. To make these nutrients available to plants, we need the intermediation of microorganisms. For this, he recommends the “four wheels of Zero Budget Natural Farming”: Bijamrit, Jivamrit, Mulching and Waaphasa.
- Bijamrit is the microbial coating of seeds with formulations of cow urine and cow dung.
- Jivamrit is the enhancement of soil microbes using an inoculum of cow dung, cow urine, and jaggery.
- Mulching is the covering of soil with crops or crop residues.
- Waaphasa is the building up of soil humus to increase soil aeration.
- In addition, ZBNF includes three methods of insect and pest management: Agniastra, Brahmastra and Neemastra (all different preparations using cow urine, cow dung, tobacco, fruits, green chilli, garlic and neem).
Benefits of Zero Budget Natural Farming:
- The rising cost of these external inputs was a leading cause of indebtedness and suicide among farmers, while the impact of chemicals on the environment and on long-term fertility was devastating. Without the need to spend money on these inputs — or take loans to buy them — the cost of production could be reduced and farming made into a “zero budget” exercise, breaking the debt cycle for many small farmers.
- Instead of commercially produced chemical inputs, the Zero Budget Natural Farming BNF promotes the application of jeevamrutha — a mixture of fresh desi cow dung and aged desi cow urine, jaggery, pulse flour, water and soil — on farmland. This is a fermented microbial culture that adds nutrients to the soil, and acts as a catalytic agent to promote the activity of microorganisms and earthworms in the soil.
- The ZBNF method also promotes soil aeration, minimal watering, intercropping, bunds and topsoil mulching and discourages intensive irrigation and deep ploughing.
- In order to achieve the Central government’s promise to double farmers income by 2022, one aspect being considered is natural farming methods such as the ZBNF which reduce farmers’ dependence on loans to purchase inputs they cannot afford. Meanwhile, inter-cropping allows for increased returns.
- ZBNF’s biggest success came in Andhra Pradesh when the Rythu Sadhikara Samstha, a state-owned non-profit company, adopted it. Major funding has been earmarked for the programme, which Andhra Pradesh calls climate resilient ZBNF or CRZBNF.
Criticisms of Zero Budget Natural Farming:
The critics of Zero Budget Natural Farming claim that it is hardly zero budget. Many ingredients have to be purchased. These apart, wages of hired labour, imputed value of family labour, imputed rent over owned land, costs of maintaining cows and paid-out costs on electricity and pump sets are all costs that ZBNF proponents conveniently ignore.
Second, there are no independent studies to validate the claims that ZBNF plots have a higher yield than non-ZBNF plots.While it has definitely helped preserve soil fertility, its role in boosting productivity and farmers’ income isn’t conclusive yet.One field trial is ongoing at the G.B. Pant University of Agriculture and Technology, but its full results will be available only after five years. According to reliable sources, preliminary observations of these field trials have recorded a yield shortfall of about 30% in ZBNF plots when compared with non-ZBNF plots.
Third, most of the claims are in defiance with agricultural science.Indian soils are poor in organic matter content. About 59% of soils are low in available nitrogen; about 49% are low in available phosphorus; and about 48% are low or medium in available potassium. . In some regions, soils are saline. In other regions, soils are acidic due to nutrient deficiencies or aluminium, manganese and iron toxicities. In certain other regions, soils are toxic due to heavy metal pollution from industrial and municipal wastes or excessive application of fertilizers and pesticides.
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Tax Measures Help Balance State Budgets
A Common and Reasonable Response to Shortfalls
With the recession continuing to widen the gap between shrinking revenues and residents’ increasing need for services, a growing number of states are adopting a balanced approach to their budgets that includes revenue increases as well as spending cuts. Since January 1, 30 states have raised taxes and another seven states are considering doing so.
These steps are in addition to revenue actions taken by 10 states in late 2007 and 2008 as the recession’s effects began to be felt. Although some of these measures are relatively small in terms of the amount of revenue raised, others — such as packages in California, New York, and Oregon — are very significant.
The great majority of states have cut services to families and individuals, including services that benefit vulnerable families. But these cuts have not been sufficient to solve state budget shortfalls; their size is too great for a cuts-only strategy. Were states to rely on spending cuts alone to close their gaps, it would require unprecedented reductions in such essential public services as health care, education, and assistance for the elderly and disabled.
By July 1, the start of the fiscal year in all but four states, most states will have employed a combination of budget solutions that also involves drawing down reserve funds, maximizing the use of federal dollars, and raising taxes. A number of prominent economists have pointed out that budget cuts are more harmful to state economies during a recession than properly structured tax increases, so it is good policy to use tax increases to fill a substantial portion of deficits that exceed the amount that can be closed with reserves or federal funds.
Historically, raising taxes in a recession is a common response by states. During the recession of the early 1990s, 44 states raised taxes by a significant margin (at least 1 percent). In the recession of 2001, 30 states did so. These actions increased annual revenue collections by tens of billions of dollars. (States often go in the opposite direction during periods of strong economic growth: 36 states cut taxes from 1994 to 2001.)
Contrary to what some consider common wisdom, a tax increase can be good policy during a recession. Tax increases are a better option than deep spending cuts — better both for families already suffering due to the recession and for state economies. Tax increases can be designed in such a way that they impose relatively little or no costs on the most vulnerable families; this can be done, for example, by targeting the increase on households with the highest incomes or on profitable corporations. Moreover, as the economists Joseph Stiglitz and Peter Orszag (among others) have noted, tax increases take less money out of the economy than spending cuts, for reasons described more fully below.
One major factor that is reducing, though not eliminating, the need for tax increases in this recession is the American Recovery and Reinvestment Act (ARRA). Enacted in February 2009, it provides substantial money for state governments that includes roughly $140 billion to help alleviate budget shortfalls through funding for education, health care, and other government services. New York, for instance, scaled back the size of a proposed tax increase package by about $1.3 billion after the ARRA funding was announced.
Tax Increases in the Current Recession
So far this year, at least 30 states have enacted tax increases, and (as of July 8) another seven are considering such measures. (See Figure 1.)
State tax increases began with the recession’s onset in late 2007, in order to preserve education, health care, and other services in the face of flattening or declining revenues. At least 10 states enacted tax and revenue measures in late 2007 or 2008. These included major revenue packages in Maryland, Michigan, and New York, and somewhat narrower measures in Alabama, California, Delaware, Massachusetts, New Hampshire, New Jersey, and Rhode Island. Many of those states have enacted or are considering further measures in 2009, reflecting the worsening of the recession.
Enacted Tax Increases In 2009
Tax increases enacted so far in 2009 include increases in personal income taxes (at least 11 states), sales taxes (12 states), business taxes (11 states), tobacco and alcohol taxes (15 states), motor vehicle taxes and fees (12 states), and others (15 states). Many states are raising more than one tax in order to diversify the new revenue sources and distribute the additional revenue collections more broadly.
Personal Income Taxes
Eleven states have enacted measures that will increase revenues from the personal income tax in fiscal year 2010. These changes include rate increases, the addition of new upper-income tax brackets, and reductions in various credits, exemptions, and deductions. Major income tax increases enacted in 2009 include:
- Along with cutting services by $14.9 billion, California enacted a 0.25 percentage point increase in each of the state’s income tax brackets. A tax credit for dependents was also reduced. Income tax measures are expected to increase tax revenues by more than $5 billion in the coming fiscal year.
- Colorado ended taxpayers’ ability to deduct capital gains income derived from assets or businesses located within the state. This change will generate about $15.8 million per year in new income tax revenues.
- Delaware increased the top marginal tax rate by one percentage point to 6.95 percent on income over $60,000. This change will generate about $28.3 million in new revenues this year. Also, Delaware eliminated an exemption from taxes for lottery winnings.
- Faced with a $682 million shortfall in the 2010 fiscal year, Hawaii adopted a measure temporarily creating three new state income tax brackets. Beginning in tax year 2009, for married couples the rates will be 9 percent on income between $300,000 and $350,000; 10 percent between $350,000 and $400,000; and 11 percent rate for income above $400,000. Additionally, the state’s standard deduction and the personal exemption were each raised by 10 percent, which will lower tax bills for low- and moderate-income families. All of these changes are set to expire after tax year 2015. Hawaii’s previous top tax rate was 8.25 percent on all income over $96,000. All of these provisions are expected to increase tax revenues by nearly $100 million during the fiscal year 2009-2011 biennium.
- New Jersey temporarily increased income taxes on households with incomes above $400,000. For one year, the tax rate on joint filers with incomes between $400,000 and $500,000 will rise to 8 percent from 6.37; the rate on income between $500,000 and $1 million will increase to 10.25 percent from 8.97 percent; and a 10.75 percent rate will apply to income over $1 million. These changes will generate about $1 billion in fiscal 2010.
- New York State also faced a sizable gap — 29 percent — in the state’s fiscal 2010 budget. As part of a budget-balancing package that included both cuts in services and tax increases, in April New York enacted two new temporary income tax rates levied on the highest-income filers. For households with taxable income above $500,000, regardless of filing status, the tax rate rises to 8.97 percent from 6.85 percent; for those with taxable income below $500,000 but above $200,000 for single individuals, $250,000 for heads of households, and $300,000 for married couples filing joint returns, the rate increases to 7.85 percent from 6.85 percent.
In addition, New York placed limits on itemized state income tax deductions for taxpayers making over $1 million and reduced a state-funded credit on New York City’s personal income tax. The changes are projected to raise more than $5 billion a year.
- The Oregon legislature approved and the governor has indicated his intention to sign a measure adding two brackets at the top of the state’s income tax structure. Married couples will pay 10.8 percent on income between $250,000 and $500,000; and 11 percent on income over $500,000. These rates will be in effect through 2011. After 2011, the top rate will fall to 9.9 percent for joint filers with incomes over $250,000. These changes are projected to generate more than $230 million in each of the next two fiscal years. Oregon’s previous top rate was 9 percent on all income over $15,200. However, if enough valid signatures are gathered the measures will not go into effect unless approved by the voters in January 2010.
- Rhode Island enacted legislation that will treat capital gains income as ordinary income for tax purposes. Previously, capital gains were given preferential treatment, taxed at rates as low as 0.83 percent.
- Vermont enacted a budget that includes several major changes to the state’s income tax structure. Although all income tax rates were lowered, net revenue will increase. This is for two reasons. One, the package eliminated a 40 percent exemption on capital gains income, replacing it with a flat exemption of $2,500. This new exemption will rise to $5,000 beginning in tax year 2011. And, two, lawmakers capped the amount of state and local income taxes that can be deducted from federal adjusted gross income at $5,000. On net, income tax provisions in Vermont will raise $9 million in new revenue in fiscal year 2010.
- By restructuring a credit for land preservation, Virginia raised income tax revenues by $75 million per year.
- Wisconsin enacted a new 7.75 percent income tax bracket on all income over $300,000 for married couples and $225,000 for individuals and heads of households. And the exclusion for capital gains income was lowered to 30 percent from 60 percent. These changes will generate about $280 million in fiscal 2010.
In 2009, 12 states have increased sales tax revenues by such means as raising rates, expanding the tax base to cover previously untaxed goods and services, and administrative changes. The following sales tax increases occurred:
- California enacted a temporary 1 percentage point increase in the sales tax rate, which is expected to generate about $4.5 billion in fiscal 2010.
- The sales tax was extended to the sale of tobacco products in Colorado. The state also enacted legislation temporarily reducing the rate at which it reimburses retailers for collecting sales taxes. These measures will generate nearly $70 million in the coming fiscal year.
- Kentucky extended the state’s sales tax to include alcoholic beverages. The change will generate about $52 million each year.
- As part of a large package of tax changes, Maine expanded the sales tax to include amusement parks and sporting events and a range of maintenance and service transactions including auto repair and dry cleaning. (The package also replaced the state’s graduated income tax structure with a flat 6.5 percent rate plus a 0.35 percentage point surcharge on income over $250,000.) In total, compared to current law, tax revenues will be modestly higher in fiscal 2010 as a result of these changes.
- Massachusetts raised about $760 million in fiscal 2010 by increasing the sales tax rate by 1.25 percentage points to 6.25 percent. An exemption on alcoholic beverages was eliminated, generating about $79 million in new revenues this year.
- In Nevada, the sales tax rate was temporarily increased to 6.85 percent from 6.5 percent. This change will raise revenues by $280 million over the next two years.
- New York raised sales tax revenues by about $35 million by taxing a broader range of companies previously selling tax-free over the Internet, and certain types of transportation services like limousine and car hires.
- Rhode Island enacted legislation requiring certain companies to collect sales taxes on goods purchased over the Internet.
- Tennessee extended the sales tax to include software maintenance contracts and limited an exemption on computer software. These changes will generate about $10.5 million per year in new revenues.
- Vermont expanded the sales tax to include liquor and digital downloads, raising over $3 million in new revenues in fiscal 2010.
- Washington State eliminated a sales tax exemption on hybrid vehicles and enacted legislation designed to curtail abuse of certificates that allow businesses that buy products for resale to avoid paying the retail sales tax. These measures will increase sales tax revenues by about $70 million.
- Wisconsin entered the multi-state Streamlined Sales and Use Tax Agreement (SSUTA) — a compact that simplifies sales tax collections for participating businesses. The state also altered its method for taxing prewritten computer software and expanded the sales tax to include digital products, such as music and video downloads and subscriptions to online periodicals. The amount of sales tax revenues that retailers are allowed to retain for administrative expenses was capped at $1,000. The state eliminated the ability of certain parent companies to avoid paying sales taxes on purchases made by subsidiaries. Sales tax revenues will rise by nearly $60 million in fiscal 2010 as a result of these actions.
At least 11 states have enacted business tax increases:
- Delaware increased the maximum corporate franchise tax to $180,000 from $165,000 and raised numerous business and occupation gross receipts tax rates. The public utilities gross receipts tax was extended to include direct-to-home satellite services.
- Iowa placed limits on the size of five costly business tax credits, saving the state about $18 million in fiscal year 2010.
- Kansas suspended its film production credit for two years. For dozens of other credits, the state temporarily reduced the amount firms can claim by 10 percent. In the next fiscal year, these changes will increase revenues by over $10 million.
- Maryland tightened the cap on corporate income tax credits for mined coal, which will increase business tax revenues by $9 million in fiscal 2010.
- Nevada altered its business payroll tax, generating $346 million in new revenue in the fiscal 2010-2011 biennium. For non-financial businesses, the tax rate on the first $250,000 in payroll is lowered to 0.5 percent from the flat rate of 0.63 percent. The tax rate on payroll over $250,000 rises to 1.17 percent.
- The interest and dividends tax in New Hampshire was extended to include profits of limited liability companies and other types of entities. The state’s business profits tax filing threshold was changed; all businesses, regardless of their income level, are now required to file a return. These changes will increase business tax revenues by about $21 million each year.
- New York imposed a new fee on certain business partnerships and restructured the business tax benefits administered through the “Empire Zone” program.
- In Oregon, the legislature approved and the governor has indicated his intention to sign a measure creating a second, 7.9 percent corporate income tax rate on businesses with taxable income above $250,000. This rate will be in effect for 2009 and 2010, and will fall to 7.6 percent for 2011 and 2012. After 2012, the 7.6 percent rate will be applied to all taxable income over $10 million. The minimum corporate income tax was increased depending on the amount of sales in Oregon. For a firm with more than $100 million in Oregon sales, the minimum tax is now $100,000. Previously, the minimum tax was $10. These changes will increase business tax revenues by more than $300 million in the fiscal 2010-2011 biennium. However, if enough valid signatures are gathered the measures will not go into effect unless approved by the voters in January 2010.
- Tennessee increased franchise and excise tax revenues by eliminating an exemption on rental income earned by certain non-corporate businesses. This change increased revenues by more than $25 million per year.
- The corporate income tax in Virginia was expanded to include investment income from Real Estate Investment Trusts (REITs). About $5 million in new revenues will be generated as a result of this change.
- Wisconsin instituted “combined reporting,” which increases revenue by requiring companies with subsidiaries to calculate their profits as one sum instead of allowing various entities to report separately and claim numerous deductions. One result is that in-state and multi-state corporations will be taxed more equivalently. Under combined reporting, corporate income tax revenues will increase by over $75 million in fiscal 2010. The state also generated about $45 million per year in new tax revenues by adopting a “throwback rule” — a provision of state corporate income tax laws that ensures that profits made in a state in which a corporation may be exempt from income tax are taxed instead by its home state.
Tobacco and Alcohol Excise Taxes
At least 15 states have increased excise taxes on tobacco and alcoholic beverages.
- Arkansas raised the cigarette tax by 56 cents, to $1.15 per pack. The tax on other tobacco products was increased to 68 percent from 32 percent of the wholesale price. These changes are expected to generate over $85 million per year in new tax revenue.
- Delaware increased the tax on cigarettes to $1.60 from $1.15 per pack.
- Florida enacted legislation adding a $1 surcharge to the tax on each pack of cigarettes. A surcharge equal to 60 percent of the wholesale price also was imposed on other tobacco products. These surcharges will increase tax revenues by nearly $1 billion in the coming fiscal year.
- Hawaii increased the cigarette tax by 2 cents per pack. The state also increased taxes on other tobacco products by various levels. Depending on the product, taxes on tobacco other than cigarettes will range up to 70 percent of wholesale price; the previous rate was 40 percent of the wholesale price. These changes will increase tax revenues by nearly $50 million in the upcoming fiscal 2010-2011 biennium.
- Kentucky doubled its cigarette tax to 60 cents per pack from 30, which will raise more than $106 million a year.
- Maine changed how it taxes smokeless tobacco products. Previously, the state taxed them at 78 percent of the wholesale price. Beginning in fiscal 2010, taxes on smokeless tobacco will be based on weight, at a rate of $2.02 per ounce. Tobacco tax revenues will increase by about $2 million in the upcoming fiscal year.
- Mississippi increased the cigarette tax to 68 cents per pack from 18 cents, which is expected to raise more than $100 million in fiscal 2010.
- New Hampshire increased the cigarette tax to $1.78 from $1.33 per pack — a change that will increase revenues by $35.2 million in fiscal 2010.
- New Jersey increased the cigarette tax by 12.5 cents to $2.70 per pack and increased the tax on alcoholic beverages, excluding beer, by 25 percent. These changes will generate about $50 million in new tax revenues this year.
- New York raised $14 million in new revenue by increasing the state excise tax on beer and wine to 30 cents per gallon from 18.9. The method for taxing cigars was changed to generate about $10 million in fiscal 2010.
- Oregon added surcharges of 50 cents on distilled liquor and 25 cents on miniature bottles through June 2011, increasing revenues by about $24 million in fiscal 2010.
- Rhode Island increased its cigarette tax by $1 to $3.46 per pack.
- The cigarette tax in Vermont was increased by 25 cents, to $2.24 per pack from $1.99. The tax on other tobacco products rises to 92 percent from 41 percent of the wholesale price. These changes will increase tax revenues by about $6 million in fiscal 2010.
- Wisconsin increased the cigarette tax by 75 cents to $2.52 per pack and changed the method of taxing moist snuff. These changes will increase revenues by about $170 million each year.
- Wyoming changed its method for taxing moist snuff tobacco, basing it on net weight. This is expected to generate about $820,000 in new tax revenues each year.
Motor Vehicle License Fees & Gasoline Taxes
Twelve states have increased various fees and taxes related to motor vehicles and fuels:
- California temporarily increased vehicle license fees to 1.15 percent of value from 0.65 percent, raising about $1.7 billion in new revenues each year in fiscal years 2010 and 2011.
- Colorado raised several fees, fines, and surcharges to support transportation improvements and instituted a $2 per day rental car fee. These changes will generate about $250 million in new tax revenues in fiscal 2010. Additionally, a motor vehicle fee to support local emergency services was increased to $2 from $1.
- Florida increased a variety of vehicle registration and license fees, raising over $1 billion in new revenues each year.
- Idaho added fees for driver’s licenses, vehicle title transfers, copying records, and replacing registration stickers. Additionally, a 2.5 cent per gallon tax exemption for biodiesel and gasohol was removed. These changes will generate about $30 million in new revenues beginning in fiscal 2010.
- Montana removed an exemption valued at 0.0401 cents per gallon on motor fuels blended with ethanol. The measure will raise about $6.4 million in new revenues each year.
- Nevada altered the rate at which vehicles depreciate in value for purposes of the registration tax. The minimum vehicle registration tax was increased to $16 from $6. These changes will increase revenues by about $94 million in fiscal 2010.
- By temporarily increasing a number of fees related to motor vehicle and trailer registrations, New Hampshire will increase revenues by more than $40 million in fiscal years 2010 and 2011. Fees charged to insurance agents for obtaining vehicle records were increased along with fees for vanity license plates. These changes will generate about $5 million per year in new revenues.
- New York added an auto rental excise tax which will generate up to $8 million in fiscal 2010.
- In Oregon, the legislature approved and the governor has indicated his intention to sign a measure increasing the excise tax on gasoline by 6 cents to 30 cents per gallon and raising a range of fees — including on motor vehicle registrations and titles, road assessment, identification cards, and others. These changes will increase revenues by more than $400 million in the fiscal 2010-2011 biennium. However, if enough valid signatures are gathered the measures will not go into effect unless approved by the voters in January 2010.
- Rhode Island increased the tax on gasoline by 2 cents to 33 cents per gallon.
- In South Dakota, about $4.2 million in new annual revenues was generated through a $1 increase in commercial and noncommercial vehicle license fees.
- Utah increased some motor vehicle fees by $20, which will generate about $53 million per year.
Other Taxes and Fees
- Colorado increased hospital provider fees, generating about $390 million each year to expand medical assistance programs.
- Florida increased fees on slot machine licenses, park admission, and off-shore fishing licenses, among other transactions and activities.
- Hawaii increased the motel room tax by one percentage point to 9.25 percent. The state also increased conveyance tax rates on property transfers worth more than $1 million.
- Iowa increased a number of court fees, including those for divorce filings and real estate title transfers. This is expected to generate about $17 million in fiscal year 2010.
- Maine increased license fees for hunting, fishing, and archery. Several residential and business property tax credits were reduced.
- Massachusetts imposed a five percent excise tax on satellite broadcast services. This will increase revenues by nearly $26 million in fiscal year 2010.
- Minnesota reduced a property tax refund for low- and moderate-income renters, saving the state $51 million in the upcoming fiscal biennium.
- Montana changed laws requiring tax information agents to report certain real estate transactions, which will generate about $900,000 in fiscal 2011.
- New Hampshire increased the excise tax on hotels and meals to 9 percent from 8 percent and extended the tax to campsites. A new 10 percent tax on gambling winnings was enacted. These changes will increase revenues by about $40 million per year.
- New Jersey increased the insurance premium tax to 1.35 percent from 1.05 percent, increasing revenues by $15-17 million in fiscal 2010. A new 5 percent tax on lottery winnings over $10,000 was enacted.
- New York eliminated a property tax rebate for homeowners with incomes below $250,000. This will save the state about $1.4 billion per year.
- In Oregon, the legislature approved and the governor has indicated his intention to sign a measure creating a one percent assessment on certain health insurance premiums and on capitation payments to Medicaid managed care organizations, generating over $306 million in new revenues for the fiscal 2010-2011 biennium.
- In Tennessee, the gross receipts tax on health maintenance organizations (HMOs) was increased to 5.5 percent from 2 percent, a change that will increase revenues by more than $136 million each year.
- South Dakota increased its gross receipts tax on gaming proceeds to 9 percent from 8 percent. Additionally, several excise taxes on activities related to tourism — motel stays, event tickets, and campsite fees — were temporarily increased. These increases will generate about $4 million in new revenues each year in fiscal 2010 and 2011.
- Wisconsin is imposing hospital assessment taxes based on gross patient revenues The state also increased the nursing home assessment to $170 from $75 per bed. Annually, this will increase revenues by over $330 million.
Tax Increases under Consideration
In addition to the 30 states that have enacted tax increases, policymakers in another seven states had before them proposals to do so as of early July. As budget deliberations continued, these states had on the table tax increases that were either included in executive budget proposals or supported by legislative leaders: Arizona, Connecticut, Illinois, Michigan, North Carolina, Ohio, and Pennsylvania.
Tax Increases in Past Recessions
For states to raise taxes in this recession is consistent with the experience of the past two recessions.
- In response to the recession of 1990-91, 44 states increased taxes significantly. From 1990 to 1993, 26 states increased personal income taxes or corporate income taxes and 37 increased sales or excise taxes. In aggregate, states enacted more than $25 billion in net tax increases. The new taxes raised total state tax revenues by about 8.9 percent during the period. (See Figure 2.)
- In the wake of the recession of 2001, 30 states raised taxes. In 15 of them, tax increases were very significant, with revenue increases of more than 5 percent. Another 15 states enacted tax increases of between 1 percent and 5 percent of total state revenues. In total, states increased net revenues by about 3.5 percent, or about $18.6 billion, from late 2001 to 2004. Of the 30 states with significant tax increases during this period, 10 raised personal income taxes, 16 raised taxes on businesses and corporations, 16 increased sales tax rates or broadened the base to include more goods and services, and 29 raised excise taxes on tobacco products or alcohol.
The tax increases occurred in a diverse group of states. States raising taxes during each of those periods included those with Democratic governors or legislatures and those led by Republicans. States in all regions of the country raised taxes. By most standards, the recessions of 1990-91 and 2001 were relatively mild. Had the recessions been more severe, the tax increases likely would have been greater.
Is It Good Policy for States to Raise Taxes in a Recession?
During a recession, unemployment rises, families have a harder time paying for necessities, and many either lose or can no longer afford health coverage. By raising taxes, states can help ensure that those families and individuals hurt most by the recession do not face even more difficulties because of cuts in government programs and services they need, including those involving assistance with housing and health care, or access to higher education. Unfortunately, many of the spending cuts that states have enacted or are considering would have the most harmful impact on low- and moderate-income families and others hit hard by the recession. Tax increases can avert such cuts.
Tax increases have another advantage over spending cuts: they are often better for a state’s economy. During recent deliberations in New York over how to close a growing budget gap, Governor Paterson and the legislature received a letter from 120 economists in the state. Citing “economic theory and historical experience,” the letter observed that “raising taxes during a downturn — particularly taxes that affect only higher-income families — is generally better for a state’s economy, and better for its citizens, than sharp budget cuts.”
The letter went on:
“The reasons are simple. Almost every dollar that states and localities spend on aid for the needy, salaries of public employees, and other vital services enters the local economy immediately. So if states cut their spending in these areas, overall demand suffers at a time when demand is already too low and support services are most needed.
“The alternative — raising taxes — also reduces spending, but by less than budget cuts of comparable size. And by targeting these taxes appropriately, their negative effects can be minimized. For example, high-income households typically spend only a fraction of their income and save the rest. As a result, each $1 increase on taxes on high-income households will reduce their spending by much less than $1.”
The letter echoed the conclusions of a paper written during the last recession by Columbia University professor and Nobel Prize winner Joseph Stiglitz and Peter Orszag, now director of the U.S. Office of Management and Budget, asserting that spending cuts can be more harmful for a state’s economy in a recession than tax increases.
The Recent Economic Experience of States That Raised Taxes in Recession
The recession of 2001 hit some states harder than others. As a result, some states raised taxes while others did not. But there is no evidence that tax-raising states were any faster or slower to recover from the recession than those that did not raise taxes. States that raised taxes were just as fast to rebound from the recession as states that did not, even though they were typically climbing out of a deeper hole.
Average Annual Growth Rates
States that Increased Taxes Significantly
Total Personal Income
Source: Bureau of Labor Statistics, Bureau of Economic Analysis, and CBPP calculations of data from the NCSL and state revenue departments.
Note: States were grouped according the amount of gross tax increases between late 2001 and 2004. States that increased taxes significantly are those
As Table 1 shows, states that had enacted significant tax increases (more than 1 percent of revenues) in the 2002-04 period saw growth rates in personal income, employment, and the median wage from 2004 to 2007 that closely matched national averages. Furthermore, a number of states that enacted significant tax increases during the early 2000s subsequently experienced above-average growth in these key economic indicators.
- North Carolina, for example, raised taxes by about 3.5 percent of revenues during the last downturn. From 2004 to 2007, total personal income in the state grew by about 6.7 percent each year compared to the nationwide rate of 6.2 percent during this period. North Carolina experienced faster-than-average growth in employment following the last recession, growing about 2.5 percent each year from 2004 to 2007. Nationwide, employment grew at an annual rate of 1.7 percent during this period.
- Similarly, growth in total personal income and employment from 2004 to 2007 exceeded national averages in South Carolina, Virginia, and Washington — all of which enacted significant tax increases during the recession of the early 2000s.
On the other hand, a number of states that did not raise taxes, or cut them, during the last recession subsequently saw slower-than-average economic growth. Among them are Iowa, Kentucky, Minnesota, Missouri, New Hampshire, and Wisconsin. Those states’ decision to avoid tax increases (and, in some cases, to enact large cuts in services) failed to protect them from below-average growth in both personal income and employment during the subsequent period.
In short, neither economic theory nor experience supports the idea that states should shy away from raising taxes in a recession for fear of harming their economic performance.
Federal Economic Recovery Act Funding Is Reducing But Not Eliminating the Need for Tax Increases
In the current recession, state budget shortfalls are projected to exceed $350 billion over the next two-and-a-half years. Even with assistance from the federal stimulus legislation (the American Recovery and Reinvestment Act), states will continue to face large budget gaps. The $135 billion to $140 billion that ARRA provides states to help balance budgets is expected to cover only about 40 percent of aggregate shortfalls. The remaining shortfalls are still too large to close with budget cuts alone; tax increases should remain on the table in most states. Indeed, most of the tax increases described earlier in this paper were proposed and/or enacted after passage of ARRA.
There is another reason that states may wish to consider raising revenues in tandem with using ARRA funds. Tax increases can be structured to be a recurring revenue source. By contrast, the ARRA funds that states can use to balance their budgets generally are available only until state fiscal year 2011, so federal aid to states likely will return to pre-ARRA levels starting in 2012. States that increase taxes to close a portion of their 2010 and 2011 gaps will find it easier to adjust to the loss of federal revenues in 2012 because they will have the recurring tax revenues to fall back on.
This analysis attempts to capture states that have enacted or are considering measures that will increase net tax revenues relative to current law. Because some states have yet to adopt their budget for fiscal year 2010, these results are subject to change. A previous version of this analysis included Georgia as having enacted tax increases. Since then, Georgia enacted a number of tax cuts, resulting in a net decrease in total tax revenues, and was removed from the current analysis.
These measures were enacted in February with the goal of balancing the state’s FY 2010 budget. The deepening recession, however, has thrown the budget out of balance again, necessitating additional spending cuts and/or revenue increases (probably both).
The reduction in the property tax refund was not passed by the Minnesota legislature, but is scheduled to take effect in FY2010 through a process known as “unallotment,” a constitutional provision allowing Minnesota’s governor to make unilateral cuts when the state faces a budget deficit.
Nicholas Johnson and Daniel Tenny, “The Rising Regressivity of State Taxes,” Center on Budget and Policy Priorities, January 15, 2002, . A “significant” tax increase is one that exceeds 1 percent of a state’s tax revenue.
Peter Orszag and Joseph Stiglitz, “Budget Cuts vs. Tax Increases at the State Level: Is One More Counter-Productive than the Other during a Recession?” Center on Budget and Policy Priorities, revised November 6, 2008, . Of course, it would be preferable if states had to neither make large spending cuts nor raise taxes, but that is not an option for most states.
Nicholas Johnson, Iris J. Lav, and Elizabeth McNichol, “Funding For States in Economic Recovery Package Will Close Less Than Half of State Deficits,” Center on Budget and Policy Priorities, February 20, 2009, www.cbpp.org/2-20-09sfp.htm.
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Deliberating Budgets in Kenya: Tools and Examples
September 2017 | By International Budget Partnership Kenya
In May 2017, IBP Kenya began to investigate what the concept of budget deliberation would mean in practice by organizing budget deliberation demonstrations in Isiolo, Mombasa, and Nakuru counties. In each demonstration, participants were asked to deliberate on allocations to the national budget sectors (health, education, etc.). Participants first learned about the sectors using IBP Kenya’s citizen-friendly Information Package on National Government Sectors, then deliberated, and then decided on an allocation.
This Information Package helps readers think about how to make tradeoffs between sectors by presenting nine factors that should be taken into account when deciding on sector allocations. It can be useful to Kenyan citizens interested in engaging in sector debate at the national level, and to think about the type of information that is needed to have budget sector discussions at the county level.
These videos capture highlights of the deliberation demonstrations, including information on how to facilitate them, how to help people think about budget tradeoffs, a synthesis of all three sessions, and key lessons learned. Watch the videos below, or click here to watch on YouTube.
This video provides a synthesis of budget deliberation demonstrations in Isiolo, Mombasa, and Nakuru counties. Watch the video below, or click here to watch on YouTube.
The following videos capture highlights of budget deliberation demonstrations in Isiolo, Mombasa, and Nakuru counties. Click on an image to watch a video, or view the playlist on YouTube.
The following videos capture information on how to facilitate budget deliberation demonstrations. Click on an image to watch a video, or view the playlist on YouTube.
- How Kenyans Learn About Budgets: Reflections on IBP Kenya’s Public Deliberation Demonstrations (October 2017)
- Public Deliberation on Budgets: How Much for Each Sector Information Package (IBP Kenya, 2017)
- Deliberating Budgets: An Example from Nairobi County, Kenya (February 2017)
- Deliberating Budgets: How Public Deliberation Can Move Us Beyond the Public Participation Rhetoric (February 2016)
- In Search of Adequate Public Reasons in Kenya’s Budget Documents (January 2017)
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Even the Digital or virtual money is popularly called a crypto currency that’s procured by cryptocurrency coins. This makes it a bit hard to double-spend or fake, yet, cryptocurrencies are defined as principal networks that are based on blockchain methods. The decentralization lets it exist outside the central authorities too. The term cryptocurrency describes that encryption techniques are used for procuring the network. The block-chain organizational strategies to earn certain the integrity of this transaction data is procured.
However, Many experts who rely on blockchainare related to tech that distributes many industries, which also includes finance and lawenforcement. Even the cryptocurrency confronts criticism for multiple explanations, like making use of legal actions, measuring rate volatility, and infrastructure vulnerabilities underlying them. However, it has also been praised because of its odds, transparency, divisibility, and inflation resistance. So let’s understand more on the subject of cryptocurrency including its own types.
Know what is a cryptocurrency
The Crypto currency also allows the most secure online payments which can be denominated concerning a digital system like a token which really helps to represent by way of the ledger admissions into the interior system. Even the crypto is understood to be many security algorithms as well as a cryptographic process that is completely a safeguard, by way of instance, a public-private critical set also contains hashing capabilities.
Types of cryptocurrencies
Even the Block-chain which is based over a crypto currency is termed bitcoin, which still is the most widely used and valuable one. Now in today’s period, you’ll find hundreds and hundreds of crypto currencies with multiple functions and their specifications as well. Yet handful are also known to function as clones or forks, however, others would be the new currencies built out of scratch.
Froge.org is really a Block Chain that enthusiastic people plus it Was started by individuals or a group. However additionally, it holds strengths and a few disadvantages, also it helps to make move safe and easy between the 2 parties. Additionally, Etherum, Bit-coin, and also Cardano are some of the most popular cryptocurrencies.
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“Life is, largely, a matter of expectation..” — Horace
How many times have you changed your opinion in the past couple of weeks? How many articles, YouTube videos, Facebook posts or Instagram pictures have you seen that presented plausible counter arguments to your opinion? In the ‘.com’ era, opinions change as fast as weather forecasts, and what one day is your absolute truth, could become your next theme for protest on a Facebook post. This constant paradigm shift offered to us by the Internet—small note, I believe it is time to consider the Internet an institution, and as such, capital letters are required—is what makes it so special, unique and progressive.
However, in this humble student’s opinion, at least economically, the Internet could be causing us some problems. You see, since the dawn of times, economists have been trying to equate expectations in our models. Rational expectations, adaptive expectations, expected inflation and so on. These are just a few of the many types of expectations described by famous economists, such as Keynes and Fisher.
All in all, they were able to describe and create models which comprised these expectations in economic theory. And with those models they were able to predict economic outcomes. But take note dear reader, predict in economics doesn’t mean explain. Actually, the two terms couldn’t be more apart from each other. As another great economist of our time, Milton Friedman, said once: ‘Economic models should be judged by their predictability, not by their explanatory power’.
Lack of explanation is the turning wheel that made us hit two trees in less than 20 years: the .com crisis and the 2008 crisis. The lack of understanding and the oversimplification made us think that the Internet wouldn’t change the economic models we had, and if it would, it would be for the best. It would be to finally create perfect market conditions, to lower transaction and transportation costs, to produce more efficiently and effectively, to, finally, give explanation without assumptions created to failproof economic theories.
While we were in this .com dream, we forgot to consider that the internet could generate negative outcomes, and amongst social and cultural problems, there is the economic expectations problem. Let’s consider the two economists previously cited, Fisher and Keynes. Both of them theorized about expectations, and I believe their work is fairly useful on this subject. Fisher’s theory is quite simple:
i = r + π
This equation says that the nominal interest rate is composed by the real interest rate (r) and the expected inflation (π). The nominal interest rate is the one seen all the time in newspapers and so on, and it’s usually defined by the Central Bank of any country.
The real interest rate is an exogenous variable, resulted by the subtraction of the nominal interest rate and the expected inflation. Last, but not least, the expected inflation will depend both on the monetary policy of a country, which is also controlled by the CB, and the other economic agents.
Let’s start by defining this last term. Economic agents are all the individuals that compose the economy of a country: households, firms and banks are generally the ones used as example.
Before telling you that the expectations of these economic agents are being affected by the internet and changing the economic models we have used so far, I have to protect myself by showing you how powerful these same economic agents are. Ironically, or not, the perfect example of how expectations can affect the economy, happened right here in the Netherlands. 1630. TulipMania. Tulips become a craze in the Netherlands—more than ever.
One new type of tulip starts being produced. Expectations of getting the Semper Augustus, the special tulip, increase exponentially, and speculation over the flower starts to grow up until the point where: “It was enough to feed, clothe and house a whole Dutch family for half a lifetime, or sufficient to purchase one of the grandest homes on the most fashionable canal in Amsterdam for cash, complete with a coach house and an 80-ft (25-m) garden – and this at a time when homes in that city were as expensive as property anywhere in the world.” (BBC One, The Tulipmania)
Of course, speculation was the main reason of the crisis. But what you don’t know, is that the Semper Augustus was a type of tulip generated because of a virus. Which means that while everyone expected to have more or the same quantity of flowers in the marketplace, there wouldn’t be any of those tulips anymore. Their expectations were completely mismatched with reality, and this pretence caused the first speculation crisis ever registered in history.
Keynes also talked about expectations, and, as the great economist that he is, he admitted that the optimism/pessimism of consumers could directly affect the economy. He just couldn’t quantify how. Moreover, in his theory, he added variables which represented this state of mind of the economic agents.
With the start point of the macroeconomic identity, Keynes would define the term ‘propensity to …’, for all the variables on the equation. Propensity to consume, invest, save, export and import would all be affected by this state of mind. Now, if the state of mind of economic agents is unstable, and this takes part on building the components of a country’s national identity equation, what can we expect from our economy?
If we add Keynes and Fisher’s theory, the Internet and a little bit of chaos theory, this is the outcome: our economic models weren’t ready for the volatility of expectations generated by the internet.
We can see the lack of explanation and the economic oversimplification as the utensils we use; the economic models as the dish we eat; and the realization that the internet actually affects our economic models as the realization you don’t have to use utensils to eat a dish of chicken wings.
It’s true, this is all theoretical. I’m indeed putting my neck out there, questioning great economists and all the other scholars which interpreted their works. But hey, because of this article, I might have just changed your mind or even just put small question mark on your head, and that would reinforce my theory even more, wouldn’t it?
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Since long, hypes have created on several healthcare schemes in India, by the successive Governments of different political dispensation. These attracted mostly positive vibes at the time of announcements. Nevertheless, as we move on, a vast majority of Indians continues to live in the midst of a health care crisis, as it were.
The National Health Policy 2017 also acknowledges this crisis as it writes: ‘growing incidences of catastrophic expenditure due to health care costs, which are presently estimated to be one of the major contributors to poverty.’
More recently, the May 31, 2018 article, published in the British Medical Journal (BMJ) continued to echo the similar concern. It reiterated, since both government funding and social health insurance contributions are insufficient to meet health care needs of households, over three-fourth of all healthcare payments are paid Out of Pocket (OOP) at the point of service delivery while medicine purchase (approximately 63 percent) account for the single largest component of these payments.
A major cause of catastrophe and impoverishment at the household level is undoubtedly the OOP expenditure on health care, including medicines. According to the above BMJ paper, 29 million households, implying about 38 million persons were pushed into poverty in the year 2011–2012, only because of this reason. Although, this study was based on a cross- sectional analysis of ‘National Sample Survey data, 1994–2014’, the public health expenditure in India has not shown any significant increase since then, either. On the contrary, the public spending in some health-related areas has come down in the recent years.
Is a health care crisis primarily a ‘financial’ crisis?
The issue of budget allocation and adequate public expenditure on healthcare in India assumes significance to understand this point better. It is generally believed that ‘a health care crisis is primarily a ‘financial’ crisis in which countries cannot successfully meet people’s access to medicine due to the rising cost of health care services and, more importantly, pharmaceuticals.’ A sincere political will is absolutely necessary to resolve these issues, meaningfully – the paper points out.
But, there doesn’t seem to be any financial crisis in the country now, as the Government claims. India is the fastest growing nation in the world. Why is then the health care crisis continuing for the majority of Indian, if not worsening? Why isn’t public expenditure on health care increasing despite such spectacular financial achievements? Could it be due to lack of requisite political intent?
On paper all health care related schemes look good:
Yes, I reckon, on paper all health care related schemes look reasonably good, assuming these will be implemented well. These may include, National Health Missions (NHM) covering both rural and urban poor or even the likes of Rashtriya Swasthya Bima Yojana (RSBY). So is also the most recent one - Ayushman Bharat – National Health Protection Mission (AB-NHPM) announced by the Government during 2018-19 Union budget presentation and approved by the cabinet on May 21, 2018. However, its implementation on the ground seem to be wobbly, too. Thus, many wonders whether this new scheme on the block will help the nation tiding over the existing health care crisis.
I broadly discussed this subject on February 5, 2018, in this Blog. However, in this article, I shall try to ferret out the reasons of such apprehension on the AB-NHPM, against some critical parameters, just as illustrations:
Who contributes and how much to health expenditures:
From the National Health Account Estimate (NHAE) of October 2017, one gets a broad idea of who contributes and roughly how much of the health expenditures in India, as follows:
|Union Govt.||State Govts.||Local bodies||Enterprises, including insurance||NGOs||External donors||OOPE|
Where does the treatment take place?
|Place||Urban (%)||Rural (%)|
It is interesting to note, although private health care costs over 4 times more than the public healthcare, more patients are compelled to go for private health care. (Source: National Sample Survey 2014, Ministry of Statistics and Program Implementation.)
Reasons for not using public health care facilities:
Around55.1percent of households are not using public health facilities.The reasons for not using public health care facilities by the members of the household when they fall sick, as reflected in the National Family Health Survey (NHFS) data, are interesting. Following are the main reasons:
|Poor quality of care||No nearby facility||Long waiting time||Inconvenient facility timing||Health Personnel absent|
Addressing these reasons would help significant reduction in OOPE:
The February 2018 report of the ‘Centre for Technology and Policy Department of Humanities and Social Sciences, IIT Madras,’ vindicates this important point. It provides unambiguous evidence that strengthening the basic infrastructure of Health Sub-Centers (HSC), along with trained personnel and adequate medicines, ensure diversion of patients from expensive private facilities – increasing patients’ access to affordable health care. Consequently, OOP expenditure by families in health care and particularly medicines, sharply comes down.The study reported that such reduction in outpatient care varied between 77 percent and 92 percent in a pilot project on ensuring universal health coverage.
Break-up of healthcare expenditure – primary care costing the most:
One gets a broad understanding on the general break-up of health care expenditure in India from the (NHAE) of October 2017, as follows:
|Primary care||Secondary care||Tertiary care||Patient transportation||Governance & supervision|
It is worth noting that transportation costs are significant for many patients, just for accessing the existing public or private health care facilities, besides getting important diagnostic tests done, or even to buy many medicines. This expenditure would continue to exist, even if NHPS is put in place. On the other hand, strengthening the low-cost Government HSCs, would help greater patient access to health care, bringing down the OOPE, remarkably.
Currently, a sizeable number of reasonably decent medical treatment points, are located quite far from many villages. Thus, availing any decent health care facility by a large number of rural folks, no longer remains a matter of choice, up until the disease turns into a life-threatening one, due to protracted negligence. One such example is a large number of child deaths occurred at the state-run BRD Medical College hospital in the Gorakhpur city of Uttar Pradesh, in 2017. Most of them were brought in a critical condition from far-off villages.
Highest OOPE expenditure incurred for outpatient treatment:
According to the December 2016 publication titled ‘Household Health Expenditure in India’ of the Union Ministry of Health, one will get an idea of top 3 key consumption areas, out of the total OOPE on health care services, which are as follows:
|Outpatient care||Inpatient care||Preventive care|
However, of the total OOPE, 53.46 percent was spent on medicines and 9.95 percent was spent on diagnostics. More importantly, 82.29 percent of the total OOP medicines expenditure and 67 percent of total OOP diagnostic expenditure were in outpatient treatment, the report highlights.
New NHPM excludes two major components of OOPE:
Based on the above facts, it is interesting to note, while the maximum expenditure for health is incurred towards Primary Care and Outpatient treatment, the brand new NHPM does not cover both. In that case, how will it address the health care crisis in India and significantly reduce OOPE on health?
Does the total cost for AB-NHPM reflect in any budget allocation?
In this context, let me touch upon the other aspect of AB-NHPM, which is giving shape to 150,000 ‘Health and Wellness Centre (HWC)’ in India.On April 14, 2018, the first HWC – under the AB scheme was launched by the Prime Minister of India at Bijapur in Chhattisgarh.But, the fund allocated in the Union Budget 2018-19 for HWCs is just Rs. 120 million, which realistically is expected to support just around 10,000 HWCs. Whereas, 150,000 HWC would cost around Rs. 3 billion. The same issue of abysmal budgetary allocation, both by most of the state governments and the center, has been raised for NHPM, as well.
As we have seen in the chart of ‘who contributes and how much to current health expenditures’, that OOPE stands out, it should in no way be allowed to remain around that number in India, because of continuing low public health expenditure on health care.
Coming back to what I started from – the issue of ongoing health care crisis in India with incredibly high OOPE expenditure of the households on health. Many health care schemes have come, gone or about to be jettisoned – getting replaced by the tweaked versions of the old ones – of course in a new Avatar, supported by much expected media hypes, virtually terming it as a panacea. But, the key problem of sincere implementation of those schemes still lingers.
Sharp Government focus, backed by adequate budget allocation, on primary health care and bringing down outpatient treatment cost, which contribute to a high proportion of OOPE, remain as elusive as ever. Thus, I reckon, AB-NHPM is unlikely to mitigate the health care crisis in India, at least,in the short to medium term.
By: Tapan J. Ray
Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.
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Sanctions are an important tool of governance in the global financial industry. Most countries have used sanctions or had sanctions placed against either them or their citizens. States increasingly use sanctions to fight economically, rather than physically, and as such, sanctions have become a common tool in foreign relations, peacekeeping and conflict resolution. Given their prevalence, everybody in the financial industry should have a good understanding of what sanctions are, how they work, and why they are used.
The United Nations issues the UN Security Council Consolidated Sanctions List:
- The UN Consolidated Sanctions List is applicable to all member-states of the United Nations and is organized into a list for individuals and a list for groups and entities.
- The UN Security Council composes the sanctions – each of which is backed by a UN Security Council Resolution.
- The UN has no direct legislative power within member-states, so it falls to domestic legislative authorities to enforce UN sanctions.
As a central European governmental body, the EU issues implements a range of financial sanctions:
- The EU Council implements UN Security Council sanctions, along with its own autonomous sanctions, in the EU Consolidated Sanctions List.
- All individuals and entities within the European Union must observe EU sanctions and comply with the sanctions list.
- EU sanctions are also applicable to all EU citizens operating anywhere in the world.
- The EU enforces some sanctions measure directly through EU law, but some measures are delegated to the domestic legislators of member-states.
The Office of Financial Assets Control maintains a number of sanctions list on behalf of the United States Treasury:
- OFAC implements and enforces the international sanctions issued by the United States government.
- OFAC sanctions lists include the Consolidated Sanctions List and the Specially Designated Nationals List.
- All individuals, banks, and financial services institutions within the United States jurisdiction must comply with OFAC sanctions.
- OFAC issues ‘comprehensive’ sanctions which are targeted against countries, and ‘non-comprehensive’ (or ‘selective’) sanctions which are targeted at specific individuals or entities.
HM Treasury maintains the sanctions list of the United Kingdom
- The HM Treasury Sanctions List incorporates the consolidated UN and EU sanctions lists, along with the UK’s own autonomous sanctions.
- All banks and financial institutions are forbidden from doing business with the countries and entities on the HM Treasury Sanctions List.
- British citizens and citizens of overseas territories are also subject to HM Treasury sanctions.
- The Office of Financial Sanctions Implementation (OFSI) is responsible for implementing and enforcing HM Treasury’s financial sanctions.
The Department of Foreign Affairs and Trade (DFAT) implements and enforces sanctions for the Australian government:
- The DFAT sanctions list incorporates the UN Sanctions List along with autonomous sanctions issued by Australia.
- All banks and financial institutions in Australia must comply with the DFAT sanctions list.
- DFAT sanctions also apply to all Australian citizens at home and abroad.
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I’m continuing to do a series of posts that provide brief answers to questions I’ve received about early childhood programs.
Today’s question: “How will investing in kids pay off in the short-run? The major benefits of investing in early childhood programs would appear to occur 20 or 30 years in the future, when former participants in these programs have joined the labor force and entered their prime earnings years.”
Short-run benefits of early childhood programs include cost savings due to a reduced need for remedial programs in K-12, such as special education.
Another important short-run benefit is that high-quality early childhood programs are increasingly important in attracting parents with valuable skills to a state.
We already know that parents care about school test scores in choosing a location. We know that from evidence from the housing market on what increases housing prices. Of two otherwise identical houses, the one zoned to an elementary school with the higher test scores will sell for more.
Even if parents don’t know about the availability and quality of early childhood programs, higher quality early childhood programs will attract parents and drive up property values by raising elementary school test scores.
If one takes the known effects of preschool on school test scores, and the known effects of school test scores on property values, each dollar of annual spending on preschool will raise property values by $13. That increase in property values represents parents voting with their feet.
A state that can attract parents will experience both increased property values and a better quality labor supply in the short-run.
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Children going through the Kenyan education system are losing an estimated three years of learning, the World Bank has said.
“What this means is that a Kenyan child can expect to go to school for 11 years out of which they will only do learning worth eight years,” said the bank’s senior education specialist Huma Waheed at their offices in Nairobi.
“When years of schooling are adjusted for quality of learning, this is only equivalent to 7.8 years, a learning gap of 2.9 years. This means Kenyan school-going children are having a learning loss of close to three years. Going to school doesn’t mean that children are learning and this is mainly because of the quality of education,” she added.
Despite completion of secondary education, more than 40 per cent of 19- and 20-year-olds score below the basic literacy level.
Due to this, she added, children who have gone through the education system in Kenya can only reach 52 per cent of their potential.
But even with these seemingly dreadful news, Kenya was recognised as one of the few developing countries showing accelerated progress for its accomplishment through technology-enabled teacher coaching, teacher guides, and the delivery of one textbook per child (in both English and Kiswahili).
The bank did surveys in seven Sub-Sahara countries and found that on average, three in 10 fourth-grade teachers had not mastered the language curriculum they were teaching. That notwithstanding, 94 per cent of Kenyan teachers had done so.
“We’ve found there’s a global crisis in learning, especially in developing countries. We’re not doing enough to invest in human capital development. We need to differentiate between schooling and learning to realise positive education outcomes,” Ms Waheed said.
“We need to invest in learning and not schooling so that when children come to school and put in all those years, then they are getting all those years’ worth of learning so that they have the skills to be able to compete in the global environment.”
She further noted that investment needs to be directed at all students and not just to delivery of the curriculum and syllabus. “This means assessing learning capacity throughout the year,” she said, adding, much effort needs to go into developing learners’ skills to be able to attain their productivity level and contribute to the economy.
This, Ms Waheed said, spelt the need to invest more in our people.
The education specialist spoke during the International Day for Poverty Eradication on October 17 under the theme: Recognition and Eradication of Learning Poverty by 2030.
To spotlight this crisis, the World Bank announced a new learning target, which aims to cut by at least half the global rate of learning poverty by 2030. The bank defines learning poverty as the percentage of 10-year-olds (the age around which most children graduate from primary school) who cannot read and understand a simple story.
The new target aligns with the Human Capital Index, a new method the bank launched earlier in the year to capture the amount of human capital a child born today could expect to attain by the age of 18.
It is aimed at building the political commitment for accelerating investment in people to bolster human capital development efforts.
The HCI will track countries’ progress in health, education, and survival, to quantify the contribution of health and education to the productivity of the next generation of workers. Countries can use it to assess how much income they are foregoing because of human capital gaps, and how much faster they can turn these losses into gains if they act to plug the gaps now. It will be updated periodically to monitor progress.
The HCI (2018) ranked Kenya on the 94th position with a 0.52 score, tying in with Algeria — emerging among the top African countries in the ranking and second only to Mauritius on the continent.
Given the current status of what countries invest in people how much productivity can they reach when they become adults?” she posed, and noted, “Globally we can only reach 40 per cent of our full potential given the state of the education and health system.”
The bank sees this is as a problem, given in the future of work, functional literacy is a survival skill.
The economic and social cost of adult illiteracy to developing countries is estimated at more than US$5 billion a year
Further, the bank said the world needed to recognise elimination of learning poverty as being a basic building block in attainment of the ambitious Sustainable Development Goals (SDGs) in education and others.
Global Director, Education Global Practice, at the World Bank, Jaime Saavedra, explained that the assessment developed jointly with UNESCO Institute of Statistics involved considered data from cross-national and national assessments of reading administered on children by the end of primary school, and their ability to read fluently, at certain level of complexity and speed, and understand what they are reading.
“We said let’s set a relatively low bar and argue that all children should be able to read and understand a simple text by age 10 …. we have assessed how many children cannot pass this relatively low bar in each country,” he said from Washington during the celebrations video-linked to African countries live. “These provide what are among the first estimates and the most comprehensive, for low- and middle-income countries of the historical rate of progress in improving reading proficiency globally
Reading is a foundational skill. It is a precondition for active participation in society — a gateway to all other learning outcomes.
The results show that 53 per cent of all children in low- and middle-income countries cannot read age-appropriate material by age 10, and that at current rates of improvement, this “learning poverty” rate will have fallen only to 43 per cent by 2030.
The bank warns that the high rate of “learning poverty” and slow progress in low- and middle-income countries is an early warning that all the ambitious SDG targets in education (and likely of social progress) are at risk.
The statement by the WB says countries keen on infrastructural development often underinvest in human capital, thereby missing an opportunity to create a virtuous cycle between physical and human capital and growth and poverty reduction. In response to the risks to stability and prosperity posed by this underinvestment, the World Bank Group has launched the Human Capital Project (HCP).
The Bank warns that a pool of unemployed adults is a political risk as well as an economic concern. At times, it leads to a wave of emigration, social unrest, or political upheaval.
Insufficient economic opportunities for an increasingly educated population were a major catalyst of the 2010–11 Arab Spring.
But the bank also emphasised that the first a thousand days when the human brain and critical child development are happening a critical window to these results.
The most rapid development occurs in the first 1,000 days of life, for learning to see, talk, walk, and think.
While the human brain continues to develop and change throughout life, the most rapid period of brain growth and its period of highest plasticity is in the last trimester of pregnancy and the first two years of life, even in the uterus and responsive caregiving, adequate nutrition and helping the child to transit into the education system.
The report acknowledged nearly a quarter of children worldwide are stunted, while half of the world’s population is not covered by essential health services leaving many vulnerable to poor cognitive development and hampering their ability to learn.
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What to Avoid When Writing Preschool Policy
Nobel laureate James Heckman spoke to the St. Louis Federal Reserve on Monday about human capital investment. A theme of Heckman’s research is that it’s wisest to invest in children when they’re young. Programs that serve preschool-aged children have a high rate of return, in economists’ parlance, while programs that try to make up for deficiencies later in a child’s life are less successful.
I agree that starting early is the best strategy for improving people’s chances in life, with the caveat that not all policies targeted at this age group do equally well. Here are three things to steer clear of in the realm of child policy:
- Preschools run by the government. Replicating the public school system for preschoolers will bring about the same inefficiencies it currently suffers from, only with younger students.
- Costly interventions in the lives of middle-class kids who don’t need help. Programs that involve one-on-one interaction, like Parents as Teachers, should be means-tested. Sending professionals out into homes on the taxpayers’ dime may be worth it in a few extreme situations, if there’s no other way to provide services to a child (for example, if the parents have no way to transport their children to a central location). Intensive help for kids who are going to do fine anyway results in a low rate of return. It also skews the results of these initiatives, making mediocre programs appear successful because so many graduates, who were never at risk in the first place, go on to thrive in school.
- Standardized tests for three-year-olds. A No-Child-Left-Behind-style assessment of alphabet mastery will yield meaningless data on preschool effectiveness. Heckman is right that early childhood education should stress emotional development rather than academic knowledge. It’s tempting for politicians to impose tests, but a better measure of preschool quality is whether parents choose to enroll their children. As a corollary, no one should be forced into preschool, and parents should have more than one option.
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A recent study conducted by Oracle, financial services company Savanta Inc. and personal finance expert and author Farnoosh Torabi found that 83% of Indian fintech users and business leaders trust AI more than humans to manage their finances. The study was conducted during the global pandemic and shows how much COVID-19 has exacerbated financial insecurity across the world.
Financial Insecurity In Times of Uncertainty
2020 has had a drastic effect on our relationship with money, the study states. Financial anxiety and sadness among business leaders and consumers more than doubled last year, which may provide a clue as to why people are turning towards robots for financial assistance. In fact, 41% of global consumers said they were losing sleep thinking about their personal finances. At the same time, trust in new technology being used in financial services – like AI, digital assistants, digital lending, blockchain, and analytics – is rapidly growing.
The study surveyed more than 9,000 consumers and business leaders across 14 countries including India. It demonstrated that during this time of uncertainty, people are losing faith in so-called financial “experts”. After all, the experts are only human and are, therefore, fallible. Who and what we can trust with our hard-earned money is slowly changing.
Unbiased Financial Management Across All Asset Classes
On a good day, most people feel overwhelmed when they think about managing their finances. It can involve planning your retirement, paying off debt, making an investment portfolio, and knowing how much to save and how much to spend. For business leaders, financial management can involve planning, budgeting, and analytical reporting. Most humans tend to be either insecure about their financial knowledge or overconfident. Both impulses lead to their own set of problems.
On the other hand, AI provides us unbiased data with efficiency and efficacy for our personal and professional lives. It can speed up processes and reduce costs. According to the study, most business leaders believe that AI can help them manage their finances by detecting fraud, creating invoices, and conducting a cost-benefit analysis. Most consumers believe that AI can help them manage their finances by detecting fraud, helping them to reduce spending, and making stock market investments on their behalf.
The following are some of the ways in which AI is being used to manage finance:
- Managing Risk – Accurate and timely forecasts and predictions are crucial for many businesses that deal with the financial markets. Machine learning, a subset of AI, is helping businesses create nimble forecasting models that help financial experts utilize existing data to pinpoint trends, identify risks and ensure better future planning.
- Personalized Banking – Traditional banking is generally seen as inconvenient and sluggish to customers, especially younger people. People want tools that can help them manage their budgets and make spending adjustments in real-time. Digital banking assistants such as chatbots use computer-generated banking advice and natural language processing to provide instant self-help customer service.
- Investment Portfolio – AI can also help customers decide their investment strategy by asking them a series of questions online and then creating an optimal portfolio personalized to their needs. Depending on your risk appetite, these programs can suggest which stocks or mutual funds you should put your money in and how you should diversify your portfolio.
- Filing Taxes – Most Chartered Accountants are already using AI extensively to help them to calculate taxes and returns. Modern financial software comes equipped with programs that can perform tax calculations in half the time and at a consistent efficiency unmatched by humans. This results in a speedy and accurate filing process.
- Credit Decisions – AI solutions are helping banks make smarter underwriting decisions by using a variety of factors to more accurately assess traditionally underserved borrowers, like young people, in the credit decision-making process.
- Fraud Detection – AI plays a key role in helping banks and financial institutions ramp up cybersecurity and fraud detection efforts in online transactions. This helps both the businesses and the consumers feel safe.
- Insurance Claims – Data science is being used to file insurance claims, like auto insurance, by simply uploading photographs from your smartphone to an app. The app will then assess the damage, crosscheck your historical records and offer you a quote without you having to dial a single number.
The Future Is Cashless
Another way the pandemic affected our finances is by moving us further towards going cashless. 88% of Indian consumers surveyed said that the pandemic has changed the way they buy goods and services. Most consumers were not enthusiastic about using cash at all and more than half said that cash-only is a deal-breaker for them for doing business. Businesses have been quick to respond to these changes. 93% of Indian business leaders surveyed have invested in digital payment capabilities and 81% have created new forms of customer engagement or changed their business models completely.
A whopping 94% of Indian business leaders think that organizations that do not rethink their financial processes in the wake of the pandemic will face the risk of falling behind competitors, having more stressed workers, increased inaccurate reporting, and reduced employee productivity.
Disruption In The Financial Services Industry
As for the finance industry, 85% of people surveyed in the study believe that AI will replace financial professionals and almost half (46%) believe that it will happen in the next five years. This is certainly surprising, but there are several reasons for these predictions. One is that, as stated, during the pandemic, our dependency on physical cash has reduced greatly. Adoption of digital business platforms and payments technologies grew by a large amount during 2020. Just like it had during demonetization in India in 2016. The other reason is that each financial advisor has a varying degree of expertise and competence. Which means that their advice is not consistent. They are emotional and think intuitively, make mistakes, have bad days, or take time off from work. On the other hand, AI is consistently rational, always available, unbiased, unemotional, and never has a bad day.
As finance becomes increasingly automated and managed by AI, the role of finance professionals in the industry will not disappear. Rather it will morph into something new. The new role of financial managers will involve communicating and forming relationships with customers, negotiating discounts, approving transactions, understanding an individual’s unique goals, and helping them with major financial purchases and life events like buying a house or retiring. Finance professionals who embrace this coming tide early on will benefit greatly. AI should be seen not as something that is making their profession redundant, rather as something they can work with to increase the productivity of both – AI and humans. Using AI to do professional finance work will increase speed and accuracy and lead to better decision-making since it can provide timely data-driven insights and recommendations to improve financial outcomes.
So while humans will still be involved in helping people manage their finances, AI is expected to greatly reduce their presence in various aspects of financial management. Another technological revolution like the IT revolution is coming and humans will have to make their own niche in the industry if they want to survive.
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Understanding your consumer is key to turning a lead into a conversion. Therefore, it’s important that you are in the conversation. To be in the conversation, you have to know what they’re talking about. Consumers focus on many different social and environmental subjects. The internet offers information on everything you could think of. One of those concerns is the concept of sustainability. Consumers are more aware than ever about industry practices. That means, if your business doesn’t fit their standards, they will take their money elsewhere. Here at Eighteen Knowledge Group, we stay on top of consumer trends, so you know how to tackle them. But what is ‘sustainability’ and how does it apply to you?
- What is Sustainability?
- How Does it Impact Ecommerce?
- Best Practices
- Empower the Customer
What is Sustainability?
Sustainability is defined as “conserving an ecological balance by avoiding depletion of natural resources”. Scientists warn that earth as we know it is in danger. The topic of climate change has been rampant everywhere. If your business doesn’t take a stance, consumers may believe you don’t share their concerns. Many are willing to purchase expensive products as long as they are eco-friendly. At one time, sustainable business practices were considered a waste of money and effort. Most thought it was a temporary fad. However, consumers are still well aware of the issues. In fact, it spans across generations and encompasses most demographics. Millennials are most concerned about the sustainability effort, but the older generations have caught on.
It is the rise of the Conscious Consumer: those who use their money to make a change in the world. They use their dollar to make a “vote”. By purchasing products and brands which align with their viewpoint. It is a broad concept, much like the concept of sustainability itself. Conscious consumers are concerned with social issues. They’re concerned with the environment. They want to reduce pollution, eliminate animal cruelty and do better for the world at large. Sustainability isn’t a new concept. It has been around for a while now. As time goes on, this demographic is not just a small part of the consumer population, but the majority. They want to finance businesses that take steps to build sustainable practices.
How Does it Impact Ecommerce?
Solving the logistics of eCommerce sustainability is not a simple task. Consumers have Shoppers want more convenience. They want fast shipping, simple returns, and packaging which protects their items. Traditional supply chains have devised efficient supply chains which have minimized CO2 emissions. The same cannot be said of eCommerce initiatives. Faster shipping requires prioritizing convenience rather than efficiency. It is difficult to manage same-day shipping within the same neighborhood or area. Packages are not as consolidated. There are more vehicles required to make deliveries. Trucks are not the only vehicle used for deliveries. Those two-day and same-day shipping options often take advantage of independent drivers. These drivers own smaller vehicles that hold fewer packages. This increases pollution.
Furthermore, the packaging of these purchases is also an issue that needs to be addressed. Consumers take advantage of sales on single purchases. This is something that Amazon has taken advantage. These single items usually come in inconvenient, inefficient packaging. They come in large cardboard boxes with packaging airbags and packing peanuts. 40% of the box is filled with air. The inefficiencies are not just costly to the environment, they’re costly to the business. Taking a look at every part of the supply chain. Increase your sustainability practices to help make your logistics more efficient.
According to experts, eCommerce should actually be more sustainable for the planet. That is only if customers opt for slower deliveries instead of in-store visits. Businesses can save money by choosing the slower modes of delivery as well. Less independent contractors and more consolidated shipping. So, what can you do to make your eCommerce business more sustainable?
The two main concerns are transportation and packaging. It’s not a question of either or. To lower your business’s impact on the environment, both need to improve.
Limit the use of plastic. It’s documented that plastic is threatening our environment. Single-use plastics are the worst in all forms. Plastic airbags and packaging peanuts make up most of our landfills. Styrofoam has been a major issue. Companies have turned to biodegradable packing peanuts with some companies using edible products. Make sure your business is investing in biodegradable packing peanuts.
Of course, that doesn’t take into consideration bubble wrap or plastic airbags. Nor does it do anything about the massive cardboard boxes used to ship small items. The best course of action is to optimize the way you ship your packages. While it’s true that products get jostled around in-transit, that doesn’t mean making the box twice its size. Using more materials than required can add up. Minimizing your packaging and focusing on eco-friendly materials can build brand loyalty. New and innovative companies are also changing packaging. Major brands have partnered up with a very new initiative called Loop. Loop is attempting to eliminate plastic waste. Consumers will shop on the platform for partnered brands and Loop will send products in reusable containers to their doors.
Recycling is important, but packaging only accounts for 5% of the carbon footprint. Choosing partners with a focus on eco-friendly practices can reduce your emissions. FedEx and UPS set their focus on improving sustainability with green shipping practices. Do what you can to research partner protocols. The supply chain can be sustainable, as shown by the biggest retailer. Walmart already has the best supply chain operations in the retail sector. But did you also know they are the leader in sustainability? It’s important to note, especially if you want to sell your products on Walmart’s shelves. One of the metrics on the supplier scorecard focuses on environmental sustainability. Walmart focuses on its suppliers to make changes to their practices. They identify supply chain inefficiencies and seek out “low-cost innovations”.
Amazon is trying to do the same. Their goal is to reduce waste and carbon emissions by using only renewable energy. By 2030 they want “50% of all Amazon shipments with net-zero carbon emissions”. They, too, are encouraging suppliers to change the way their supply chain operates. Improving sustainability practices is something your business needs to do.
Inform your Customers
As said, customers are willing to pay an increase on goods if it is more environmentally friendly. Businesses can make consumers aware of their shopping practices. Shoppers are less likely to choose faster delivery options if they know it will hurt the planet. Giving them the incentive to choose slower delivery speeds can help. It will also increase loyalty to your brand. If you use recyclable material and biodegradable packaging, say so. Consumers like transparency. They want to know they are supporting a company that aligns with their beliefs. Bringing awareness and transparency to the supply chain promotes trust.
Your customers want to know where your business stands. Use social media, blogs, and other outlets to inform consumers. If you can, partner with a charity organization. Offset any pollution you can’t eliminate. Plenty of brands are doing it. Your customers will appreciate that their purchase helped a good cause. Sustainability isn’t their only concern.
EKG Understands Consumer Trends
So, is your business working toward sustainability? Eighteen Knowledge Group stays on top of consumer trends. We take a look at the most popular trends and analyze the way they impact businesses. It’s important to understand your target audience. If you don’t, you may lose customers to a competitor. Everything from your product to your social media needs to speak to your audience. We use consumer trends as a way to better profile the wants and needs of consumers. This way, your brand voice and, the story will better connect with them. Optimize every facet of your business with us. We’ll help make your business more efficient.
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DeFi is a protocol or a cryptocurrency industry movement that aims to recreate traditional banking services without centralized technologies.
While cryptocurrency coins create a decentralized store of value separate from any government-backed fiat currency,
Defi creates decentralized financial instruments separate from traditional centralized institutions.
Bitcoin is a quintessential example of Defi; most other cryptocurrencies have relied on central issuers or organizers.
Most Defi platforms take the form of decentralized apps, known as dapps.
These dapps use the series of smart contracts to generate financial transactions, making them faster and more efficient.
It is more affordable than their centralized counterparts because dapps are governed by computer code as it stays neutral and there is nothing like biasedness.
Defi allows people to have control over their money and has interesting ways to utilize it.
The centralized financial industry has long excluded people of modest means, reserving the best instruments for those with more funds, and thus further increasing the wealth gap.
Most of the Defi projects aim to make investment and trading more accessible, with lower minimum investments and platforms which are easy to use from any smartphone with an internet connection, regardless of geographical location.
The rise of Defi
It is understood that this initiative is being flourished through more flexible blockchains i.e smart contracts and a more healthy developer base.
Today, nearly all Defi projects are being built on Ethereum, making it standard default blockchain for many dapps.
Ethereum dominates existing blockchains in the number of applications, application activity, user activity, and also in volume traded/locked (with limitations).
In nutshell, there are many other competitors for the Defi but some of them lack true decentralization or a healthy developer base.
Bitcoin as a part of cryptocurrency emphasizes security, something which is very important in financial infrastructure.
Hence, Bitcoin might be suited for a robust, albeit notably smaller Defi ecosystem.
Bitcoin’s most successful Defi application is so far the Lightning Network.
Other notable Bitcoin Dapps are in the area of decentralized exchanges like Bisq or Sparkswap.
It is tough to determine which protocol or application serves the best and will have the most usage, in the long run, currently the advanced decentralization, programmatic flexibility, and the enthusiastic developer base gives Ethereum ( Eth ) the lead.
Core benefits of DeFi
DeFi can be viewed as a cluster of second layer applications as blockchain is referred to as a general infrastructure layer.
Defi inherits the core property of decentralization and this is only because the blockchain itself is decentralized.
- True decentralization – It enables censorship resistance, worldwide participation regardless of social status, and dispenses trusted the third party.
- Technological infrastructure – Blockchains allow relatively speedy and low-cost transactions/ settlement also ensures the immutability of the financial contracts and contract automation.
- Private keys – This term is referred to as non – custodial in the blockchain ecosystem which means the user is in full control of the money without a trusted party.
- Increased transparency – It ensures minimum agent risks, as asymmetric information is non-existent and the personal interests are governed by a transparent protocol.
- Network effects – A lot of innovation is generated by uniquely combining different projects in layer 2 or even layer 3 applications.
Why it is lacking behind ?
Defi is currently lacking behind the promising theory to adopt it. In favor to adopt decentralized applications, Defi has to overcome major obstacles –
- Accessibility – Blockchains allow accessibility of the Defi all over the globe but it is still unintuitive to user experience. Furthermore, as it is based on cryptocurrencies, converting traditional currencies into cryptocurrencies has to be done as a pre-requirement.
- Liquidity – It is an important for a fact that it ensures efficient pricing in the financial industry. Most protocols are currently unable to compete as efficient low-fee competitors. In the light of double-digit stability fees, MakerDAO is currently not used as a permissionless credit provider but rather it serves as a decentral way to create leverage in Ethereum. By converting ETH to DAI and reinvesting this into ETH, this follows the centralized strategy of leveraged long positions.
- Products are overcollateralized – This is because currently there is no credit scoring or shared collateral which reduces the leverage for professional traders or the opportunity to obtain access to capital that the user does not own.
- Technical risks – Transactions are irreversible in the blockchains as if some bugs arrive or get detected in smart contracts or blockchain layer.
- Operational risks – Due to the failure/manipulation of price feeds (so-called oracles) and complex governance protocols.
- System risk – This problem arrives from the interdependencies of the protocol. This can be observed at MakerDAO’s too-big-too-fail status, arguably the most critical piece of infrastructure within Defi given space’s reliance on oracles and stable coins.
Ethereum as an Obstacle
There are some problems with eth which could potentially create problems for Defi to work :
- Network Congestion – If the usage is high, Ethereum faces clogging issues in the network. The traffic gets collected on the network which results in transactions to be pending, market inefficiency, and delay in information.
- Transaction costs – Transactions are being competed on the basis of chain gas fees. The lower the gas fees of the transactions, the lower would be its priority.
- Timing issues – Blockchain is updated on average every 15 seconds, this is very uncommon for traditional finance. Defi interest and prices are calculated per block and for robust operation, it requires stable block mining.
Defi Use Cases: The best examples of decentralized finance
Defi is an umbrella term for decentralized financial infrastructure, thus a variety of customer-facing applications can be found.
Layer 3 – They aggregate core DeFi infrastructure and provide complexity.
Use Case – Combining Defi platforms allows customers for easier interactions, monitoring, and general better usability.
Example: Ray, InstaDapp, Defi watch.
Crypto Borrowing/Lending – It provides loans to users or businesses in a trustless manner i.e without any intermediaries whereas the lending protocols allow every participant to get interests on crypto coins and stable coins.
Use Case – Market participants are enjoying various benefits :
- Borrower, the ability to buy any asset and selling to another immediately shorting the asset, borrowing utility, and creating leverages.
- Lender, ability to provide capital and earn interest
- Both, Arbitrage and capital work
Example : Compound, Dharma, dydx, bZx
Stablecoins – Stablecoins are cryptocurrencies within the ecosystem, secured to a fiat currency.
Use Case – Trader: Cryptocurrency with minimal volatility as pegged to a fiat currency.
Example : MakerDAO
Defi insurance – Defi insurance protocols allow its users to take out insurance policies on smart contracts, funds, or any other digital asset through pooling individual funds to cover any claims.
Use Case – The purpose of decentralized derivatives is a manifold as the instruments itself like risk management, leveraged trading, betting.
Example: Nexus Mutual, Ethersc, Cdx
Derivatives – Derivatives in Defi offers immense flexibility across multiple assets and platforms. Smart contracts can issue tokenized derivative contracts which are executed permissionless and automatically.
Use Case – Purpose includes risk management, leveraged trading, and betting.
Example : Synthetix, Augur, Tokenset
Defi is currently a space of technical experiments and innovation instead of professional financial operations.
This can be said for the majority of the ecosystem and to fill the gap between theory and practice Decentralized Finance has yet to overcome its core roadblocks:
Low liquidity, unintuitive UX and accessibility, capital inefficiency, hidden risks, and regulation have somewhat suffocated adoption.
These issues might be lessened as the industry matures.
Promising solutions are already on the way making 2020 an exciting year to follow.
Cryptic Ocean is a blockchain technology company that provides end-to-end blockchain development and blockchain consulting services to multiple business domains.
Our goal is to assist corporations adopt new technologies and change difficult problems that arise throughout technology evolution.
Contact us for the most effective solutions regarding the utilization of blockchain technology to resolve the toughest challenges faced by the globe nowadays.
What are Defi apps?
Defi apps is a that platform which provides users with traditional services but in a decentralized and borderless manner that enables anyone across the globe with an internet connection to gain access to financial products and services.
How do you make money with DeFi?
If a beginner is familiar with Ethereum, then it would take a couple of minutes to make money out of it.
And when it’s all said and done, the user earns interest in DAI every block.
A beginner’s guide which breaks down the entire process of getting a wallet, acquiring ETH, and lending out your DAI.
What is the safest Stablecoin?
Tether is the oldest stable coin and by far the most used stable coin but newer – gen fiat-backed stable coins USDC, TUSD, and PAX have made material improvements over Tether, both in their actual performance and their transparency to users.
How does DeFi lending work?
With applications such as Maker and Compound, any individual can take out a loan of any size without having to disclose their identity to a third party in a matter of minutes.
In order to properly function, all loans are secured using cryptocurrencies as the underlying collateral.
If you found this article interesting, here you can find more Articles.
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In finance, PE stands for price-to-earnings ratio, and tells you whether a stock, a stock index, or a mutual find consisting of stocks is selling at a reasonable price. The PE ratio compares the price of the stock to the profits of the corporation. When calculating the PE ratio for a collection of stocks that make up a mutual fund or a stock index, financial analysts use a weighted average. Understanding PE ratios will make you a better investor.
Earning Per Share
Along with the PE ratio, you will also frequently hear a figure called EPS, which stands for earnings per share. A financial analyst must calculate EPS to come up with the PE ratio. Similarly, an investor must grasp the meaning and significance of EPS to understand PE. EPS equals the corporation's net profits for a given period divided by the number of common shares outstanding. In simpler terms, EPS equals how much the company earned per each outstanding share. If the EPS equals $1.50 and you own 100 shares in the company, your share of the company's total profits equals $1.50 times 100, or $150. If the company also has preferred shares, which is a special, privileged share class, EPS calculation becomes a little more complex.
The PE ratio for a stock equals the most recent price for the stock divided by the EPS. If the prevailing market price for the share is $15 and the EPS is $1.50, the PE ratio equals $15 divided by $1.50, or 10. Such a stock is said to be trading at 10 times earnings. This means that you are paying 10 times as much for the stock as the company is earning per stock. If the corporation sustains the present ratios, it will earn sufficient money, per share, to equal your purchase price of the share in exactly 10 years.
Mutual Fund PE
The PE of a mutual fund equals the weighted average PE of all the stocks that make up the mutual fund. The weights of the stocks when calculating the average is determined by their market values. If a fund is holding $200,000 worth of stock A and $300,000 worth of stock B, for example, the total holdings equal $500,000. In this example, 40 percent of this total is held in stock A and 60 percent in stock B. If the PE ratios of the stocks are 10 and 12, respectively, the fund's PE ratio equals 40 percent of 10 plus 60 percent of 12. The fund's PE is therefore (0.410) + (0.612) = 11.2
When investing in mutual funds, an investor generally looks for a low PE ratio. This means that the average price of the stock in the fund, compared to the earnings of the companies whose stocks are in the fund, is relatively low. The expectation is that the companies will quickly earn enough to make up for the purchase price of the stocks. Investing in stocks with high PE ratios is a strategy that can also pay off. Some mutual funds focus on companies with high prices and resulting high PE ratios. Such corporations are usually performing well in their industries, and their stock prices are therefore relatively high. During hard economic times, these strong companies can weather the storm when many smaller competitors fail. The PE ratio of a fund should therefore be evaluated within the broader context of its strategy.
Hunkar Ozyasar is the former high-yield bond strategist for Deutsche Bank. He has been quoted in publications including "Financial Times" and the "Wall Street Journal." His book, "When Time Management Fails," is published in 12 countries while Ozyasar’s finance articles are featured on Nikkei, Japan’s premier financial news service. He holds a Master of Business Administration from Kellogg Graduate School.
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The federal government plans to introduce legislation – the Act to Amend the Sustainable Development Act – that will likely come into force in 2021 and will guide future Federal Sustainable Development Strategies, committing Canada to net-zero emissions by 2050. As this discussion unfolds in light of COVID-19, it is critical that the electricity sector, as a key enabler of Canada’s net-zero goals, clearly articulates its role and what is expected of governments and regulators to transition to a net-zero economy over the next thirty years. This document outlines a set of foundational actions intended to guide the sector—including members, government interlocutors and other key industry stakeholders—towards the pursuit of achieving net-zero by 2050.
The Canadian electricity industry is key to supporting Canada’s vision to be carbon neutral by 2050. The sector has already done more to decarbonize Canada’s economy than any other economic sector. To achieve this national goal, Canada’s economy will have to balance any remaining greenhouse gas emissions (GHG) with initiatives that remove an equal amount of GHGs from the atmosphere. This will allow for broad deployment of existing technologies and increased investment in new and innovative ones while increasing jobs, protecting Canada’s socio-economic well-being and tackling climate change head-on.
To read the full action plan:
See Canada’s 2018 UNFCCC NIR (46% reduction in GHG emissions in the electricity sector between 2005-2018)
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- The national prevalence of obesity has increased significantly over the past few decades. Roughly three in ten Australian adults are now obese, with a further 36% classified as overweight. Together, that’s almost two in three of us.
- Seven in every 100 children are obese (and around one in four, overweight or obese) – an increase from almost zero in 1980.
- Overweight and obesity are second only to tobacco, in being the largest contributors to Australia’s disease burden.
- If no further action is taken to curb obesity growth, leading economists estimate a total of A$87.7 billion in additional direct and indirect costs to the Australian economy by 2025.
As this public health challenge continues to grow, year on year, it is easy to feel like we are making limited progress. That we are letting the window for close, and failing not only ourselves and our peers – but also the next generation of young Aussies.
Yet despite all the challenging updates that crossed my desk this week, three good news items stood out. Here, I share them with you – because to paraphrase a favourite quote, let’s not risk quitting as we look forward at the long road ahead, but also take inspiration from a moment’s glance back, and the many miles already covered.
New report on a sugary drinks tax – recovering the community costs of obesity
Hot off the press this week, is a new report from the Grattan Institute focusing on the role and impact a “sugary drinks tax” might have on the health of Australians, and our federal budget.
Reflecting the building thirst for effective policy, it lays out the evidence for a tax levied at a rate of about 40 cents for every 100 grams of sugar in our drinks. Containing a whopping 210g of sugar (roughly seven times the adult daily recommendation), this would increase the price of a two-litre bottle of soft drink by about 80 cents – but could raise around A$500 million in annual revenue to recoup some of the hidden social costs of obesity.
While the authors acknowledge that one single policy is never a panacea, this latest report supports building evidence from around the world that shows price can play a crucial role in addressing obesity. It also reminds us that increasing the price of sugary drinks is not about taxing, punishing or implementing a new levy, but moving towards truer pricing of what these products actually cost.
Whether you agree or not, this latest analysis is well worth a thorough read.
TEDx talk on the politics of food
With growing support for smarter policies on obesity, a strenghtening counter-current emerges. Food and politics go together like vegemite and toast, and in this new TEDx talk from the Australian National University’s Dr Phil Baker, we learn the realities and challenges facing us as consumers and our food systems at large.
Not to be missed, Phil insightfully asks and answers what really influences our food choices, and what we can do about it.
New study shows 30 seconds and primary care, is time and money well spent
Finally, as someone working in public health to build and advocate an evidence-based case for greater action on obesity, it can sometimes feel a little like “two steps forward, one step back”. For clinicians and GPs working to address obesity with their patients, the tools available can appear similarly lacking.
The last piece of good news this week is a recent study published in the prestigious health journal, The Lancet. Despite the sometimes pervasive thinking that a limited impact on obesity can be accomplished in brief consultations with our GP, this new study shows the opposite. Through rigorous research methods, it reaffirms both the importance of strong, well supported primary care – and 30 seconds with your doctor – in bringing in the waistline.
The large study followed more than 1800 patients over one year and found that a:
behaviourally-informed, very brief, physician-delivered opportunistic intervention is both acceptable to patients and an effective way to reduce population weight.
In other words, it found 30 seconds of structured advice and a referral to a free weight-management group, with follow up after from the GP, was associated with 2.4kg weight loss at 12 months. Sounds small, but added over years and in contrast to the usual upward trend of weight, this is very good news.
It also supports the thousands of doctors, nurses and allied health professionals around the nation working hard to improve the health of us all.
Chin up – progress is being made
While meaningful action on obesity remains alarmingly elusive – our social appetite for accusations of “nanny statism” or individual blame continue to stagger.
But as we near the end of the month that saw an impressive, mounting list of American cities vote in progressive sugar taxes, and a year that saw global leaders and bodies support swift and comprehensive action on childhood obesity – we cannot lose sight or momentum.
It can be easy to look forward at the long road in front – yes, it will be long – and falter. But instead, let’s focus on the strong strides already made, the building movement for action and the incredible work being done by so many to move the dial on obesity policy.
After all, the challenges faced today will just make reaching that finish line tomorrow, all the more sweet. Pun intended
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by Larry Kummer
The United Nations Climate Change Conference (COP21) in Paris climate was preceded by a surge of studies and articles warning of a dismal future if we do not take strong policy action. One scenario in the IPCC’s Fifth Assessment Report (AR5) provides the basis for these: RCP8.5. Even a casual examination of this shows it to be a useful worst-case scenario, but not “business as usual”.
(1) An introduction to scenarios about our future
In AR5 four Representative Concentration Pathways (RCPs) describe scenarios for future emissions, concentrations, and land-use, ending with radiative forcing levels of 2.6, 4.5, 6.0, and 8.5 W/m2 by 2100. Strong mitigation policies result in a low forcing level (RCP2.6). Two medium stabilization scenarios lead to intermediate outcomes: (RCP4.5, RCP6.0).
RCP8.5 gets the most attention. It assumes the fastest population growth (a doubling of Earth’s population to 12 billion), the lowest rate of technology development, slow GDP growth, a massive increase in world poverty, plus high energy use and emissions. For more about the RCPs see “The representative concentration pathways: an overview” by Detlef P. van Vuuren et al, Climatic Change, Nov 2011.
RCP8.5 assumes a nightmarish world even before climate impacts, resulting from substantial changes to long-standing trends. It provides AR5 with an essential worst case scenario necessary for conservative planning.
Unfortunately scientists often inaccurately describe RCP8.5 as the baseline scenario — a future without policy action: “a relatively conservative business as usual case with low income, high population and high energy demand due to only modest improvements in energy intensity” from “RCP 8.5: A scenario of comparatively high greenhouse gas emissions” by Keywan Riahi et al in Climate Change, November 2011, This is a material misrepresentation of RCP8.5. Scientists then use RCP8.5 to construct horrific visions of the future. They seldom mention its unlikely assumptions.
(2) About RCP8.5, the stuff nightmares are made from
(a) Rapid population growth
RP8.5 assumes population growth at the high end of the current UN forecasts: 80% odds of between 9.6 and 12.3 billion people by 2100 (Gerland, P. et al, Science 10 Oct 2014). Most of this growth occurs in Africa, assuming that the collapse in fertility seem in the rest of the world will not occur there (Iran’s fertility was 6.0% in 1980, it is ~1.6 now, below the replacement rate of 2.1).
Gerland makes a purely probabilistic forecast, without considering if Africa can support the same population density as China does today. Their high end forecast, used in RCP8.5, is that Nigeria’s population will grow from 175 million today to 1.5 billion in 2100. See this for more information about the Gerland 2014 forecast.
(b) Technological stagnation: back to the 19th Century’s coal-driven world
RCP8.5’s assumes that the centuries long progress of technology will slow. Most importantly, it assumes that three centuries of evolution to ever more efficient energy sources reverses and we burn off almost all of Earth’s fossil fuel reserves.
RCP8.5 describes a hot dirty future for the world, in which coal use increases to become the major source of power for the world.
There is an analytical basis for these forecasts. For example, see “Drivers for the renaissance of coal” by Jan Christoph Steckel et al in PNAS, 2015. The authors predict that coal use will increase not just in China and India, but also in fast-growing poor countries. There are a lot of poor nations in RCP8.5.
But this assumes that the long shift away from coal continues. Data from the Energy Information Agency shows that world coal consumption fell by 98 million short tons (1.2%) in 2012 (most recent data) following peaking in many nations, both poor and rich nations. North American use peaked in 2005; 2012 was down an astonishing 21% since then (USA use in Q1 2015 was down 24% from Q1 2005). Europe peaked in 2007, after 6 of its 9 largest coal-consuming nations peaked: UK and Poland in 2006; Czech, Germany, and Greece in 2007; and Turkey in 2011. Africa peaked in 2008 and Asia in 2011.
History shows that as poor nations grow into the middle income brackets, people become willing to pay for a cleaner environment. That often drives regulations on the mining and burning of coal, which raises its cost (in the US perhaps going to uneconomic levels). We see the first signs of that now in India and China. A March report by the Sierra Club describes the situation:
“From 2005 to 2012, worldwide coal-fired generating capacity boomed, growing at three times the previous pace. The increase in the global coal fleet was twice the size of the entire existing U.S. coal fleet. That boom is now busting. In India, projects shelved or cancelled since 2012 outnumber project completions by six to one, and new construction initiations are at a near-standstill. In both Europe and the U.S., the coal fleet is shrinking, with retirements outnumbering new plants. China faces a looming glut in coal-fired generating capacity, with plant utilization rates at a 35-year low.”
China has been the largest driver of global commodity consumption, including coal. Excluding China, world coal use is flat for 5 years, up only 13% for 10 years, and up only 7% in the previous 25 years (there is no Energy Information Agency data after 2012).
China has shown little concern about climate change, but air pollution from coal is a major public policy problem. “The cost of China’s reliance on coal: 670,000 smog-related deaths a year“. “Beijing to Shut All Major Coal Power Plants to Cut Pollution“. There are headlines like this almost monthly as public pressure grows for drastic action (see this Pew Research poll).
The Sierra Club report describes this and other drivers of China’s shift away from coal…
“Within China, the following policy trends are playing a significant role in determining future coal capacity: (1) Small Plant Replacement Policy, (2) air pollution mitigation, (3) economic restructuring, (4) expanding renewable, gas, nuclear, and hydro power sources, (5) climate policies, (6) energy efficiency initiatives, and (7) shifts in the regional distribution of generating capacity.”
Perhaps these trends will reverse, but that cannot logically be considered the “business as usual” scenario.
(c) Technological stagnation: energy efficiency
RCP8.5 assumes no decarbonization of world power sources from new technology (e.g., solar, wind, fission, fusion) or regulations to reduce not just climate change but also air pollution and toxic waste. Although possible, how likely is this? For example, use of solar and wind is skyrocketing as these technologies improve.
RCP8.5 also assumes a slowing of technological innovation, most clearly seen in energy use. By 2100 energy efficiency has improved only slightly, so that despite GDP being one-third lower than under RCP2.6, energy consumption is over twice as large. That breaks the decades long trend, as partially shown in this graph of energy efficiency from the World Bank. There is not reason to assume this progress will halt.
GDP per kilogram of oil equivalent of energy use
(d) A more realistic view of our energy future
More speculatively, new technology to produce energy might lie in our future. There are dozens of advanced nuclear and fusion projects under development. A new report by Third Way describes that some have matured to the stage attracting private capital:
The American energy sector has experienced enormous technological innovation over the past decade in everything from renewables (solar and wind power), to extraction (hydraulic fracturing), to storage (advanced batteries), to consumer efficiency (advanced thermostats). What has gone largely unnoticed is that nuclear power is poised to join the innovation list.
A new generation of engineers, entrepreneurs and investors are working to commercialize innovative and advanced nuclear reactors. … Third Way has found that there are nearly 50 companies, backed by more than $1.3 billion in private capital, developing plans for new nuclear plants in the U.S. and Canada. The mix includes startups and big-name investors like Bill Gates, all placing bets on a nuclear comeback, hoping to get the technology in position to win in an increasingly carbon-constrained world.
The designers of the RCP’s made a methodological choice that was logical, but was either not understood or ignored by the IPCC’s authors. They started with targets for forcings and created scenarios that would produce them.
The RCP8.5 scenario assumes ominous breaks in several important and long-standing trends. As such it provides a valuable warning against complacency and a reminder to prepare for extreme outcomes. But that meant that there was no business as usual scenario, a critical component for forecasting. None of the RCPs is even remotely close to fulfilling this role.
Worse was the labeling — with no supporting analysis — of RCP8.5 as the business as usual scenario (see the history here). Doing so preceded AR5, as in “Compared to the scenario literature RCP8.5 depicts thus a relatively conservative business as usual case with low income, high population and high energy demand due to only modest improvements in energy intensity” from “RCP 8.5: A scenario of comparatively high greenhouse gas emissions” by Keywan Riahi et al in Climate Change, November 2011.
I have written a description of the year 2100 assuming continuation of existing trends — including substantial advances in fusion. It’s a non-analytical discussion piece, showing that there is a more plausible alternative to RCP8.5’s nightmarish world of 2100. It shows that we need another RCP, one describing a base case showing reasonable projection of current trends.
Preparing that requires extrapolating trends for GDP, population, energy intensity, sources of energy, etc — assuming no breakthroughs in technology (e.g., fusion, a male contraceptive pill) — then calculating the resulting forcing. This should be done by a multidisciplinary team (imo tapping too-narrow a disciplinary base is one of the most serious weakness in climate science today). The cost would be trivial compared to its benefits.
As COP21 has shown, the public policy debate about climate change is gridlocked. Repeating what we have already done, with higher volume, seems unlikely to break it. Let’s draw outside the box and try different tactics.
(4) For More Information
For a detailed look at RCP8.5 see “Scenarios of long-term socio-economic and environmental development under climate stabilization” by Keywan Riahia, Arnulf Grüblera, and Nebojsa Nakicenovica, Technological Forecasting and Social Change, September 2007 (gated). To better understand the evolution of IPCC’s scenarios I recommend this by John Nielsen-Gammon (Prof Atmospheric Science at Texas A&M, Texas State Climatologist).
This article was originally posted at the Fabius Maximus blog [link], of which Larry Kummer is the editor.
JC note: As with all guest posts, please keep your comments relevant and civil.
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Are you saving or are you investing?
Teaching youth the difference between saving and investing will help put them on the path to wealth.
The road to financial security involves saving and investing your money, which means starting even while you are a youth. While saving and investing involve planning to use your money later and maintaining your ownership of the funds, there are distinct differences.
According to the High School Financial Planning Program through the National Endowment for Financial Education, saving is putting aside money to use for later. The money can be saved in an emergency fund or be for a specific SMART goal. You might save your money in a piggy bank, safe or envelope. You could also save it in a savings or certificate of deposit (CD) at a credit union or bank, which may earn interest.
Investing, on the other hand, is specifically putting money aside with the intent it will grow and make money for you. Investments might be rental properties, businesses or owning stocks.
The difference between saving and investing is that, with investing, the original amount of money you invested might not be available if the value of the investment drops. Not all investments are insured while most savings programs—those through banks and credit unions—are insured so your money is secure.
With the increased risk of investments comes the potential for higher growth, too, but there is the risk of losing what you invested—a big difference between saving and investing. Youth can start investing with the support of a custodial account, which a parent or guardian can set up through a brokerage or mutual fund company. The assets would belong to you, but you would not have legal control over them until you are no longer a minor as defined by your state.
Remember, wealth is the result of accumulating assets through saving and investing. It is not a matter of how much you earn or make, but how much you keep that determines wealth. Sometimes young people do not have a lot of money to start saving or investing. However, it is not about the starting amount of money. Saving even small amounts of money into interest-earning accounts or custodial investing accounts will lead to larger amounts in your future. The key is to start!
Michigan State University Extension and Michigan 4-H Youth Development help to prepare young people for successful futures. As a result of career exploration and workforce preparation activities, thousands of Michigan youth are better equipped to make important decisions about their professional future, ready to contribute to the workforce and able to take fiscal responsibility in their personal lives.
To learn about the positive impact of Michigan 4-H youth career preparation, money management and entrepreneurship programs, read the 2016 Impact Report: “Preparing Michigan Youth for Future Employment.”
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The Impact of Economic Euthanasia in Dogs
Ideally, the decision to euthanize a dog would be made after many years of happy life with every party feeling they have done all they could and they have given their pet the longest, happiest life possible. But what happens if you simply do not have the means to treat your pet for a long-term or costly illness? For some owners that answer might be euthanasia, commonly referred to in the veterinary industry as “economic euthanasia.”
Unfortunately, veterinary clinics are seeing more and more economic euthanasia due to changes in the economy, unemployment and underemployment, and the rising cost of living. Many pet parents have trouble affording wellness visits or routine care so they aren’t going to the veterinarian at all. In other cases, owners that do bring their pets to the vet clinic are declining heartworm, flea, and tick prevention purely due to cost.
Owners being reluctant to vaccinate and skipping preventative medicine are a large contributing factor to this issue. One example of this is parvovirus, commonly referred to as “parvo.” If the pet is vaccinated this problem can be totally avoided but, if owners are trying to cut the costs of a new puppy, it can be expensive and potentially deadly. If a puppy comes to the vet presenting with signs of parvo, most veterinary clinics will not even start treatment without a $250 to $500 deposit with the total cost being $800 to $3,000, sometimes even more.
When emergencies arise (such as a pet getting hit by a car or developing an intestinal obstruction), they require immediate medical attention and many owners have very little time to save. Unfortunately, just the diagnostic tests for these issues can cost an average of $500, in addition to treatment that can cost thousands of dollars.
Economic euthanasia is a sad, everyday reality in animal shelters, which tend to be underfinanced and overflowing with unwanted and abandoned animals. According to the ASPCA, around 7.6 million animals are brought into American shelters per year; 2.7 million of those are euthanized. Many veterinary professionals and shelter staff find this to be the hardest aspect of their job. The fact that the technicians, kennel workers, and doctors have cared for, vaccinated, and treated these animals makes this situation heart wrenching.
It is extremely difficult for all involved when owners can’t afford to treat their pet’s medical problems. Veterinary staff wants to do the best for the pets but this is not possible when owners can’t afford the recommended care. Pet owners often cut corners, neglect vaccinations, or even refuse to treat medical problems.
According to Dr. Debra Primovic, editor in chief of Petplace.com, as little as 10% of pet owners approve of their veterinarians’ recommendations. (This depends on the practice location and the affluence of the pet owner.) The statistic for pet owners who are more affluent or live in certain locations can be closer to 50%. Some veterinarians cited that when an expensive medical problem is diagnosed, only 10-20% of owners will provide the recommended care for their pets, another 20-30% will cut corners and try a less expensive option or treatment, and the rest will euthanize. Many of these health problems can be completely cured with the proper treatment.
How Can You Avoid Economic Euthanasia?
There are ways to plan for unexpected veterinary bills that will help you minimize the risk of euthanizing your dog due to your financial limitations.
Here are some common methods to avoid economic euthanasia:
Pet Savings Account Some pet parents will put aside money in a savings account for emergencies. This is a great way to plan for pet care; however, it can take a long time to accumulate enough money in this type of account to pay for expensive problems.
Pet Insurance Most comprehensive policies are only $15-25/month for cats and $30-50/month for dogs and can cover examinations, diagnostic tests, medication, surgeries, cancer treatments, and emergency care. Some plans also offer options for wellness care including vaccinations, heartworm prevention, dental procedures and more. Pet insurance does not require a credit check to purchase a plan.
Care Credit This is a credit card that can be used in emergencies on its own or together with your pet insurance. It’s a great option for clients that have no insurance but have a credit score high enough to qualify. Rates are usually reasonable and if you pay your balance in a certain amount of time you can often avoid interest charges all together. The problem with this method is that many people who need Care Credit can’t qualify due to poor credit.
Other Credit Cards Some pet owners keep a credit card with enough available credit to cover an emergency, or a “hidden” card in case of a problem. This can be a great solution but many cards have high interest rates and the bill will eventually come due.
Donations A select few veterinary clinics have funds available (often donated by clients) to prevent tragically euthanizing animals who could potentially live a healthy life if their current problem were resolved. This is assessed on a case-to-case basis to make sure it is not being abused and is used to its full potential.
I hope this helps you understand the impact of economic euthanasia and options you can consider to prevent euthanizing your dog due to financial limitations.
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The monetary value of all final goods and services produced by the residents of a country is called N.I.
N.I is calculated for a specified period normally a financial year.
In India, The financial year means April 1st to March 31st of next year.
National Income = C + I + G + (x – M)
C = Total consumption expenditure
I = Total Investment expenditure
G = Total Government expenditure
X – M = Export- Import
Methods of N.I. Estimation: – In India, All the below three methods are used.
(a) Production/ product method-This is also called output method or Value Added Method. In this method the value added by each enterprise in the production goods and services is measured. Value added by an enterprise is obtained by deducting expenditure incurred on intermediate goods such as raw materials, unfinished goods (purchased from other firms from the value of output produced by an enterprise.
Value of output produced by an enterprise is equal to physical output (Q) produced multiplied by the market price (P), that is, P.Q
Best & simple method
This method is mostly used in Agriculture and Mining etc
(b) Income method
This method approaches national income from distribution side. In other words, this method measures national income at the phase of distribution and appears as income paid and or received by individuals of the country. Thus, under this method, national income is obtained by summing up of the incomes of all individuals of a country. Individuals earn incomes by contributing their own services and the services of their property such as land and capital to the national production.
Unregistered entities are included here
Service sector is the main Component
(c) Expenditure method
Expenditure method arrives at national income by adding up all expenditures made on goods and services during a year. Income can be spent either on consumer goods or capital goods. Again, expenditure can be made by private individuals and households or by government and business enterprises.
Used in construction.
1. 1st N.I estimation in 1886 by Dadabhai Nauroji
2. Dadabhai Nauroji’s Book “poverty & Un—british rule of India”.
3. V.K.R. V Rao Provided Another estimate for the period 1925-29.
4. After independence for the period of 1948-51, N.I. estimate was provided by National Income committee headed by P.C Mahalanobis.
5. Since 1951, N.I estimation is done by central statistical Organisation (CSO) Established in 1950.
6. CSO presents N.I estimation Every year which is also known as National Accounts statistics (NAS).
For this purpose, CSO divides the economy is several parts.
Classification of Indian Economy: –
(1) Agriculture sector:
(2) Industrial sector:
Electricity gas and water supply
(3) Transport communication and trade
Trade, Hotel and restaurant
Transport, storage and communication.
(4) Finance and Real estate
Banking and Real Estate
Real estate and commercial services
(5) social and personal services
Public administration and defence other services.
(6) Foreign services
GDP– Gross Domestic Product
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As explained in the previous chapter, there are only two main methods of microeconomic analysis. The first is finding an optimum: what's the best thing to do? The second is finding the equilibrium: when everyone's actions are taken into account, what's the overall result? Here in Part Two of the book, we apply the first of these methods to analyze the optimum of the consumer. Specifically, what is the best bundle of goods for a consumer to purchase?
People in a market economy face two fundamental choices: how to earn an income, and how to spend it. Part Two deals with how income is spent, taking earnings (income) as given. Part Four will analyze the decisions that generate income – for example, whether or not to work overtime.
THE LAWS OF PREFERENCE
The economist thinks of the individual as aiming to maximize utility. The logic of utility analysis is the central topic of this chapter.
Theories or models are pictures that simplify reality. Irrelevant details are stripped away to concentrate on essentials. The economist's picture (theory) of preferences is based on two axioms:
The Axiom of Comparison: A person can compare any two baskets A and B of commodities. Such a comparison must lead to one of the three following results: he or she (i) prefers basket A over B, or (ii) prefers basket B over A, or (iii) is indifferent between A and B.
The Axiom of Transitivity: Consider any three baskets A, B, and C. If a consumer prefers A to B, and also prefers B to C, he or she must prefer A to C. Similarly, a person who is indifferent between A and B, and is also indifferent between B and C, must be indifferent between A and C.
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Assessment Based System
Tax-based frameworks, now and then alluded to as national health administrations pay for wellbeing administrations out of general government income, for example, immediate or roundabout expense from various levels, including public and neighbourhood charge. These duties are regularly utilized for different types of health insurance subsidizing. Besides financing public health services, vouchers or restrictive money benefits, charges are used as endowments for blended medical coverage programmes such as public health care coverage, whereby government revenues are utilized to sponsor poor people. Likewise, taxes may be utilized as appropriations for social wellbeing insurance, community-based common wellbeing and private health insurance plans. Appropriations from government revenue might spread expenses for poor people, shortfalls, explicit services, and fire up or speculation costs. Tax-Based Systems started in two separate ways. In the first set of nations, this financing framework created on an establishment gave by the previous improvement of social or private medical coverage. For example, Britain passed its National Insurance Act in 1911 that was financed through finance commitments, and didn’t adopt charge base wellbeing framework until after the Second World War.
The spread of assessment based wellbeing financing across Western European nations followed this example. In the second set of nations, the Tax-Based System evolved from wellbeing administrations ran legitimately by frontier administrations. This example is normal in creating countries that were colonized or affected as far as create meant strategy by Britain. Among this arrangement of countries include Malaysia, Singapore, Hong Kong, and many countries in Africa and the Caribbean. Irrespective of the beginning stage, Tax-Based Systems share regular pluses and inadequacies. The mandatory system of instalment makes Tax-Based Systems advantage from scale economies in organization, buying power and especially hazard the board, that prompts public risk pooling for the entire population and redistribute between high and low wellbeing dangers, and high-and low-salary gatherings. These advantages are drawn from the group and political nature of bringing and allocating charge incomes up in a cutting edge country state. None-the less, this equivalent political-monetary component fills in as weakness regarding failures that develop from serving different goals, political weights to serve privileged gatherings, the ineffectual administration in public services, and the challenges identified with frail accountability and precariousness.
In addition, this financing system can’t satisfy the need by privileged bunches for more modern medical services or expensive conveniences and powers everybody into taking the same standard of medical care. This is one of the key reasons why charge based public medical coverage is not favoured in America. Attempts by many low income countries to execute supportive of rich wellbeing spending has led to spillage of government assets to the rich at the expense of the remainder of the population. A compelling model, as some would contend, is the model used in nations like Britain, Brazil, Ireland, Malaysia, Sri Lanka and Sweden, where the suppliers get paid by government that screens the advancement of services and where it is conveyed. This methodology forces the rich who want costly consideration to look for it through the private sector which works as a restricted security valve. Notwithstanding, attributable to the thin expense base and a restricted authoritative ability to implement tax compliance or forestall broad tax avoidance health services financing through broad tax assessment stays a big challenge for creating nations. The accomplishment of assessment based medical services financing is to a great extent unforeseen up on the nature of administration, the size of the expense base, and the government’s human and institutional ability to collect taxes and manage the framework. England, Brazil, Ireland, Malaysia, Sri Lanka and Sweden have been successful because of their solid monetary and institutional capacity to adequately prepare assets and supervise the conveyance of wellbeing administrations. Given the similarity over, the mission for universal coverage in creating nations stays tricky, yet the ILO contends that utilization of pluralistic wellbeing financing mechanisms (local wellbeing financing frameworks) is the most ideal approach to improve to admittance to poor people. This means using different financing instrument including SHI and other commitments to enhance charge revenues. Drawing on the example of overcoming adversity of Brazil, Thailand, Malaysia and Sri Lanka, creating nations that have strong political will can manage the cost of some fundamental social protection in wellbeing. A mix of commitment based financing and charge financed appropriations will help to cover population gatherings of epidemiological necessities. By utilizing multiple financing components the weight of medical care expenditure is spread among a more extensive duty base while at the same time permitting space for cross sponsorship by enrolling contributors and non-givers in a similar pool. This is the methodology Thailand utilized and accomplished close general inclusion (97.8%). The Thai health coverage has three primary plans: the Fringe Benefit Scheme, the Social Security Health Insurance (SSO) and the Universal medical services Scheme (UC), (WHO, 2005).The incidental advantage conspire covers venture employees, pensioners and wards.
The government managed retirement health insurance then again stretches out inclusion to private sector formal economy labourers, while the universal health conspire offers full admittance to all Thai residents who are not associated to both of the two plans. Owing to the effective usage of these plans, as of2006, Thailand’s general health care coverage inclusion stood at an astounding 97.8 percent of the population. While the Thai case stays excellent there are two questions that creating nations aiming to follow the same pathway must address: first, the financial space, the ability to bring extra assets up in request to cover the majority of the population. Concerning the counties a stab at executing local plans, aside from SriLanka, Thailand, Brazil and Malaysia are upper middle income nations hence their ability to activate additional assets to support UHC. On the opposite however, Ghana is a lower center salary nation; Kenya and Tanzania are low pay nations with a GDP of 40.71billion, 40.70 billion and 28.24 billion separately. With low GDP, and swelling rates surpassing development rates these nations would battle to raise enough funds for local wellbeing financing for UHC. The second point is whether creating countries like Ghana, Kenya and Tanzania, have the limit to coordinate incoherent or covering schemes? Empirical evidence show that helpless coordination brings about holes in coverage and admittance to wellbeing administrations and the poor are the hardest hit. Hence, organizing incoherent and over lapping schemes require decent medical services and ICT infrastructure and the accessibility of authoritative and professional workforce to execute the program. In addition, a solid political will is expected to make sure about the much required money related and lawful support for the programme’s maintainability. It is obvious from this survey that paying little heed to the model of medical coverage received; creating countries would still face a tremendous test stretching out health coverage to poor people. Some assessment studies propose that the particular needs of the poor have for quite a while been overlooked in the plan of so-called professional chronic frailty protection plans and as such the obstructions that block helpless family units’ admittance to care still remain. To investigate these obstructions of admittance to medical services an incorporated reasonable system for assessing access to medical services is needed to illuminate the plan of these plans.
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Accounting is a broad and varied profession. When you study accounting, you’ll find that you can apply your education to a wide range of possible functions within a business. You can specialize to serve your employer better if not your own business. You can also work in any industry and many departments within each of them. Work at government agencies is also a common employment choice for accountants, both at the state and federal levels. Every company needs employees working for them who know how to use good accounting principles to record and maintain records of business transactions over the long term, improve businesses accounting process, prepare income tax and financial statements, provide needed financial accounting advice to managers for information-based decision making, create or use critical accounting software programs, accounts receivable and payable, point out investment opportunities to senior management, create financial reports and financial statements such as the balance sheet, perform debt collection, and much more.
Some accountants make their careers in the financial sector. They apply their ability to analyze corporate health to deals that can include initial public offerings, mergers, and acquisitions. These accountants don’t often engage in functions such as audits or dealing with financial statements, but their knowledge and expertise enable them to assess an auditor’s conclusions with an educated eye and maintain financial controls in their firm.
Others engage in managerial accounting. If you move your career in this direction, you will be tasked with projects dealing with budgeting, maximizing efficiency, checking for errors or even theft in the system, and keeping an eye on the financial position of the company over the long-term. In this role, you will make business decisions to encourage company profit and be in charge of the entry-level employees performing all types of function of accounting necessary, for example, accounts receivable, preparing taxes and accounting reports, and more.
Those in managerial accounting might also have experience in information technology, where they audit an organization’s technological systems in search of new ways to optimize workflow or overall efficiency or work on accounting software programs.
Featured Online Programs
Two Forms of Accounting
Managerial accountants are an integral part of a business’ daily operations. They seek to find new ways to maximize efficiency, write budgets for new projects, and even perform audits on various systems. One key function of a managerial accountant is cost control, which can mean anything from finding cheaper toner for the copiers to shaving minutes from worker’s hours to save the company thousands of dollars.
They also work to evaluate employee performance to ensure that the organization receives the most productivity possible from the payroll expenditures. When individuals or departments are found to be too inefficient, accountants might seek ways to improve workforce output. This could entail upgrading technologies, discovering new workflow methods to improve how work is actually done, or even outsourcing labor to other sources.
Managerial accountants might work for a single organization and continually seek to improve its functioning and efficiency. They might also work as consultants for organizations all over the nation and world. In each case, these accountants need to work closely with department heads in a range of areas. They might need to assess efficiency in a manufacturing facility or discern how to best upgrade IT functions in a small company.
Managerial accountants frequently will focus on a specific industry where they will become experts and forge a successful career. This is important because each industry has an individual set of issues to work with. Healthcare, for instance, must abide by certain regulations governing patient care. On the other hand, the automotive industry deals with a whole different type of regulation.
Here is a brief list of other managerial functions accountants perform regularly:
- Budgeting – both for individual projects and the company as a whole
- Cost Controls – determine company policy for areas such as payroll or accounts payable
- Employee Evaluations – analyze the workforce to see where improvements will result in savings
- Fraud Control – investigate shortages to ensure that neither outside theft nor inside embezzlement is occurring
- Error Control – accountants analyze how and why errors happen to help determine how to avoid them in the future
Financial accounting is the other main function of an accountant. This set of functions is also called stewardship accounting. This might be what most people think of when they think of a staff accountant; a professional tasked with aggregating and analyzing the hard numbers.
Stewardship accounting is always concerned with keeping accurate financial records. They need to ensure that every penny spent or earned is recorded accurately. That is, it’s vital to know how certain transactions can be accounted for on a tax return.
In a publicly traded company, this sort of classification can be incredibly helpful when putting together quarterly and year-end documentation. Shareholders need to have an accurate accounting of the company’s finances and also a fair and objective description of those figures. Sometimes, a company will have one-time expenditures that will dramatically impact overall earnings or profits. On the other hand, shareholders need to understand how a sell-off of assets can result in a revenue spike, which is unlikely to repeat.
Financial accountants might also analyze the company’s overall fiscal health with regards to multiple factors. They can take into account external events that impact financial health including taxation, government regulations, or even weather events. In some cases, financial accountants might make the seemingly counter-productive recommendation that a company take on more debt. However, when seen in a broader perspective, that debt can offset profits and thus help the organization avoid taxation.
A financial accountant’s duties can include, but are not limited to:
- Recording financial transactions
- Describing financial transactions
- Translating financial data for executives or shareholders
- Calculating the actual bottom line for a company
- Preparing reporting documents such as the Annual Report
Functions Within a Business
Accounts Payable (Money Out)
Accounts payable is the part of every company that handles expenses. After all, every commercial enterprise must purchase things such as raw materials, office equipment, industrial equipment, and more. Furthermore, organizations need to pay vendors of certain services.
An accountant can set the terms of these payments so that the company absorbs the expenditures in the best way, and at the best times. For instance, vendors might not receive payment for a set time after their work is complete, thus enabling the organization time to receive payments from a client before paying the vendors. Delayed payments might also enable the organization time to accrue interest on funds.
Accounts Receivable (Money In)
For any business to be successful, its accounts receivable department should bring in more money than the accounts payable department spends. The accounts receivable department is ultimately responsible for the organization’s revenues. They are on the front lines of profit-making.
Thus, an accountant in accounts receivable is responsible for ensuring that all accounts are paid in full. The accountants may be in charge of ensuring that all outgoing invoices are as accurate and detailed as possible. They also need to be sure to collect on every outgoing bill. In the case of vendors, it’s vital to keep track of each vendor contract because some payers will negotiate individual terms for payment such as a delayed lump sum or an interest-bearing payment plan.
Ascertain Results/Income – Budget Preparation
Budgets are vital for planning out a business’ overall, future success. Accountants need to diligently consider every future expense and then justify that expense by showing its long-term value in terms of profits. Budgets can be long-term or cover a shorter time frame.
For instance, some budgeting is for certain projects that a company or department wishes to complete. Some projects involving research and development need to find the most efficient ways to research a product and then demonstrate the long-term revenues that can result from success. It’s also vital to show how expenses will be absorbed in the meantime.
Since companies attract investments by demonstrating the long-term value of current expenditures, budgeting is a vital part of the equation. When a project can come to completion both on-time and within budgetary constraints, it’s more likely that investors will receive gains. These same investors will thus be more likely to invest in future ventures with the same team.
Payroll is often one of a company’s largest expenditures. After all, every business relies on its human capital before any revenues are realized. Accountants constantly scrutinize payroll expenses to determine how to maximize the return on their investment in labor. They might even set standards for hiring and compensation. A new hire with a lot of experience and success may be deemed worthy of a much higher salary than an untested worker fresh from college.
Payroll also includes issues related to travel expenses, benefits packages, and severance payments. Accountants strive to ensure that everyone is paid equitably so that the company can attract and retain top talent.
Financial Report Preparation – Management Decisions
Financial reporting is a vital part of any business. If you work for a publicly traded organization, your quarterly and annual reporting documents must include an Income Statement, Balance Sheet, and Cash Flow Statement. These reports are all subject to scrutiny by both shareholders and the Securities and Exchange Commission, a governmental regulatory body. These documents are required by law to be filed in a timely fashion and to reflect the actual condition of the company. Private companies also need these reporting documents to present to private equity stakeholders as well as internal executives.
The Income statement demonstrates the company’s financial health. It is essentially the result of comparing total revenues, plus all gains, minus total expenses and losses. This statement can show how non-operating revenues, such as outside investing, measures up against operating revenues.
A company’s Balance Sheet is a statement of a company’s assets. This is the sum of all the company’s liabilities plus its equity or retained earnings. A balance sheet is a snapshot of a company’s health and does not offer insights about long-term growth. However, when accountants compare Balance Sheets from previous periods, a pattern can emerge.
Finally, a Cash Flow Statement demonstrates for investors and executives how much cash is moving through a company during a period of time. This financial analysis shows how well a company holds its cash and what percentage of the cash flow results in profits.
Analysis and Advice
Analysis and advice results from scrutinizing a company’s financial documentation. This can be a crucial part of an accountant’s career. In the case of a larger organization, a Chief Financial Officer might receive all of the relevant data and then spend a great deal of time preparing a presentation for the Board of Directors or other stakeholders. Their report should help the audience understand the true meaning of the numbers, so that they can make decisions for the company’s future.
Outside consulting accountants can likewise provide analysis and insights from a vantage point that is difficult for the company’s internal accountants. They might advise a company to undergo a restructuring, eliminate certain processes, or otherwise improve efficiency.
Financial Data Management
Data management used to be comprised of paper ledgers that were stored in fireproof safes. These days, accountants need to ensure that their financial data is stored and managed in ways that are both safe and reliable. For this reason, contemporary accountants can specialize in information technology so that they are best able to keep tabs on how and where the information is stored. Further, they can also ensure that the data is safe and not compromised by unauthorized individuals.
Regulatory and Reporting Compliance
Every company in the United States is subject to governmental regulation. Thus, accountants need to be well-versed in governmental regulations so that their operations remain in compliance with current statutes. For instance, a publicly traded company must meet certain transparency standards for its reporting. The Securities and Exchange Commission (SEC) is responsible for enforcing these regulations so that average investors can make sound investing decisions.
Companies may also have their own standards. Often, these standards reflect the government’s rules but are often stricter. Accountants who hold themselves to these higher standards find that their organizations have less legal exposure and possibly higher success rates in the long-term.
Accountants are responsible for every aspect of a company’s financial data. They need to provide accurate numbers and sound analysis to all relevant stakeholders and then ensure the safety and security of that data. These days, ensuring that safety of data may require a deep knowledge of cyber security and information technology. Companies might hire outside consultants to help with this security or hire accountants who have an IT specialty.
A financial controller is an accounting executive who applies their years of experience in maintaining and controlling a company’s budget. They might also be tasked with ensuring that financial reporting is accurate, truthful, and prepared to meet regulatory stipulations. The controller will also file all required documents to the SEC, including the quarterly, annual, and proxy statements. Sometimes a controller heads up the hiring of accounting professionals and meeting all legal requirements pertaining to taxation and licenses.
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For Americans living abroad, the rules for US taxes can be confusing and overwhelming to understand. If you fail to file correctly, it can even lead to significant penalties. If you are a citizen or permanent resident of the US, then regardless of where you are living at the time, you are obligated to file a tax return with the federal government each year.
In addition to the regular income tax return, you may even be required to file an informational return on your assets held in foreign bank accounts. While the US is one of the few governments that taxes the international income of its citizens and permanent residents, it does have special provisions to help protect you from double taxation and can also entitle you to some tax benefits that locally residing American’s would not receive. So, whether you are an American living in Sydney or Seattle, it is important to know your tax system.
LIVING ABROAD AND STILL PAYING US TAXES
The United States tends to take a unique approach when it comes to taxing individual income as it is the only major country in the world that taxes their citizens based on their citizenship.
When it comes to taxing income there are generally two used systems: the Residency-based system or the territorial based taxation system. More than 130 countries use a residential tax system. Roughly another 40 countries use the territorial taxation model. This tax system is especially interesting for location independent professionals.
#Residency-Based Tax System
The residency-based tax system is the most widely used tax system in the world today. Under residence-based taxation, countries like Germany and France tax their local residents on all income earned from both local and foreign sources. For non-residents in these countries, only income earned locally is taxed, similar to the territorial-based system. The 130 countries essentially include all major industrialized nations. Most of the EU, Canada, Australia, New Zealand, Japan, and Korea are a few included in that list.
#Territorial-Based Tax System
In a territorial-based taxation system, countries only tax individuals on the income from sources inside the country’s borders. Countries such as Singapore and Lebanon are amongst the 40 countries that use the territorial-based tax system. In countries with a territorial-based taxation system, only income actually generated inside the country is liable to tax. It has been said that these countries often do not have any, or just very weak CFC rules. For tax purposes it may be considered to make excellent locations for a second residency.
#Citizenship-Based Tax System
While majority of countries will implement either the residency-based tax system or the territorial-based tax system, the US and Eritrea are the only countries that have citizenship-based taxation systems. This means, if you are an American living abroad, you must file a US federal tax return and pay US taxes because of the simple fact that you are a citizen. In other words, you are subject to the same rules regarding income taxation as people living stateside.
Therefore, even if you have not lived in the US at any point during the year and have earned all of your income in a foreign territory, the IRS still expects you to file a tax return. Moreover, you may also be subject to file a state tax return depending on the state rules of where you lived prior to moving abroad.
EXCLUSIONS AND DEDUCTIONS
#Double Taxation On Foreign Income
The United States has Tax Treaties with over 60 countries, including most (but not all) popular expat destinations. One issue that arises in this tax system is that an individual could theoretically be double taxed on their income earned – both by their country of current residence and the US. This scenario is especially relevant for an American living abroad full-time who may qualify as a resident in other local tax systems. Tax Treaties can provide exemptions or reduced tax rates for certain types of income, including retirement/pension plans, as well as reduced withholding rates in passive income such as dividends and interest.
For example, if you were a US Citizen living in Sydney Australia then you would look at the double tax agreement between the two countries. The US tax treaty with Australia defines the terms that set the relationship between the US and Australia and provides “tie-breaker” rules for determining in which country a taxpayer is considered a resident. It is primarily of use to those who have doubts or want clarification as to their residency status. It can help alleviate any confusion when you are earning foreign income and submitting taxes to both countries.
#Foreign Earned Income Exclusion
To help avoid this negative consequence, the US tax code contains a provision called the foreign earned income exclusion (FEIE). Under the FEIE, the US doesn’t ask you to prove where your new tax residence is as long as you spend enough time outside of the United States to prove that it is no longer your home. That doesn’t necessarily mean that you’re going to pay zero tax, there are other things involved, but you can still live nomadically and qualify for the exclusion. As of 2020 the Foreign Earned Income Exclusion allows you to exclude up to $107,600 of income.
#Foreign Tax Credit
Another provision to help mitigate double taxation is the Foreign Tax Credit. In this case, Americans earning income internationally may reduce their US tax obligation beyond the limits of the FEIE if they have paid or accrued tax to a foreign government. Generally, only income, war profits and excess profits taxes qualify for the credit. What makes this provision complex, however, is that it applies to only certain types of income, and there are unique considerations related to each foreign country.
#Foreign Housing Exclusion
Created by the IRS to offset the expenses that go hand in hand with living overseas, the Foreign Housing Exclusion decreases an expat’s tax liability by allowing certain housing expenses to be deducted from taxable income. This exclusion can be used if your housing costs were over 16% of the FEIE amount for that year. The first step to qualifying for the Foreign Housing Exclusion is by qualifying for the FEIE. Rent and utilities are qualified expenses, as are parking, household repairs, real and personal property insurance, and furniture and accessory rentals can all qualify under this exclusion.
TAX FAIRNESS FOR AMERICANS ABROAD
The Tax Fairness for Americans Abroad Act proposes a new section of the Internal Revenue Code that would allow qualified non-resident citizens (i.e.; American expats residing in a foreign country) to exclude all foreign-sourced income from US taxation. This means that expats would only pay taxes on their US-sourced income. The Act would remove limitations on how much and which kinds of foreign income expats can exclude from US taxation. If passed, the TFFAAA would essentially change the US citizenship-based taxation into a territorial taxation system. The TFFAAA therefore, resembles the first step in the goal to address the tax issues and problems for the travelling Americans who are living abroad.
#TFFAAA Progress Report
In 2018, the Republicans Overseas group initiated the bill and found Congressman George Holding to introduce it as the Tax Fairness for Americans Abroad Act. The bill was then sent to the Ways and Means Committee for further consideration and was then presented to the 115th Congress.
Throughout 2019 and 2020, Congressman Holding continued to advocate for the interests of Americans abroad but unfortunately the Act failed to gain traction in Congress. With Congressman Holding unlikely to run for office again in 2020, the future of the bill is uncertain. Due to the fact that the bill was not passed, and this Congress is no longer in operation, the Act would need to be reintroduced.
Although progress has for the meantime stopped, there was a clear support for the passing of the TFFAAA from the expat community which may motivate discussion within the government. As the rise in numbers of digital nomads and remote workers continue, hope is not yet lost for the Americans abroad.
Do you want professional help with your own International Tax Strategy and Corporate Structure?
Check out our current services. We are here to guide you and help you navigate through the complex world of International Taxes and Business Structures.
We hope you have enjoyed this article. If you have any further questions please leave us a message below and we’ll get back to you as soon as we can.
NOTICE: The content of this article is not to be considered as a legal opinion or tax advice. Wanderers Wealth does not hold itself out as a legal or tax advisor. If you want to receive a legal opinion or tax advice on the matter in this article please contact us directly and we will refer you to a legal practitioner.
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The demand for electricity has been on the rise since the industrial revolution and is yet to increase even further due to the electrification of transport and heat. In 2020, it has already transformed the modern economy and provides a growing share of energy services.
With this continuous increase in the demand for electricity, the high price of non-renewable fossil fuels, and the ever-increasing concerns for environmental conservation, many organizations are shifting to a renewable source of energy.
Among these renewable forms of energy is solar energy that offers a promising future for clean and green electricity. Many businesses worldwide are now tapping into this alternative source of energy, hoping to profit from its several benefits.
Below we mention some of the advantages solar energy can have for your business.
Cost Reduction and Risk Mitigation
Cost reduction is one of the most important benefits of solar power for businesses. Companies that use solar energy can significantly reduce their commercial power cost, and it can even help them eliminate their energy bills entirely if the system installed on their commercial setting is large enough.
The cost reduction of switching to solar energy, however, is determined by several factors, including the location of a commercial building, time of operating, and industry size. Companies that benefit the most from switching to green energy are the ones that have enough space to build an appropriately sized system to cover their electrical needs. In certain applications, extra solar power can be stored for later use as back-up energy.
Solar incentives are another great reward for businesses that convert to green energy.
Solar energy is becoming more and more popular, and governments all over the world are launching various incentives, and rebate programs to attract their citizens to shift to a renewable form of energy. In Canada, for example, we have several provincial-wide and territory-wide incentives and rebate programs available for citizens and business owners that switch to green energy. Some of these incentives still active in 2020 are:
- Federal Incentive- Saskatechewn: For those provinces in Canada that have yet to commit to the carbon pollution pricing systems, there is funding and rebate programming available for small and medium-sized businesses that invest in green energy, including solar power systems. This incentive goes by the name of the Climate Action Incentive Fund (CAIF) and provides 25% of a rebate on the total project cost. This 25% could range from $20,000 to $250,000. CAIF is currently available in Saskatchewan, Manitoba, Ontario, and New Brunswick.
- Municipal Incentive- Alberta: Municipal incentives for switching to green energy are available for businesses in some municipalities. In Alberta, for example, the Banff Solar PV Incentive Program will provide a rebate of $0.75/Watt for systems between 2 kW and 7.5 kW. Both residential and commercial properties in Banff are eligible for this program.
- Provincial Incentive- British Columbia: In British Columbia, BC Hydro has yearly net-metering for residential and commercial customers. This program allows people to receive credits on their electricity bill for the excess amount of solar electricity generated vs used in a month. Over a period of one year, if more electricity is produced than used, it can be sold to BC Hydro at the Mid-C price, and the credits are set to zero again.
Businesses tend to get labeled as ‘Green’ if they are utilizing renewable energy sources in their operations. For example, if they are producing electricity using solar panel systems, they are reducing their consumption of fossil fuels and are therefore reducing greenhouse gas emissions and environmental pollution. By doing so, any business or company can express itself as eco-friendly, which will give them a positive reputation in the consumer market.
About Dandelion Renewables
At Dandelion Renewables, we provide solar conservation solutions to our customers based in Alberta, British Columbia, and Saskatchewan. We have a complete range of certified products and services relating to renewable energy at reasonable rates. Visit our website, or you can contact us here today to get a free quote.
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It’s official: Gone are the days when employees promptly clock out at 5 p.m. Whether they’re burning the midnight oil during busy season or finishing up a project at home, many employees take their work beyond the traditional nine to five grind—and should be compensated properly.
Overtime pay is the logical solution, but what is overtime pay, and how does it work?
What is Overtime pay?
According to the Fair Labor Standards Act, which also places regulations on child labor and minimum wages, overtime pay is considered any hours that are worked over a 40-hour workweek. In the case of overtime, a workweek is defined as a recurring period of 168 hours, or seven 24-hour days. Employees can keep track of their overtime pay by physically clocking in and out of the office, writing their hours down, or keeping a digital time card.
Is Overtime Pay Required by the Law?
The short answer? Yes. The Fair Labor Standards Act, or FLSA for short, requires companies to pay their employees overtime once they exceed the 40-hour workweek; however, overtime laws can vary state by state. The state law in California, for example, says companies are required to pay double the employee’s regular rate when a workday exceeds 12 hours. However, some state laws (like in Texas) have overtime policies that are more aligned with FLSA.
Keep in mind the FLSA’s overtime policies are the bare minimum. While some companies will pay their employees double time on holidays, others will kick into overtime at 30 hours instead of 40.
But no matter where you live or what your company’s exact policies are, one thing's for sure: It’s important to comply with the law. According to the United States Department of Labor, employers who do ignore overtime requirements are subjected to civil money penalties for each violation.
What About Double Time?
If you started to do your overtime research, there’s a good chance you’ve at least heard of double time. As the phrase suggests, double time is twice the amount of a person’s hourly rate. Translation? If a person’s rate was $15 per hour, their double time wage would be $30 per hour.
But what gives? When do you up the ante to double time?
Well, it’s more complicated than that. While there is no federal law that requires employers to pay double time, some states have their regulations in place.The state law in California, for example, says companies are required to pay double the employee’s regular rate when a workday exceeds 12 hours.
More times than not, a double time rate is established between a company and their employees. While some businesses pay their employees double time when they work on weekends or during a national holiday, others might double an employee’s rate if they work more than seven days in a row.
Double time is not a one-size-fits-all situation. Before establishing a double time policy, think about the service your business offers. For example, some businesses might need to be open every day, so you might want to offer double time for holidays like Thanksgiving and New Year’s Day.
Who is Eligible for Overtime Pay?
So everyone’s entitled to overtime, right? Well, not so fast. There are a couple factors that play into whether or not your employees are eligible for overtime pay.
First things first: Where do your employees fall on the corporate ladder? The FLSA has a white-collar exemption, which applies to “any employee employed in a bona fide executive, administrative, or professional capacity.”
Employees can be exempt from overtime payments if they are paid on a salary basis, and make a salary of at least $684 per week.
While most salaried employees are exempt from overtime pay, if their salary is less than $684 per week—which works out to less than $35,568 per year—they are entitled to overtime payments.
Another thing to consider? Some industries and careers are not covered in the FLSA. For example, independent contractors are generally paid for the task at hand and are not eligible for overtime hours. Other jobs—such as farmworkers, movie theater attendants, railroad and air carrier employees—are exempt from overtime coverage.
How Do You Calculate Overtime Hours?
Figuring out whether your employees are eligible for overtime may not be a one-size-fits-all situation; however, calculating overtime is a lot easier than you think. The FLSA defines the overtime rate as “time and a half,” or 1.5 an employee’s hourly wage. When figuring out your employee’s overtime pay, break out your calculator and multiply their hourly rate by 1.5.
So what does that look like? Break out your calculator, let’s do the math:
- Hourly Rate x 40 = Weekly Wage
- Hourly Rate x 1.5 = Overtime Rate
- Overtime Rate x Number of Overtime Hours = Overtime Wage
- Weekly Wage + Overtime Wage = Total Pay
Clocking in some double time? Here’s what it’d look like:
- Hourly Rate x 40 = Weekly Wage
- Hourly Rate x 2 = Double Time Rate
- Double Time Rate x Number of Double Time Hours = Double Time Wage
- Weekly Wage + Overtime Wage = Total Pay
As for salaried workers? Divide their salary by 52 to get their weekly wage. From there, you can divide the weekly rage by the number of hours worked (in most cases, by 40) to find the hourly rate.
Speaking of paying your employees, the FLSA says any overtime rates must be paid in the same payment period that the wages were earned. Translation? Include any overtime pay in the same period as their regular pay—just like you would process a normal pay period.
3 Simple Rules for Paying Overtime
Let's not sugarcoat things: Overtime pay is not optional for non-exempt employees. If your employees are working overtime, they need to be compensated accordingly. That being said, overtime can cause friction between an employer and their employees. To help ease the relationship, check out these three cardinal rules to navigating overtime payments.
Believe it or not, having employees submit proper timesheets is easier said than done. While some employees might feel guilty for exceeding their standard number of hours, Forbes found 89 percent of employees waste time at work, which can add to an employer’s bottom line.
Encourage your employees to record the number of hours they worked each day. Waiting until Friday to fill out a timesheet can lead to employees recording too little or too much overtime.
Employees should feel empowered to account for their overtime, but you might want to ask them to give you a heads up if they’re about to surpass their 40-hour workweek. Setting expectations and holding each other accountable for submitting accurate hours can help create a positive, efficient work environment.
Don’t Cut Corners
Between promoting employees to exempt managerial roles and averaging all the workweeks in a pay period to determine overtime pay, some companies cut corners to keep overtime wages at bay. Not only can overtime pay shortcuts put your employee’s trust in jeopardy, but it can also result in financial penalties. In a nutshell, stick to the overtime laws and handle overtime on a week by week basis.
Communication is Key
Let’s face it: Many employees will exceed a typical 40-hour work week. After all, busy season is inevitable. But if your employees are submitting too many weeks with overtime hours, it may be indicative of a larger issue. Maybe your employees’ bandwidths are hitting critical mass. Perhaps a project’s workflow isn’t running as smoothly as you’d like. If you’re noticing a pattern in an employee’s timesheets, schedule a meeting to get to the root of the issue. At the end of the day, happy, fulfilled employees are priceless.
Let’s Wrap it Up
Do you want to make your records 100% accurate and make navigating overtime pay a breeze? Sign up for Hourly, which tracks and automatically records your employee’s timecards. Hourly also lets employers create custom rules like enforcing 8 hour days, 30 minute lunches, and setting mandatory start times. That way, you can rest easy knowing you have more control over overtime pay before your employees clock in extra hours.
Have questions? Reach out at (844) 800-2211 to learn more!
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<Last updated 12.04.2020>
Hi! If you are interested in Economics, I’ve prepared the below to help your understanding. You should take a look at this short article in which I explain how Supply for goods and services is formed and how Prices are determined by Demand and Supply .
We have seen that Aggregate, or Total Demand, is formed by people’s preferences. A negative relationship exists between price and quantity demanded.
Aggregate Supply: The relationship between price and quantity supplied, at each price level the quantity supplied is different (specified for a specific period). The quantities supplied must be from suppliers that have the desire and can (afford to) provide.
As the price increases, this means that businesses can make more profit by producing and supplying more products to increase revenue. This is from where the Law of Supply is derived: With other factors affecting quantity supplied equal (ceteris paribus), there is a positive relationship between price and quantity supplied. This means that when price increases, quantity supplied is more. (From Qo to Q1).
Adding up all businesses/providers supply curves: It is important to note here that each business entity, or supplier, has a different curve, meaning that each response is different to price increases. For example, Andreas LTD company wants to provide more quantities when there is a price increase from 3 to 4 . However, George LTD wants to provide also more due to the same price level increase, but less quantity than Andreas LTD wants to provide. These business “preferences” are determined by factors such as production/provision cost.
> We add up all quantities supplied at each specific price level to find the Total/Aggregate Supply curve (line in this case).
When the price increases, suppliers want to provide higher quantities of goods. Suppliers find opportunities to generate profit by providing more. Suppliers increase production and provision of the good in concern, and new suppliers enter the market to supply as well. Total production/provision of the good increases.
What makes businesses to supply more or less quantities of goods if price is not the cause? The most important factors affecting Supply are:
a) Prices of Factors of Production: The cost of producing goods and services. When price of a factor of production falls this reduces the cost of production/provision.
b) Technology: A technological improvement, an improvement in the way factors of production are used in the production process (i.e. Machinery, PCs etc that save time and increase productivity) increase productivity of capital and labor, reducing the cost per unit of output, leading to increase in production/provision of goods and services.
c) Supplier Expectations: Expectations regarding the future market conditions of the good in concern affect supplier’s decisions today. Expecting that the price of the good will be increased in the future, reduces its supply today (maybe stored in inventory). This leads to decrease in production/provision today. Expectations concern also the future prices of factors of production, technology etc.
d) Prices of Other Goods: –Alternative Goods: the goods that can be produced using the same resources. Shifts in production of other goods happens due to price increase, reducing profits from lower demand of the currently produced good.
e) Number of suppliers: More suppliers means more total production/provision.
f) Weather Conditions: weather conditions affect production of goods and services. This can be easily experienced in agriculture, where weather conditions affect production in critical levels. (no rain, too much heat, storms etc.).
All the previous factors cause a shift. We have a shift of the Supply curve (line in this case):
Some Factors shifting supply for a good to the right (increase):
> Decrease in the price of Factors of Production (lower cost).
> Increase in consumer Income.
> Better weather conditions.
> Lower expected future price of the good.
Equilibrium exists when the price balances Supply and Demand, a level where no entity, buyer or seller, wants to deviate from that level. The following graph shows Supply with Demand, how these two forces together determine the price level and how they can affect it:
The equilibrium price is the price at which quantity demanded equals quantity supplied. At EP.
“I hope I am clear on this one. If not, contact us on social media and we will do our best to help you.
Thank you for reading my articles and watching my videos.”
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<Last updated 10.04.2020>
Hi! If you are interested in Economics, I’ve prepared the below to help you with your studies and understanding of these interesting concepts. You should take a look at this short article in which I discuss an important market form called Perfect Competition, the ideal market form.
In the past, market was an actual physical location where buyers and sellers met and transactions (buys and sells) were taking place > This required the buyer and the seller to meet at a location. Today in modern society this is not required because the information needed for transactions to take place is fast and can be done from a distance with the help of the new means of communication and technology. For example by using the internet and the mobile or smartphone.
Since no physical location is needed, the market is considered today only as: A mechanism that allows the communication between buyers and sellers, the information exchange and transactions to take place.
The are different market forms due to the different market conditions.
Competition between businesses (suppliers) makes possible to have different market forms (with consumers having the same level of competition).
The level of competition that exists in a sector depends mainly from:
> the number of businesses.
> the degree of homogeneity or differentiation of the product produced by the businesses of the sector.
The ideal market form is Perfect Competition. This ensures the optimal allocation of resources and the production of goods and services people need and want. Many businesses produce and provide homogeneous products, or services, to a large number of consumers. (i.e. agriculture: fruits and vegetables, i.e. stock market: brokers offering stocks to many buyers). It is rare to find such a market in reality. However, it provides a point of reference and helps in comparison purposes with the other market forms.
a) The large number of businesses: they are price takers (taking the price as given). A business must choose what quantity to produce. This choice won’t affect the market price.> Makes almost impossible for businesses to cooperate and affect the price based on their interests.
b) Perfect homogeneity of the product: this is the product that is produced and supplied to the market and has no physical or real difference (to consumer’s perception) compared with its homogeneous products. Consumers are indifferent from which business they are going to buy the product. If a business increases the price of the product no consumer would want to buy. > Leads to incentives for advertisement. So, more advertisement is needed for businesses to stand out and hit the competition.
c) The complete freedom (no barriers) to entry or exit to the sector: There is no legal or other economic barrier for businesses to enter, or exit, the sector.
When businesses have economic profit, in the long-term, new businesses enter the sector, market price decreases and economic profit of businesses decreases. When businesses have economic loss, in the long-term, businesses exit the sector, market price increases and economic loss of businesses decreases. Entry and exit stops when businesses have economic profit = 0.
For the competitive business (perfectly) demand is perfectly elastic. If the business increases the price above the market price level (MP) then nobody would want to buy from that business the individual business’ quantity of the product demanded will be 0.
The goal of every business is to maximize the profits or minimize the losses by producing the optimum level of production.
Total revenue Equation (Gross Revenue) TR = P x Q (TR = Total Revenue, P = Price, Q=Quantity)
Since Price is fixed in perfect competition, the business can only choose Quantity in order to increase revenues and profit.
Average Revenue (AR): the Total Revenue per unit of product sold. Marginal Revenue (MR): the increase in Total Revenue from a unit sold.
Since the Price is fixed the increase in quantity sold by one unit increases revenues by an amount that equals the price. AR = (P x Q) / Q = P = MR
The optimum level of production is the one that maximizes Profit, or minimizes Costs. It can be done with both ways. In the following example, when producing 6 units of the product, the business is maximizing its profits.
When production is 0 the business is in loss since there are fixed costs. After the increase of production Total Revenue increase and TC increase with decreasing rate. At the Point where TR = TC (Q=3) Loss = 0.
After production increases, where TR>TC, the business generates profit. The optimum level of production is when Q=6, at that level the business maximizes profit. The levels Q=3 and Q=8 show economic loss/profit zero and they are called break-even points.
Comparing Marginal Revenue (MR) with Marginal Cost (TC): The business, in the short-term, manages to succeed in producing at the Optimal Level of Production where Marginal Revenue = Marginal Cost = Price in perfect competition.
The level of output that maximizes profit is not the same as the level of output that minimizes cost per unit, and so profit per unit of output. When Q=6 the business maximizes profits and MC = MR > this point where this equation is satisfied, it is optimal level of production or optimal output (profit side).
“I hope I am clear on this one. If not, contact us on social media and we will do our best to help you.
Thank you for reading my articles and watching my videos.”
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What Is an Asset Class Breakdown?
An asset class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities. Often, sub-asset classes may be reported in concentrated portfolios or for more granular detail.
- An asset class breakdown demonstrates how certain core asset classes are accounted for in an investment portfolio.
- Asset classes can include stocks, bonds, commodities, cash, real estate, and currencies.
- Asset class breakdowns help investors understand the nuts and bolts of their portfolios, management's goals, the distribution of funds, and the inherent risks.
Understanding Asset Class Breakdowns
An asset class breakdown represents the distribution of assets in a portfolio. Breakdowns are calculated by dividing the market value of a particular asset class's holdings by the fund’s total assets. Comprehensive asset class breakdowns are typically provided to help an investor understand the fund's investment objective and risk management strategy.
Investing by asset class is a primary way for investors and professional portfolio managers to manage risk. Asset classes may include cash, fixed income, equities, commodities, and real estate. Each has its risk characteristics and return opportunities. Fixed income and equity investments are typically asset classes used for core holdings. Both have multiple investment options, with fixed income used for more conservative investments and equities used for more aggressive allocations.
Cash investments are the most conservative and can include high-yield savings accounts and money market funds.
Types of Sub-Asset Class Breakdowns
Sub-asset class breakdowns are also often used in due diligence fund reporting and can provide similar support for investors. Sub-asset class breakdowns may be used when a fund is highly concentrated in one asset class.
Fixed income sub-asset class breakdowns can include a wide range of loans, government bonds, corporate bonds, and municipal bonds. Equity sub-asset classes can consist of special categories such as real estate investment trusts (REITs) and master limited partnerships (MLPs). They may also include market capitalization breakdowns such as small-cap, mid-cap, and large-cap or investment styles such as growth stocks and value stocks. Investing in international investments can add sub-asset class components for investments.
Example of Asset Allocation Breakdown
60/40 funds are a popular choice for investors seeking balanced asset allocation fund options. The BlackRock 60/40 Target Allocation Fund provides one example for investors. This Fund uses a fund-of-funds approach to provide a 60/40 asset class breakdown between equity and fixed income.
Individual fund holdings are used to provide exposure to various sub-asset classes, including U.S. stocks, developed market stocks, international stocks, and 7- to 10-year Treasury bonds. BlackRock's asset allocation funds include the 40/60 Target Allocation Fund, 80/20 Target Allocation Fund, and the 20/80 Target Allocation Fund.
The asset class breakdown is often used in marketing the fund to investors since it is a simple way to present the approximate risk profile of a fund. Asset allocation funds will generally vary by asset mix, often marketed as conservative, moderate, or aggressive funds.
Higher equity exposure is typically found in more aggressive growth funds. Moderate funds tend to have a balanced asset allocation approach that is evenly weighted between equity and fixed income. Overall, modern portfolio theory suggests that asset allocation can be a crucial determinant for total return potential and risk characteristics.
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There is no quick or easy formula when it comes to determining the expected monetary value (EMV); it is all based on probability. The value of commodities we own is evaluated by how much money they are worth, hence creating monetary value. With monetary value comes the probability of risks in different events, in this article we get to learn that there are positive risks (opportunities) and negative risks(threats). The decisions to be made are discussed by analyzing the expected monetary value.
Some of the decisions you make determine how much money you can expect in the future. The possibility of an outcome by its likelihood of occurrence are the determinants in this topic. In this article, we explore expected monetary value including its meaning, the associated formula, and how to calculate EMV.
What is the Expected Monetary Value?
Expected monetary value is a statistical concept that calculates the normal consequence when the future contains scenarios that may or may not transpire. An EMV analysis is usually recorded using a decision tree to stand for making decisions when facing multiple risks in events and their possible consequences on scenarios. The expected monetary value is a significant concept in project risk management which is for all types of schemes to create a quantitative risk analysis. As a risk management tool, the Expected Monetary Value can be used in projects to quantify and compare risks.
EMV is an estimated figure that shows how much money a complainant can practically expect in arbitration. Let’s think of it as a typical basis of the best-case scenarios where the risk brings opportunities and in the worst-case scenarios the risk brings threats. It accounts not only for the money figure allocated to each outcome but also for the probability of the outcome happening. EMV does not require additional costs, it only needs an expert who in this case could be a project manager to make the risk calculations.
Expected Monetary Value in Project Management
When it comes to risk management, although project managers have to primarily depend on their knowledge from past projects, there exists a technique known as Expected Monetary Value analysis to help in projects. The project team is expected to use expected monetary value to help them steer their way down the challenging paths. Even though many of the project management plans aspirants find this concept difficult to understand. However, the expected monetary value involves simple mathematical calculations.
Project management plan team is responsible for quantifying the features of the risks, either positive or negative, based on the company’s procedure and knowledge database. Once the project is quantified, the project manager could use the workings to calculate the EMV for each risk and the possibility reserve for the entire project respectively. Even though we said EMV involves simple calculations, it demands experience for one to appropriately substitute the right figure for each variable and analyze the final project possibility reserve using this technique.
Expected Monetary Value Formula
EMV calculates the average outcome when the future includes uncertain scenarios, which may either be positive (opportunities) or negative (threats). Opportunities are expressed as positive values, while threats are expressed as negative values. The formula for EMV of risk is as follows:
- Allocate a probability of occurrence for the risk.
- Allocate the monetary value of the impact on the risk when it happens.
- Multiply the values produced by step 1 and step 2.
Expected Monetary Value (EMV) = Probability of the risk (P) x Impact of the risk (I)
EMV = P x I
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How to Calculate the Expected Monetary Value
The EMV for any project is calculated by multiplying the probability of each consequence taking place by the value of each possible consequence and its Impact. Probability in this case is the likelihood of the occurrence of any event. For example, a coin has a 50% head outcome and 50% tail outcome when tossed.
The total number of events is 2 and hence the probability for head or tail outcome is ½. On the other hand, the impact is the money that you require to deal with the identified risk if it happens. For example, during project implementation, you note that there may be a breakdown in the gear you are using and you need to trade it with a new one. The cost of a new one is $7000. This is the impact value.
You are a project manager in an IT firm managing a software project and you identify a risk linked to the market claim. The possibility of risk is 20% and if it occurs you will lose $8000. Now we will calculate the EMV of this risk.
Probability of event happening: 20%
Impact of risk: – $8000
EMV = P x I
EMV = 0.2 x -8000 = -$1600
Suppose you are managing a large-scale farming project and your project has some risks that may cause postponement and cost overflows. For example:
Project risk 1: There is a 30% possibility of heavy rains. This will cause a delay in the project for 5 weeks and cost $9000.
Project Risk 2: There is a 20% probability of the rental charges of the equipment to increase, which will cost $10,000.
Project Risk 3: There is a 40% possibility of the cost of labor increases, which will cost $6000
Project Risk 4: There is a 25% possibility of increasing productivity the productivity of tractors due to the ground conditions. This will enable you to complete the project 3 weeks before and save up $10,000. Below is the calculation for the EMV of the project:
EMV = P x I
Project 1= 0.3 x -9000 = -2700
Project 2= 0.2 x -10,000 = -2000
Project 3= 0.4 x -6000= -2400
Project 4= 0.25 x 10,000= 2500
EMV of the project= -$2700+ -$2000+ -$2400+ 2500
EMV = -$4600.
Even after getting the EMV, a decision needs to be made hence the use of decision trees. In a decision tree diagram, a rectangular node is known as the decision node. There are no likelihoods at a decision node but we gauge the expected monetary value of the choices. In a decision tree, the first node is constantly a decision node. If there are more decision nodes then we gauge choices there and choose the best one and the expected value of this choice develops the expected value of the outlet leading to the decision node.
Expected Monetary Value Calculator
The expected monetary value calculator computes the project management metric. The calculator returns the EMV in U.S dollars. However, it can be automatically changed to other currency units through the pull-down menu.
You just need to enter the impact and probability of occurrence in the EMV to compute the expected monetary value.
Advantages of Expected Money Value
There are many benefits that expected money value provides in risk management. Here are some key gains:
- provides you with an average outcome of all the uncertain events that have been identified. This helps to be proactive and make necessary plans regarding such events.
- EMV aids with the calculation of contingency reserve.
- It facilitates decision tree analysis. This means that EMV makes it easier to understand problems and solutions.
- does not need any costly resources. The opinions of experts are what mainly counts.
- When making procurement plans, EMV helps to decide on whether to make or buy project items. This decision is vital when it comes to cost cutting and operating within the set budget.
Disadvantages of Expected Money Value
Although EMV is beneficial, it has the following shortcomings:
- Usually, expected money value is not applied in either small or small-medium-sized projects.
- EMV requires expert opinions to make decisions regarding probability and effects of risk. This suggests that outcomes may be affected by personal bias.
- The EMV technique functions well in situations where there are large number of risks. This is because EMV helps to spread the impact of risks.
- The final outcome of expected monetary value analysis is affected if positive risks are not included in analysis.
When performing EMV analysis, risk attitude should be kept at a neutral level. Otherwise, it can affect the calculation. Moreover, the reliability of the analysis is dependent on all the data provided, which acts as the input to the EMV technique. Overall, the analysis of expected monetary value makes it easier to enumerate risks, compute the contingency reserve and help you select the finest choice in a decision tree analysis. In addition, the dependability of this analysis depends on the input data; therefore, the data quality valuation should be thoroughly attained. You must have an unbiased attitude towards the risk, this is to avoid wrong calculations. This technique increases the assurance level in achieving the project objectives. Expected monetary value and decision tree analysis are both modules of project management and its body of facts. Therefore, either or both of these topics could be on your PMP examination
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Back taxes are taxes to a national government owed from previous years. Because they were not paid when they were due, the taxes will also typically incur interest and fines until they are dealt with. It is highly advisable to deal with back taxes as quickly as possible, because many tax agencies have the authority to enforce liens and other actions on you, thereby forcing you to pay your unpaid taxes.
There are a number of reasons for back taxes to accumulate. Some taxpayers, for example, may not realize that they owe taxes, or they may have been given erroneous information. Some taxpayers simply do not file tax forms, while others choose to deliberately evade their taxes. Both individuals and businesses can owe back taxes, and the consequences can be very serious if the taxes are not dealt with.
If you owe back taxes, it is better to approach your tax agency than to sit and wait for the tax agency to approach you. Many tax agencies, such as the Internal Revenue Service (IRS) in the United States, will offer amnesty to tax payers who demonstrate the intent to pay off their unpaid taxes. A taxpayer who asks for help may be offered a payment plan or another form of assistance. If the tax agency has to sent out representatives, however, the agency can and will get nasty.
Generally, the best way to deal with back taxes is to fill out the relevant tax forms for each year that your taxes were unpaid to determine how much money you owe, if any. The government may actually owe you money; many people who do not file returns have overpaid their taxes, and they are entitled to refunds. If your back taxes are complicated, you may wish to hire an accountant to help you. Pick an accountant who knows tax law well, as he or she may be able to help you negotiate with the tax agency.
If you cannot pay your overdue taxes in a lump sum, request a payment plan. You should sit down and think about your budget, and determine how much money you can offer to pay. By coming to the tax agency with a workable plan, you can impress them with your desire to correct the problem. Be aware that a tax agency may be able to confiscate property, place liens on financial accounts, and perform other actions to recover the money you owe them.
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The renewable energy world faces unprecedented uncertainty. Increased awareness surrounding the impact of climate change and dependence on fossil fuels has prompted policymakers and scientists to rethink their strategies.
The renewable energy industry has been both a benefactor and victim of these changing tides, as increased investment and support has been offset by delayed implementation and political populism. The Federal Government’s mandatory Renewable Energy Target (RET) that aims to have 20% of the country’s electricity generated from renewable sources by 2020 is a good indicator of its commitment to a clean energy future. However, the economics of coal-fuelled electricity considerably outweigh that of renewables and measures such as an emissions trading scheme have been postponed due to a fickle political climate.
Hydropower continues to be the largest source of renewable energy but has been affected by poor rainfall and drought conditions. Wind and solar power have exhibited dramatic growth over the decade, but their contribution to overall output remains small.
The introduction of the carbon tax on July 1, 2012 will see the industry benefit from significant assistance in the form of grants and concessions, but still remains at the mercy of its infancy and expensive cost structure. In the five years leading up to 2012-13, industry revenue is estimated to grow at an annualised 5.6% to total $5.24 billion. Revenue in 2012-13 is expected to post an increase of 35.2% from the previous year.
The future prospects of the industry are inextricably tied to the level of government support and the willingness of end users to wear higher costs. Initiatives such as interest free Green Loans and the Renewable Energy Development Fund aid investment in technology that will eventually make clean energy affordable.
Industry at a Glance
However, support from consumers and industry is equally important in setting a precedent for change.
The next five years will be critical in determining whether Australia’s abundant natural resources can indeed be harnessed and set a world example for a decarbonised future. To this end, IBISWorld estimates that industry revenue will increase by an annualised 10.8% until 2017-18 to total $8.77 billion.
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There is light at the end of the renewable power tunnel
JUDGING by comments at the World Future Energy Summit in Abu Dhabi recently, and recent statements by the South African Wind Energy Association, investment in the renewable energy sector is declining in Africa in general and in South Africa in particular. Evidence, however, indicates that far from experiencing a “rolling blackout”, such investments face a clean, well-lit future.
A number of considerations support this. First, Africa is experiencing a remarkable growth surge that will require substantial infrastructure investments. Second, there is time pressure to roll out new power generation to address a rapidly declining reserve capacity in South Africa. Third is the increasing cost burden of carbon emissions; and finally, there is the opportunity to align fixed investment — such as renewable energy projects that provide tangible social and developmental advantages — with local procurement policies, skills training and employment for the rapidly growing population both in the rural and urban areas.
Africa’s population stands at just more than 1-billion and is expected to double by 2050. According to a report by the International Renewable Energy Agency (Irena), titled Africa’s Renewable Future, in 2012, more than 590-million Africans (57% of the population) had “no access to electricity”, and 700-million (68% of the population) were “living without clean cooking facilities”.
More than 40% of the population lives in rural areas.
Separate economic reports put Africa’s growth at an average rate of 4% per year, and claim that over the past decade sub-Saharan Africa had six of the world’s 10 fastest-growing economies.
Africa’s gross domestic product is expected to “increase roughly threefold by 2030 and sevenfold by 2050”, and as the Irena report says, “sustaining such growth will only be possible if fuelled by a much larger and better performing energy sector”. South Africa is dependent upon 90% of its electricity supply coming from coal-fired power stations, while the rest of the country’s power is split between nuclear and hydroelectric schemes. Given South Africa’s economic growth since 1994 and the increased requirement to maintain, upgrade or replace its aging thermal power stations, pressure on power generation capacity has increased significantly over the past 15 years. The government’s Integrated Resource Plan 2010 (IRP2010) estimated that South Africa’s installed capacity would need to grow by 40GW (double the current capacity) in the next 20-25 years to meet existing and forecast demand.
While dependence on fossil fuels remains the government’s priority, the IRP2010 makes a substantial concession to including renewable energy in its plans. South Africa’s renewable energy programme has followed an extremely well run, clean and transparent procurement process to date, which has given it significant credibility in the eyes of the international renewable investor community. The Department of Energy’s Renewable Energy Independent Power Producers Procurement Programme (REIPPPP), launched in August 2011, provides for the procurement of 6, 925MW from renewable energy sources, primarily onshore wind, concentrated solar power and solar photovoltaic. The REIPPPP is being conducted in six rounds and following the third round, announced late last year, the development of 64 renewable projects that were awarded power production contracts to date is in progress, representing a collective investment value of R150bn and a combined installed capacity of 3,933MW.
While some investors may continue to favour fossil fuels, the Renewables Global Future Report 2013, published by the Renewable Energy Policy Network for the 21st Century (REN21), indicated that investment and ownership in renewable energy would come from a broad array of “investment sources, mechanisms, and models, including insurance companies and pension funds, utilities, oil companies, retail investors, sovereign wealth funds, banks, public equity, and multilateral finance”.
There is the added incentive for these investors to consider the associated responsible investment policies that take account of environmental, social and governance issues in renewable projects.
Such policies tend to adopt risk-return perspectives when pursuing energy investments (in other words favouring renewables, or at least a combination of renewable and fossil fuels) rather than straightforward traditional cost-benefit perspectives.
REN21 points to the growing demand for “transformational change”, which is not simply about “technology and infrastructure, but about models of social, institutional, business, and policy change”.
Increasingly, cities, municipalities and regions are striving to reduce their carbon footprint, which means investing in and promoting renewable energy policies.
Gone are the days when we could rely on conventional technologies that fit “centralised, inflexible, and commodity-like systems”. The new paradigm requires system designers who think in terms of “flexibility, modularity, multiple levels of service and reliability with energy becoming more service-like and less commodity-like”.
It is not only governments and local authorities that wish to reduce the cost of carbon emissions; investors are increasingly aware of their responsibility to support environmentally positive initiatives, and investments such as renewables will increasingly be favoured.
Apart from the obvious benefits of clean power production and the ability to construct renewable energy projects much faster than traditional thermal power stations, the South African government has recognised the potential impact that the renewable industry will have on job creation, skills transfer and economic development.
Irena has published several reports on the benefits of renewable energy in terms job creation, improving local skills and creating income-generating activities. The SMART Electricity Planning document prepared by the Electricity Governance Initiative of South Africa says its research found that “investment in renewable energy can stimulate economic growth, create abundant and sustainable new jobs, replace outmoded fossil fuel-based jobs and have positive knock-on effects, including for the poor and for rural livelihoods”.
It points out that renewable energy job creation is not only about replacing coal jobs with renewable ones but that there will be a “positive knock-on effect on rural livelihoods and job creation”.
The focus on localisation is expected to be a key underpin to the sustainability of the renewable energy programme and the challenge for investors will be to operate within these parameters to ensure that their REIPPPP bids comply and are ultimately successful. This has not deterred prospective investors so far, as evidenced by the growing number of bidders in successive rounds of the renewable energy programme.
According to REN21, global investment in renewable energy was approximately $290bn in 2011, up from a mere $40bn in 2004. Some economists say “private investment in renewables could exceed $500bn annually by 2020”. It would at best be an oddity should South Africa and the rest of Africa not be part of this power game, and at worst an aberration. I believe, however, that investors do see the opportunity of establishing operations in South Africa to supply the rapidly growing demand for renewables in the sub-Saharan market.
• Semple is a credit analyst with Futuregrowth Asset Management.
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Is it possible to make money on deposits
The Bottom Line Traditional introductory economic textbooks generally treat banks as financial intermediaries, the role of which is to connect borrowers with savers, facilitating their interactions by acting as credible middlemen.
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Individuals who earn an income above their immediate consumption needs can deposit their unused income in a reputable bank, thus creating a reservoir of funds. The bank can then draw on those from those funds in order to loan out to those whose incomes fall below their immediate consumption needs.
Fibonacci numbers trading on to see how banks really use your deposits to make loans and to what extent they need your money to do so.
Key Takeaways Banks are thought of as financial intermediaries that connect savers and borrowers. However, banks actually rely on a fractional reserve banking system whereby banks can lend more than the number of actual deposits on hand.
This leads to a money multiplier effect. In order to lend out more, a bank must secure new deposits by attracting more customers.
Without deposits, there would be no loans, or in other words, deposits create loans. Of course, this story of bank lending is usually supplemented by the money multiplier theory that is consistent with what is known as fractional reserve banking.
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The magnitude of this fraction is specified by the reserve requirementthe reciprocal of which indicates the multiple of reserves that banks are able to lend out.
However, given a particular monetary policy regime and barring any increase in reserves, the only way commercial banks can increase their lending capacity is to secure new deposits. Again, deposits create loans, and consequently, banks need your money in order to make new loans.
How banks actually make money
The loan counts as an asset to the bank and it is simultaneously offset by a newly created deposit, which is a liability of the bank to the depositor holder. Contrary to the story described above, loans actually create deposits.
Now, this may seem a bit shocking since, if loans create deposits, private banks are creators of money.
Why Banks Don't Need Your Money to Make Loans
The reality is that banks first extend loans and then look for the required reserves later. Fractional reserve banking is effective, but can also fail. During a " bank run ," depositors all at once demand their money, which exceeds the amount of reserves on hand, leading to a potential bank failure.
There two sorts of answers to this question, but they are related. The first answer is that banks are limited by profitability considerations; that is, given a certain demand for loans, banks base is it possible to make money on deposits lending decisions on their perception of the risk-return trade-offs, not reserve requirements.
How Banks Earn their Money
The mention of risk brings us to the second, albeit related, answer to our question. In a context whereby deposit accounts are insured by the federal government, banks may find it tempting to take undue risks in their lending operations.
For this reason, regulatory capital requirements have been implemented to ensure that banks maintain a certain ratio of capital to existing assets. However, since capital requirements are specified as a ratio whose denominator consists of risk-weighted assets RWAsthey are dependent on how risk is measured, which in turn is dependent on the subjective human judgment.
How to earn money by investing
As noted above, banks lend first and look for reserves later, but they do look for the reserves. Attracting new customers is one way, if not the cheapest way, to secure those reserves.
Indeed, the current targeted fed funds rate—the rate at which banks borrow from each other—is between 0. Article Sources Investopedia requires writers to use primary sources to support their work.
These include white papers, government data, original reporting, and interviews with industry experts.
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We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.
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We explain why in this blog post. Ever wonder why some banks give you money to switch?
Routledge, Federal Deposit Insurance Corporation.
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The media’s fascination with the prospect of peak oil has spread to another commodity — phosphorus. In Julian Cribb’s 2010 book, The Coming Famine: The Global Food Crisis and What We Can Do to Avoid It, Mr. Cribb highlights the 2007 work of Canadian physicist Patrick Déry, who applied the same analytical technique to world rock phosphate production that M. King Hubbert used to predict peak oil in the United States. Déry’s analysis suggested that the world reached peak rock phosphate production in 1989. Furthermore, the chart above demonstrates that the United States appears to have reached peak production long before that.
Curious, I decided to apply Hubbert’s analytical technique — so-called Hubbert Linearization — to the problem using more recent rock phosphate reserve and production data from the U.S. Geological Survey. What I found surprised me.
The Role of Phosphorus in Agriculture
Before delving into the details of my findings, it is important that I address why phosphorus is so important. The last century’s green revolution in food production succeeded because of the human application of mechanized equipment and systematic use of fertilizer on the farm. These two items drove tremendous leaps in agricultural productivity that helped sustain the world’s dramatic population increase in the twentieth century. One critical nutrient used in both fertilizer and animal feed that helped drive these crop yield improvements was phosphorus.
About ninety percent of industrial phosphorus makes its way to the agricultural industry. Of this ninety percent, animal feed accounts for about ten percent and fertilizer makes up the remaining ninety percent.
Perhaps because of a perceived peak in global rock phosphate production, prices have surged in recent years. But has the world really reached peak phosphorus production?
Applying Hubbert Linearization to Rock Phosphate Production
To answer this question, I first blindly applied the analytical technique to world rock phosphate production using data from 1900 to 2009. This technique provided a normal curve that suggests the world hit peak production in 1994 and that the ultimate amount of phosphoric rock ever recovered will be on the order of 8.9 billion metric tons. This number, the so-called ulimate recoverable reserves (URR) is supposed to equal the cumulative amount of phosphoric rock mined from 1900 to 2009 plus recoverable reserves still in the ground. My results are shown in the chart below.
Here is the problem. The U.S. Geological Survey 2010 estimates indicated that there were 16B metric tons of reserves in the world in 2009. Adding this 16B in reserves to the cumulative amount mined globally since 1900 yields a URR of about 23B, a number over two and a half times higher than the 8.9B figure implied by the “best-fit” curve.
Backsolving for the 23B figure and applying the same analytical technique yields the following result, which implies a peak production year of 2022 and a URR of 23.9B. This curve clearly does not have as nice a fit as the prior one, but it roughly foots to U.S. Geological Survey reserve estimates.
U.S. Geological Survey Quadruples Global Reserve Estimates in January 2011
While peaking rock phosphate production in 2022 is better having reached a peak in 1994, it still would be a concern for global food production. However, in January of this year, the U.S. Geological Survey more than quadrupled its reserve estimates from 16B metric tons to 65B metric tons. Using this revision, I again ran a Hubbert Linearization. When I tried to match the URR to that implied by the U.S. Geological Survey’s estimates of 72B, the normal curve fell out of view. So I assumed that countries would not be able to mine all of these reserves economically and fit the curve for a URR of 33B. This extremely conservative estimate implies that phosphoric rock will not peak until 2038, which suggests that global production has not peaked nor will it be peaking any time soon.
So the next time someone suggests that peak phoshorus is a looming concern, you can take comfort that the data does not seem to support their case.
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}
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National Olympiad in Informatics, China, 1998
Day 1, Problem 1 - Personal Income Tax
A country's income tax law regulates for citizens' personal income taxes to be based on their wage and income.
Wage taxation is calculated on a monthly basis. 800 dollars worth of fees is subtracted from one's total monthly wage, and the result is used as the base amount from which their personal income tax is calculated. The tax rate is outlined in the following table:
|Bracket||Base Amount Range (Each Month)||Tax Rate (%)|
|1||No more than 500 dollars||5|
|2||More than 500 dollars, up to 2000 dollars||10|
|3||More than 2000 dollars, up to 5000 dollars||15|
|4||More than 5000 dollars, up to 20000 dollars||20|
|5||More than 20000 dollars, up to 40000 dollars||25|
|6||More than 40000 dollars, up to 60000 dollars||30|
|7||More than 60000 dollars, up to 80000 dollars||35|
|8||More than 80000 dollars, up to 100000 dollars||40|
|9||More than 100000 dollars||45|
Income taxation is calculated independently, and separately each payout instance. For each payout, if the amount does not exceed 4000 dollars, then 800 dollars of fees is taken away to get the base amount. If the amount exceeds 4000 dollars, then 20% of that is subtracted to yield the base amount. The base amount is then used to calculate the income tax rate.
|Bracket||Base Amount Range (Each Payout)||Tax Rate (%)|
|1||No more than 20000 dollars||20|
|2||More than 20000 dollars, up to 50000 dollars||30|
|3||More than 50000 dollars||40|
From the above, one should realize that both wage and income taxes are to be calculated in a compounded fashion. That is, one must start at the first income bracket and pay as much of that given range as possible according to the rate specified in the bracket. If there is money left over (their current amount exceeds the base amount range), then they move down to the next income bracket, where they apply as much of the excess amount as they can. This continues until they have exhausted all of the value.
For example, an individual's wage for one month is 3800 dollars. After subtracting 800 dollars of fees, they apply the remaining 3000 dollars to each of the income brackets. Bracket 1 is completely filled with 500 dollars, bracket 2 is completely filled with 1500 dollars, and bracket 3 gets the remaining 1000 dollars. The rates applied to the brackets are respectively 5%, 10%, and 15%. Thus the total wage tax for that month is 500×5% + 1500×10% + 1000×15% = 325 (dollars). The calculating process is outlined in the figure given on the left.
You must write a program to help a company keep track of the taxes they have to pay for one year, given the information of all of their payouts (the type of payout, time of payout, and the amount paid). Your program must find the sum of both the wage tax and income tax for all of their employees.
The first line of inputs contains one integer M (M ≤ 50000), the number of employees in the company. The remaining lines each describe the information for one payout instance. There are two possible formats:
- Wage tax payout:
PAY ID Date Amount
- Income tax payout:
INCOME ID Date Amount
ID represents the ID of the employee being paid (an integer from 1 to M),
Date is the date of the payout in the format
MM is the month (1 ≤ MM ≤ 12),
DD is the day (1 ≤ DD ≤ 31), and
Amount is the amount paid in dollars (assume that each amount is a positive integer no larger than 1 million).
A line with the character "
#" denotes the end of input. Adjacent values in the input will be separated by one or more spaces.
The output contains a positive number P, the total amount of tax (wage and income) that the company must pay on behalf of all of its employees for that year in dollars. This value must be rounded and displayed to 2 decimal places.
2 PAY 1 2/23 3800 INCOME 2 4/8 4010 INCOME 2 4/18 800 PAY 1 8/14 6700 PAY 1 8/10 1200 PAY 2 12/10 20000 #
Point Value: 7
Time Limit: 1.00s
Memory Limit: 16M
Added: May 01, 2014
C++03, PAS, C, HASK, ASM, RUBY, PYTH2, JAVA, PHP, SCM, CAML, PERL, C#, C++11, PYTH3
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