http://www.foxbusiness.com/story/markets/economy/madoff-accountant-faces-criminal-charges/
Summary
“Madoff Accountant Faces Criminal Charges,” is an article written by Dunstan Prial from FOXBusiness. The article is about David G. Frienhing, an accountant who helped Bernard Madoff in his investment fraud. David G. Frienhing, currently 49 years old, turned himself in to the authorities on March 18, 2009. He is currently facing criminal charges for helping Madoff operate his investment fraud, which is probably the largest investment fraud in the history of mankind. David G. Frienhing isn’t accused for the knowing about Madoff’s investment fraud, but for deceiving investors by falsely certifying financial statements that he audited for Madoff. Madoff had given his clients false financial statements that showed that they were earning money, but in reality Madoff hadnt made a single transaction for the last decade. David G. Frienhing was charged for security frauds, aiding and abetting investment adviser fraud, filing false audit reports and is specifically being charged for falsely certifying Madoff’s audited statements. In accordance with GAAP (Generally Accepted Accounting Principles) David G. Frienhing’s bail was set to 2.5 million dollars plus having his personal recognizance bond secured, which was four pieces of property worth about $800, 000 to $900, 000. He currently has his passport confiscated and his area where he can travel reduced. David G. Frienhing can face up to 105 years in jail for the crime he has done.
Connection
The article, “Madoff Accountant Faces Criminal Charges” has many connections to the accounting 12 textbook. The specific connections that the article and the accounting textbook have are business transactions and GAAP. A business transaction is a financial event that changes the value of certain accounts. Recording business transactions are very important in the business world because it’s what affects the financial position of a business or person. In the article, Madoff gave his clients false statements that showed transactions earning them profit. In reality, Maddoff didn’t make a single transaction for the last thirteen years. The other connection to the article was GAAP. GAAP is the generally accepted accounting principles that all accountants should follow. This is an important part of the article since David G. Frienhing broke these rules in order to certify Madoff’s financial statements. The specific Generally Accepted Accounting Principles that David G. Frienhing broke are the principle of conservatism, the objective principle, and the materiality principle. The principle of conservatism states that accounting for a business should be fair and reasonable. Accounts are required to make evaluations and estimates to deliver opinions and to select procedures in a way that neither overstates nor understates the results. In Madoff's case, he showed his clients false financial statements that overstates earnings they didn't have. The objective principle states that accounting is recorded on the basis of objective evidence. Madoff had showed his clients that they earned money with no real evidence. Since Madoff hadn't made a single transaction for the last thirteen years, the evidence that his clients were all shown are obviously fake. The last specific GAAP that David broke, the materiality principle, states that accountants are required to follow GAAP unless it is expensive or difficult to do so and makes no real difference in the real world. The scam made a big difference in the real world. Many people had lost a lot of money investing in Madoff's investment scam because Madoff and David got greedy and broke the Generally Accepted Accounting Principles. GAAP is an important part of accounting, and breaking it lead to a maximum of 105 years for David G. Frienhing.
Reflection
I think David G. Frienhing deserved what he got. He helped Madoff cause a lot of people to loss their hard earned cash in his investment scam and ignored the generally accepted accounting principles in order to do so. I think Madoff and David probably wanted out of the scam once they had earned a fortune off it, but couldnt because it would get suspesious if a lot of people started losing money in their investments and they were the only ones earning money. I am surprised it took so long for people to find out about this scam. Although this is a terrible event, I think some good came out of it. After reading about this, a lot of people will probably be more careful about their investments and hopefully less people will try to do an investment scam like this. I think GAAP is an important part of accounting, without it the business world will be in chaos. I also think that the people that invested into Madoff’s investments have learned that if it’s too good to be true, then it probably is the hard way.
Sunday, April 5, 2009
Wednesday, March 11, 2009
ACC12: Chapter 16 Article
http://www.edmontonsun.com/News/Alberta/2009/03/05/8633386-sun.html
Summary
“Alberta’s minimum wage increases” is an article written by Kerry Diotte from the Edmonton Sun. On April 1, 2009, citizens of Alberta will have an increase in minimum wage of $0.40. From the current minimum wage of $8.40 in Alberta, Alberta’s minimum wage will increase to $8.80. This increase in minimum wage will make Alberta the province with the second highest minimum wage. Alberta won’t take second for too long, because in a couple of months other provinces like Ontario, Quebec, Saskatchewan, and Newfoundland will all have a higher minimum wage, with Ontario have the highest minimum wage of $9.50. Many people have different views of minimum wage. Employees will always want it higher while employers think the lower the better.
Connection
The connection between the article, “Alberta’s minimum wage increases” and chapter 16 of the accounting 12 textbook is wages. Wages are the payment that a worker earns for his or her labour. The article talks about the minimum wage an employee earns for their labour on an hourly basis in Alberta and compares it to other province’s minimum wages. In section 16.1 in the accounting text book, it gives the general meaning of wages and how much a worker gets paid for a period of time. An employee loses some of his payment for his labour if he is late and earns more money if he is paid commissions. Paying wages is what keeps employees working and businesses running.
Reflection
I think that increasing the minimum wage in Alberta isn’t the best thing to happen. The increase in wages will make it so more people are able to buy more stuff, but this is only for people who are earning less than $8.80 per hours in Alberta. Increasing the minimum wage will cause the gap between people who are earning over $8.80 in Alberta and the people earning the minimum wage in Alberta less. People who had to work hard for a raise might get discourage because everyone earning minimum wage in Alberta will get a raise of $0.40 an hour on April 1 for doing nothing. This is also bad for employers because they are paying more for the same quality of work. Increasing the minimum wage might cause a few businesses to lay off people because of the increase in minimum wage during a recession. The increase in minimum wage for Alberta is a discouraging thing for employees earning over minimum wage, bad for employers who aren’t doing well in business, but a good thing to those who are earning minimum wage in Alberta.
Summary
“Alberta’s minimum wage increases” is an article written by Kerry Diotte from the Edmonton Sun. On April 1, 2009, citizens of Alberta will have an increase in minimum wage of $0.40. From the current minimum wage of $8.40 in Alberta, Alberta’s minimum wage will increase to $8.80. This increase in minimum wage will make Alberta the province with the second highest minimum wage. Alberta won’t take second for too long, because in a couple of months other provinces like Ontario, Quebec, Saskatchewan, and Newfoundland will all have a higher minimum wage, with Ontario have the highest minimum wage of $9.50. Many people have different views of minimum wage. Employees will always want it higher while employers think the lower the better.
Connection
The connection between the article, “Alberta’s minimum wage increases” and chapter 16 of the accounting 12 textbook is wages. Wages are the payment that a worker earns for his or her labour. The article talks about the minimum wage an employee earns for their labour on an hourly basis in Alberta and compares it to other province’s minimum wages. In section 16.1 in the accounting text book, it gives the general meaning of wages and how much a worker gets paid for a period of time. An employee loses some of his payment for his labour if he is late and earns more money if he is paid commissions. Paying wages is what keeps employees working and businesses running.
Reflection
I think that increasing the minimum wage in Alberta isn’t the best thing to happen. The increase in wages will make it so more people are able to buy more stuff, but this is only for people who are earning less than $8.80 per hours in Alberta. Increasing the minimum wage will cause the gap between people who are earning over $8.80 in Alberta and the people earning the minimum wage in Alberta less. People who had to work hard for a raise might get discourage because everyone earning minimum wage in Alberta will get a raise of $0.40 an hour on April 1 for doing nothing. This is also bad for employers because they are paying more for the same quality of work. Increasing the minimum wage might cause a few businesses to lay off people because of the increase in minimum wage during a recession. The increase in minimum wage for Alberta is a discouraging thing for employees earning over minimum wage, bad for employers who aren’t doing well in business, but a good thing to those who are earning minimum wage in Alberta.
Sunday, March 1, 2009
ACC12 : Chapter 15 Article
http://www.nytimes.com/2009/02/19/technology/companies/19yahoo.html?ref=business
Summary
“Yahoo Shows Search Ads With Images and Video” is an article written by Stephanie Clifford from the New York Times. The article is about yahoo introducing a new type of search advertising they created. Yahoo calls this new advertising offer “Rich Ads in Search.” This new type of search advertising integrates images and videos in paid listings compared to typically search advertising that show only text advertisements and links. Usually a marketer will use their online budget on search advertising and display adverting, a video or image on a banner/box on a web page. With this new type of search advertisement, Yahoo hopes to win back paid search advertising from Google, the current market leader. According to the research firm eMarketer, in 2004, Yahoo’s market shares in paid search advertisement fell 13.8% and in 2009, it fell 10.5%. Also, Google has doubled their market shares in paid search advertising in the same period of time. It market shares jumped from 32.8% in 2004 to 67.7% this year. Yahoo’s strength on internet advertisement has been display advertising on highly trafficked pages, but because of the recent recession many advertiser’s changed to search advertising, which gives measurable results anytime. Advertisers, who are willing to pay a huge price in order to develop their company commercials and/or logos will probably, be attracted to Yahoo’s new type of search advertisements.
Connection
There are two connection between the article, “Yahoo Shows Search Ads With Images and Videos” and chapter 15 of the accounting textbook. The first connection is that both sources are about users of financial statements and the second connection is that both sources talk about comparing financial data. The types of users of financial statements in the article are insiders (the owner, managers, and executive group of a company). The insiders in the articles are Yahoo and the companies that use paid advertisement. Yahoo uses its financial data to compare its revenue in paid search advertising to Google, the current market leader in paid search advertising. Many companies use financial data to compare to other companies to make decisions like putting more or less into paid advertisement.
Reflection
I think that comparing financial data is very important in business. It can be used to evaluate a company and see how it’s doing. Comparing financial data also helps companies that are not doing so well, be prepared mentally for the worst case scenario and be ready to take action when the time comes. I believe that Yahoo’s new type of search advertising will do well because no other company has this type of search advertising, but won’t be enough to make them market leader. I think that some companies will be willing to pay for this type of advertisement because it’s a new concept, but I don’t think that it will make a big difference. Personally, I don’t think this type of advertising will affect me at all, since I just ignore online ads and find them annoying.
Summary
“Yahoo Shows Search Ads With Images and Video” is an article written by Stephanie Clifford from the New York Times. The article is about yahoo introducing a new type of search advertising they created. Yahoo calls this new advertising offer “Rich Ads in Search.” This new type of search advertising integrates images and videos in paid listings compared to typically search advertising that show only text advertisements and links. Usually a marketer will use their online budget on search advertising and display adverting, a video or image on a banner/box on a web page. With this new type of search advertisement, Yahoo hopes to win back paid search advertising from Google, the current market leader. According to the research firm eMarketer, in 2004, Yahoo’s market shares in paid search advertisement fell 13.8% and in 2009, it fell 10.5%. Also, Google has doubled their market shares in paid search advertising in the same period of time. It market shares jumped from 32.8% in 2004 to 67.7% this year. Yahoo’s strength on internet advertisement has been display advertising on highly trafficked pages, but because of the recent recession many advertiser’s changed to search advertising, which gives measurable results anytime. Advertisers, who are willing to pay a huge price in order to develop their company commercials and/or logos will probably, be attracted to Yahoo’s new type of search advertisements.
Connection
There are two connection between the article, “Yahoo Shows Search Ads With Images and Videos” and chapter 15 of the accounting textbook. The first connection is that both sources are about users of financial statements and the second connection is that both sources talk about comparing financial data. The types of users of financial statements in the article are insiders (the owner, managers, and executive group of a company). The insiders in the articles are Yahoo and the companies that use paid advertisement. Yahoo uses its financial data to compare its revenue in paid search advertising to Google, the current market leader in paid search advertising. Many companies use financial data to compare to other companies to make decisions like putting more or less into paid advertisement.
Reflection
I think that comparing financial data is very important in business. It can be used to evaluate a company and see how it’s doing. Comparing financial data also helps companies that are not doing so well, be prepared mentally for the worst case scenario and be ready to take action when the time comes. I believe that Yahoo’s new type of search advertising will do well because no other company has this type of search advertising, but won’t be enough to make them market leader. I think that some companies will be willing to pay for this type of advertisement because it’s a new concept, but I don’t think that it will make a big difference. Personally, I don’t think this type of advertising will affect me at all, since I just ignore online ads and find them annoying.
Thursday, November 20, 2008
ACC12: Chapter 14 Article
http://www.usatoday.com/money/industries/banking/2008-11-09-bank-credit-card-interest-rates_N.htm
Summary
“Why banks are boosting credit card interest rates and fees,” is an article written by Kathy Chu and Byron Acohido from USA TODAY. It starts off with a small story about a guy name Tommy Newsom. Tommy Newson gets his credit card bill and is shocked that interest rate has doubled. He asked a customer rep and was informed that the law allowed his bank to double the interest rate. Tommy states, “The bank is just looking for a reason to maximize profits.” It isn’t just Tommy’s bank that has increased the interest rates and penalty fees on credit cards. Many banks are increasing their interest rate and penalty fees for credit cards to increase revenue because of mortgage-related losses in the economy. Also, “selling off credit card debts has given banks a powerful incentive to raise card fees and penalties.” Securitization is another reason why banks have increased interest rates, but banks have denied the relationship between securitization and increased penalties. Securitization has caused some credit card companies to take riskier loans.
Connection
The connection I made between chapter 14 in the accounting textbook and the article, “Why banks are boosting credit card interest rates and fees” is credit card charges. The bank doesn’t provide free service for credit cards. They charge fees and interest to earn revenue from credit cards. The bank charges transaction fees, annual fees, interest on advances of cash given to them and overdue balances on the credit cards. The main fee that connects the textbook and the article is interest on overdue balances. The article is mainly about the increase in credit card interest rates. When the bank increases the interest on credit cards, they earn more money.
Reflection
I agree that banks should increase the interest on credit cards because of their losses in mortgages, but I don't think nearly doubling it is reasonable. At a time when the household budgets are bad, it’s giving consumers a harder time to pay their bills on time. I think families with tight budgets shouldn't be using credit cards. The interest is going to cause them to pay a lot more and the debt is just going to increase if not paid on time. If possible, I think consumers that are on a tight budget should just use cash. Credit cards maybe convenient, but can cause financial hardship for people and give more revenue to banks.
Summary
“Why banks are boosting credit card interest rates and fees,” is an article written by Kathy Chu and Byron Acohido from USA TODAY. It starts off with a small story about a guy name Tommy Newsom. Tommy Newson gets his credit card bill and is shocked that interest rate has doubled. He asked a customer rep and was informed that the law allowed his bank to double the interest rate. Tommy states, “The bank is just looking for a reason to maximize profits.” It isn’t just Tommy’s bank that has increased the interest rates and penalty fees on credit cards. Many banks are increasing their interest rate and penalty fees for credit cards to increase revenue because of mortgage-related losses in the economy. Also, “selling off credit card debts has given banks a powerful incentive to raise card fees and penalties.” Securitization is another reason why banks have increased interest rates, but banks have denied the relationship between securitization and increased penalties. Securitization has caused some credit card companies to take riskier loans.
Connection
The connection I made between chapter 14 in the accounting textbook and the article, “Why banks are boosting credit card interest rates and fees” is credit card charges. The bank doesn’t provide free service for credit cards. They charge fees and interest to earn revenue from credit cards. The bank charges transaction fees, annual fees, interest on advances of cash given to them and overdue balances on the credit cards. The main fee that connects the textbook and the article is interest on overdue balances. The article is mainly about the increase in credit card interest rates. When the bank increases the interest on credit cards, they earn more money.
Reflection
I agree that banks should increase the interest on credit cards because of their losses in mortgages, but I don't think nearly doubling it is reasonable. At a time when the household budgets are bad, it’s giving consumers a harder time to pay their bills on time. I think families with tight budgets shouldn't be using credit cards. The interest is going to cause them to pay a lot more and the debt is just going to increase if not paid on time. If possible, I think consumers that are on a tight budget should just use cash. Credit cards maybe convenient, but can cause financial hardship for people and give more revenue to banks.
Thursday, October 30, 2008
ACC12: Chapter 12 Article
http://news.bbc.co.uk/2/hi/uk_news/magazine/7668139.stm
Summary
The article, “High Street – Discount Store” from BBC news is about a discount store owned by a man named Peter Gallagher. Peter’s discount store, Shirley Market, had been getting ready for the busiest time of the year for his small business, but noticed that some of his biggest customers for fireworks weren’t around this year. His prices had increased but he’s profit remained the same. Even with all the talk about recession, Peter thinks his store will do fine. Peter says that his business has recently attracted more upmarket customers and stated that, “The person who wouldn't usually shop in this kind of place. The type of people who would usually shop at John Lewis. They're coming in and looking for things like tin openers."
Connection
The connection I made between chapter 12 from the accounting textbook and the article from BBC news are synoptic journals and cash discounts. When some people think of small business like Shirley Market, they might think of synoptic journals. A synoptic journal is a multicolumn journal designed for small businesses. A small business like Shirley Market would probably use a synoptic journal. Since Shirley Market is a general discount store, I presume that there is some sort of cash discount involved. Shirley Market would probably pay their bills as soon as possible so they can get the cash discount and sell their products for a cheaper price.
Reflection
I think small general discount stores like Shirley Market would want to receive a cash discount on their bills. If they got a cash discount on their bills, they would be able to sell their products at a cheaper price without losing profit. I think the recession is causing people to not waste money on unnecessary and expensive things like fireworks and buy at cheaper stores like Shirley Market. I hope the economy won't be in recession for a long period of time and people learn not to waste money on useless things that they aren't going to use.
Summary
The article, “High Street – Discount Store” from BBC news is about a discount store owned by a man named Peter Gallagher. Peter’s discount store, Shirley Market, had been getting ready for the busiest time of the year for his small business, but noticed that some of his biggest customers for fireworks weren’t around this year. His prices had increased but he’s profit remained the same. Even with all the talk about recession, Peter thinks his store will do fine. Peter says that his business has recently attracted more upmarket customers and stated that, “The person who wouldn't usually shop in this kind of place. The type of people who would usually shop at John Lewis. They're coming in and looking for things like tin openers."
Connection
The connection I made between chapter 12 from the accounting textbook and the article from BBC news are synoptic journals and cash discounts. When some people think of small business like Shirley Market, they might think of synoptic journals. A synoptic journal is a multicolumn journal designed for small businesses. A small business like Shirley Market would probably use a synoptic journal. Since Shirley Market is a general discount store, I presume that there is some sort of cash discount involved. Shirley Market would probably pay their bills as soon as possible so they can get the cash discount and sell their products for a cheaper price.
Reflection
I think small general discount stores like Shirley Market would want to receive a cash discount on their bills. If they got a cash discount on their bills, they would be able to sell their products at a cheaper price without losing profit. I think the recession is causing people to not waste money on unnecessary and expensive things like fireworks and buy at cheaper stores like Shirley Market. I hope the economy won't be in recession for a long period of time and people learn not to waste money on useless things that they aren't going to use.
Wednesday, October 8, 2008
ACC 12: Chapter 11 Article
http://lfpress.ca/newsstand/Business/BusinessMonday/2008/10/06/6990796-sun.html
Summary
The article I read was written by Norman De Bono, a writer from “The London Free Press.” His article is about the trucking industry in North America and the brunt caused by U.S.’s economic slowdown. The decrease in truck sales and production indicates that an economy isn’t doing well. It is expected that fewer trucks will be needed to ship goods since Canadian businesses are being tugged downhill by the U.S economy because they are heading toward recession. As a result of the slowdown freights are shrinking and workers are being laid off. Factors that will maintain the slowdown are new emission standards, rising cost of fuel, rising value of loonies in Canada, and reduced fleet sizes. Some experts say that the North American trucking industry will start to recovery in late 2009 or early 2010.
Connection
The connection i made between chapter 11 of the accounting textbook and the article written by Norman De Bono are the freight-in figure and merchandising businesses. Freight-in is the delivery charges on incoming merchandise. The North American trucking industry will probably have to increase their delivery charges because of the decrease in revenue and the increase in the cost of fuel. If the freight-in figure increased, it would cause merchandising companies that need a delivery for there purchases to earn less revenue or raise their prices on their merchandise. In conclusion, if the trucking industry is doing poorly the economy is affected by it.
Reflection
Experts say that a recovery may happen in late 2009 or early 2010. I think it would take longer than that for the trucking industry to start recovering. With the U.S economy heading toward recession, I believe it would take more than just one year, unless the new president makes some good decisions. With the new emission standards and the rising cost of fuel, I wouldn't be surprise if a North American trucking company goes bankrupt. I think most small trucking business will take a great loss in sales before a recovery will start. I hope this situation will get better as soon as possible, because many people are getting laid off.
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