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.