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

Cost Accounting

Cost Accounting is a branch of accounting and has been developed due to limitations of financial accounting. Financial accounting is primarily concerned with record keeping directed towards the preparation of Profit and Loss Account and Balance Sheet. It provides information regarding the profit and loss that the business enterprise is making and also its financial position on a particular date. The financial accounting reports help the management to control in a general way the various functions of the business but it fails to give detailed reports on the efficiency of various divisions. The limitations of Financial Accounting which led to the development of cost accounting

Objectives of Cost Accounting

1. To analyse and classify

Business Combinations

1- Horizontal Combination

• Advantages: minimization of costs, maximization of profits, reduction of the possibilities of overproduction.

2- Vertical Combinations

Entrepreneur is a person who recognizes opportunities and takes risks while operating a business.

Free Enterprise freedom of private business to organize and operate for profit in a competitive system without interference by government

Capital is the money or property owned or used for business

Opportunity Cost is the value of what must be given up to get something else

Business Plan Elements :

• Idea/product : Know what the product is and what it does, Is it realistic or practical? Will it fill a gap in the market?
• Market Research : How can you use customer feedback? You can use that to implement changes to be successful.
• Production : What is the production cost? How will you test the quality of the product? How will you make it ?
• Finance : Know the

Understanding Key Macroeconomic Balances

National Accounts & Economic Identities

• Current Account Balance + Capital Account Balance = Net lending (+) / Net borrowing (–)
• CAB + Capital Account Balance = Financial Account Balance – Errors and omissions
• Gross Domestic Product at market prices (GDPmp) = Final Consumption Expenditure (FCE) + Gross Fixed Capital Formation (GFCF) + Exports (X) – Imports (M)
• Gross National Income (GNI) = GDPmp + Net Primary Income with RoW (NPI)
• Gross National Disposable Income (GNDI) = GNI + Net Secondary Income with RoW* (NSI)
• * net current transfers with RoW
• GNDI = GDPmp + NPI + NSI
• GNDI = FCE + GFCF + X – M + NPI + NSI
• X – M + NPI + NSI = Current Account Balance
• Domestic Demand = FCE + GFCF
• GNDI – Domestic Demand

Product Differentiation

Product differentiation involves making a product distinctive so that it stands out from competitors' products in consumers' perception.

Niche Marketing

Niche marketing involves identifying and exploiting a small segment of a larger market by developing products specifically to suit its needs.

Direct Competitor

A direct competitor refers to businesses that provide the same or very similar goods or services.

Societal Marketing

Societal marketing is an approach that considers the demands of consumers and the effect on all members of public society involved in some way when firms meet these demands.

Mass Marketing

Mass marketing involves selling the same products to the entire market with no attempt to target specific groups within... Continue reading "Essential Marketing & Business Terminology Defined" »

Which of the following is a flow variable? income

Which of the following is a component of money?

Which of the following is a component of money?

Forecasting Market Methods: Long and Short Term

A company’s production schedules, planned manning levels, and financial budgeting are all related to the sales forecast. A too optimistic forecast can lead to excess stocks being accumulated, over-production and high manning levels, and over-borrowing or inefficient deployment of financial resources. A pessimistic forecast can lead to large opportunity costs and frustration among potential buyers because of late or no delivery. Firms adopt various approaches to sales forecasting, but the basic approach is to (according to T. Proctor):

Stage 1.

Make an environmental forecast regarding inflation, employment, interest rates, consumer spending and saving, and business investment.

Stage 2.

Make a forecast... Continue reading "Market Forecasting Methods: Short & Long Term Techniques" »

EXAM REVIEW 2

Chapter 12

• A country’s standard of living depends on its ability to produce goods and services. Its ability depends on PRODUCTIVITY.
• Y = real GDP = quantity of output produced L = quantity of labor so productivity = Y/L (output per worker)
• Real GDP per capita: Y/Population
• What determines PRODUCTIVITY?

1. Physical Capital per Worker:

1. What is Physical capital? The stock of equipment and structures used to produce goods and services is called [physical] capital, denoted K.
2. Productivity is higher when the average worker has more capital (machines, equipment, etc.).

1. Human Capital per Worker (H):

1. What is Human Capital? The knowledge and skills workers acquire through education, training, and experience
2. Productivity is higher when the average worker

Key Economic & Fiscal Policy Terms

Understanding the language of economics and government finance is crucial. This glossary defines essential terms related to fiscal policy, budgeting, and economic theory.

Appropriations Bill

A legislative bill that sets money aside for specific government spending.

Automatic Stabilizer

A government program designed to automatically adjust based on changes in GDP and a person's income, helping to stabilize the economy.

Balanced Budget

A financial plan where government revenue and spending are equal.

Budget Deficit

A situation in which the government spends more money than it collects in revenue.

Budget Surplus

A situation in which the government collects more money in revenue than it spends.

Classical Economics

An economic