Accounting 12 Chapter 12

Gas prices drop record amount

Link: http://www.cnn.com/2008/US/10/26/gas.prices/index.html?iref=newssearch

Summary

The average price of self-serve, unleaded gas in the United States as of Friday was $2.78 a gallon, compared to $3.31 two weeks ago. A total of 53 cents drop in gas prices over the last two weeks has set another record, and the publisher of a national survey predicted that Sunday prices will continue to decline, but at a slower pace. The all-time high average was $4.11. Numbers based on responses from more than 5,000 service stations nationwide. Oil prices have fallen by more than half from $147 a barrel in July because of lower demand due to rough economic times, especially in the United States.

Connections

The connections I made between the article and chapter 12 would be cash discounts. The article talks about the massive drop in oil prices. With this chapter focusing on specialized journals, discounts are recorded in the Discounts Earned account (for the customer) and/or the Discounts Allowed account (for the retailer). While this focuses mainly on retailers businesses but I think prices drop has does the same effect as discount. They both attract consumer and increase the demand of such products. Moreover, there are discounts given when payments are made before its due date. These discount have terms that must be met before it is in effect.

Reflection

In my opinion, I think having discounts or lowering the price to attract consumer are great strategies, since not only consumer can get a great deal but at the same time retailer can make a profit and increase its demand of the product. Moreover, I think having discount encourage people to shop more and it could increase our country’s economy. Therefore I think lowering prices and having discounts are consider a win-win situation.

Economics Chapter Two

Airlines begin cutting fares for holiday travel

Link: http://www.cnn.com/2008/TRAVEL/10/30/airlines.holiday.fares.ap/index.html

Summary

This article talks about major U.S airlines cutting many fares for the upcoming Thanksgiving and Christmas seasons. Many airlines see price-cutting as necessary in the face of a recession economy that could affect both leisure and business travel. Northwest Airlines started the rush Tuesday night with a broad holiday fare sale, and most other major carriers matched the prices the next day, Wednesday. The cuts ranged up to 25 percent off the previous price for tickets that must be bought 21 or 30 days ahead of travel. Carriers would rather not be cutting prices now, but demand may be slowing faster than airlines can reduce the supply of available seats. In most cases, the prices are good until at least late November.

Connections

The connection that I found between this article and the text in chapter 2 is the concept of supply and demand. Due to the recession economy we have today, many businesses are cutting supplies to once again increase the demand for products or services. Moreover, consumer’s income has declined or affected due to the economy; therefore they will no longer spend money on travels or vacations. This will once again lower the demand for airlines and carriers. Prices for products or services will only increase if there’s a high demand and limited supply; however, the demands for airlines are at its worst compare to a few months back.

Reflection

I agree to what the airlines and carriers are doing. I believe that cutting the price will attract more consumers to travel during holidays and increase the demand. As we all know, the economy is in a complete recession. We've got to be prepared for a weak economy and weaker demand. Many other businesses are also cutting price due to the low demand, such as oil and etc. This way we can slowly bring the economy back up and balance out the supply and demand factors.

Accounting 12 Chapter 11

China orders milk products pulled

Link: http://www.cnn.com/2008/WORLD/asiapcf/10/14/tainted.milk.ap/index.html

Summary

A national affecting event took place last month as dairy suppliers in China added the industrial chemical melamine to watered-down milk to fool quality control tests and make the product appear rich in protein. Melamine can cause kidney stones as the body tries to eliminate it and, in extreme cases, lead to life-threatening kidney failure. Approximately four infants has been killed and tens of thousands of children nationwide has been sickened due to this. China ordered all milk products more than a month old are being pulled from store shelves for emergency testing, as another child in Hong Kong developed kidney stones after consuming melamine-contaminated products. All milk powder and liquid milk produced before September 14 must be tested. Moreover, no products would be sold unless they pass quality tests and are labeled as safe. Many companies and consumers are affected due to this serious crisis.

Connections

The connection between the article and Chapter 11 is COGS (goods that are lost, broken, or stolen). Due to huge amount of contaminated chocolates, cookies, candies and milk products, which will all have to be included on the income statement as either a return or as COGS. Many dairy suppliers are now in hold of serious debts as they have to cover large amount of returns and law suits that are taking place. If this crisis continues I believe many more people will be affected and more innocent child will be harmed.

Reflection

In my opinion, I believe China is doing the right decision as to pull off all the dairy products and put it into quality tests. However, I think they should put a more serious charge on the suppliers that added chemical melamine which will affect others and are against their moral. If China treats this crisis sucessfully then it would have a better image and gain trust from consumers again.

Economics Chapter One

Chinese demand for B.C. lumber takes off

Link: http://www.canada.com/vancouversun/news/business/story.html?id=08d079c6-eea7-41db-8b3f-ea97c900d0a7

Summary

This article talks about the sudden demand of B.C lumber from China. It was reported last week that they took on 10 million board feet of wood destined for Asia. Longshoremen loaded the Saga Wave with the largest load of lumber to leave Port Alberni in nine years, and half of it - five million board feet - was going to China. The article states that China's sudden emergence as a new major market for B.C. lumber is filling some of the void left when the U.S. housing market crashed two years ago, resulting in huge spread sawmill closures and worker layoffs here. B.C. exports to China have doubled since 2007, which was double 2006 exports. As a result, the forests ministry is forecasting 945 million board feet this year, but Forests Minister Pat Bell said he believes exports will reach the one billion mark.

Connections

The connection between the article and the concepts in chapter one is scarcity. Through out the years, China has been vastly developing using tons of woods and other resources. Therefore its scarce now and they are realizing the consequences of deforestation and are required to import foreign lumber. The high demand of woods moves lumber closer to an abundant resource

Reflection

In my opinion, I believe its a positive act towards lumber industry in B.C due to the huge demand by countries in Asia, especially China. Moreover, it opens up more opportunity for B.C lumber to be sold as the industry dispute with United States. Therefore, in the long run it will help increase B.C's lumber industry and provide more job positions in British Columbia.