Notes, summaries, assignments, exams, and problems for Economy

Understanding Company Structure and Accounting Principles

A company is a legal entity made up of an association of persons, be they natural, legal, or a mixture of both, for carrying on a commercial or industrial enterprise. An accounting cycle is a set of steps applied in the accounting of a company. The general ledger contains all the accounts for recording transactions relating to a company's assets, liabilities, owner's equity, revenues, and expenses.

Elements of a Company

• Merchant
• Worker
• Technology
• Provider

Principles and Ethics Code of an Accountant

Accountants must adhere to a strict code of ethics, including:

• Integrity: The accountant must be upright in all their acts. It is not allowed to make any act that could discredit their profession.
• Discretion:

Key Accounting Terms

• Entries: Journal analysis of the effects of a transaction on the accounts, usually accompanied by an explanation of the transaction.
• Ledger: Single accounts kept updated by posting. Each is recorded with one debit and one credit.
• Assets: Resources controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.
• Liabilities: Obligations of the enterprise arising from past events, expected to result in an outflow from the enterprise of resources embodying economic benefits.
• Equity: What is left of the assets after liabilities are deducted. Capital or owner's interest, withdrawals.
• Expenses: Amounts that have been paid or will be paid for costs that have been incurred

Fundamental Accounting Principles

Accrual Basis of Accounting

Revenue is recognized when earned, and expenses are recognized when incurred, regardless of when cash changes hands.

Cash Basis of Accounting

Revenue is recognized when cash is received, and expenses are recognized when cash is paid.

Matching Principle

Requires expenses to be recognized in the same period as the revenues they helped generate.

Time Period Principle

States that a business should report its financial results over specific, consistent time periods.

Key Financial Statement Components

Current Assets

Assets expected to be converted to cash, sold, or consumed within one year or one operating cycle, whichever is longer.

Long-Term Investments

Investments held for more than one year, typically... Continue reading "Essential Accounting Terms & Financial Definitions" »

Stakeholder PRO

Get to know stakeholders better — relative importance, power & interests — better managed relationships — risks identified.

• Make better strategies & decisions.
• Greater acceptance of organisation actions by stakeholders.

Cons:

• Best done on a continuous basis.
• Assessment or analysis may be subjective.
• Maybe not all stakeholder interests can be met at the same time — focus on the most important stakeholders; balance and reconcile all interests according to importance or urgency.

4P — Product / Service

1. What does the customer want from the product, plan, or service?
2. What features does it have to meet these needs?
3. Are there any features you've missed out?
4. Are you including costly features that the customer won't actually use?

CHAPTER 3

16) If the world terms of trade for a country are somewhere between the domestic cost ratio of H and that of F, then

B) country H and country F will both gain from trade.

17) If the world terms of trade equal those of country F, then

A) country H but not country F will gain from trade

18) If the world terms of trade equal those of country H, then

E) country F but not country H will gain from trade

CHAPTER 4

37) In the specific factors model, a 5% increase in the price of food accompanied by a 10% increase in the price of cloth will cause ________ in the welfare of labor, ________ in the welfare of the fixed factor in the production of food, and ________ in the welfare of the fixed factor in the production of cloth.
A) an ambiguous change;... Continue reading "International Trade and Specific Factors Model" »

Vocabulary 1

• 1) A mortgage is a loan to buy property.
• 2) Money you put in the bank is called a deposit.
• 3) Money paid to a retired person is called a pension.
• 4) Securities representing part-ownership of a company are called stocks or shares.
• 5) The money invested in a business is its capital.
• 6) Bonds are interest-paying securities issued by companies that need to borrow money.
• 7) A takeover is when a company gains control of another one by buying its stocks.
• 8) A merger is when two formerly separate companies join together.

Vocabulary 2

• 1) Conglomerates: Groups of companies that have joined together.
• 2) Depositors: People who place money in bank accounts.
• 3) Deregulated: Abolished or ended rules and restrictions.
• 4) Fines: Sums of money paid as penalties

Core Principles of Economic Thinking

• The Economic Way of Thinking: A set of basic concepts that helps one understand human choices. It stresses that incentives matter, meaning individuals respond in predictable ways to changes in personal costs and benefits.
• Primary Assumption: Economic analysis assumes that changes in the personal benefits and costs associated with a choice will exert a predictable influence on human behavior.
• Example of Incentives: If a college enforces a new policy where anyone caught cheating is immediately expelled, the basic postulate of economics suggests that fewer students will attempt to cheat.
• Secondary Effects: A good economist considers not only the immediate, apparent effects of a change but also the secondary effects—unintended

Address the least developed countries' special needs:

• Tariff- and quota-free access for their exports
• Enhanced debt relief for heavily indebted poor countries
• Cancellation of official bilateral debt

Address the special needs of landlocked and small island developing states.

Deal comprehensively with developing countries' debt problems.

Develop decent and productive work for youth.

In cooperation with pharmaceutical companies, provide access to affordable essential drugs in developing countries.

Activity: Global Public Good

i. Choosing one global public good. Argue why it should be considered as a global public good.

- Author defines global public good as a good, service, or resource that is available for all because it involves non-rivalry and non-excludability.... Continue reading "Developing a Global Partnership for Development: Addressing Special Needs and Debt Problems" »

troškovna primjena??

How to use implications of multiple output cost functions?

Economies of Scope and Cost Complementarity

Economies of scope

• total cost of producing both products together is less than the total cost of producing both products separately

Implications for managerial decision making: managers alert to the possibility of profitably extending the product line to exploit economies of scope: reasons for mergers and acquisitions, reasons for not disinvesting a product line

Cost complementarity

• exists when the marginal cost of producing one output is reduced when the output of another product is increased:

Example of specialized investment

An investment in a particular exchange that cannot be recovered in another trading relationship

• Eg. Spending

Between 1870 and 1914, the Second Industrial Revolution transformed global economies, characterized by rapid industrialization driven by the growth of the financial sector and the rise of finance capitalism.

Financial Innovations and Capital Growth

This era saw significant innovations in finance, providing new sources of capital for burgeoning industries:

• Joint-Stock Company: A company formed by individuals who invested by buying shares, receiving a proportionate part of the company’s profits and losses.
• Banks: Financial institutions began to lend money to businesses in return for interest and started investing in shares. These changes fostered a closer union between financial and industrial capital.
• Stock Exchange: A marketplace where shares