ACC/291 Week 1 Discussion Questions 1. How are bad debts accounted for under the direct write-off method? What are the disadvantages of this method? The direct write-off method is when a company determines that an account is uncollectible and it charges the loss to the Bad Debts Expense. An example of this would be when a customer is not able to pay their bill because due to a downturn in the economy, money may be tight if they have been laid off from their jobs or faced with unexpected hospital bills.
Crimes such as there are always unacceptable do to the creation of uncertainty in the markets. The fear is bad for business in the United States and in the world as a whole. Many investors’ lost substantial amounts of money due to the scandals. The Sarbanes-Oxley now places a tighter regulation and control on the reporting of a company’s financial reports while holding those within the company accountable with criminal charges. With all the modifications and changes that are now being enforces, business investments into public companies in the United States is
It gets to be an even bigger problem when the mortgage loan officer doesn’t help you out with your decsion when purchasing a home. When loans are approved for people who are unable to afford them sometimes the officer changes numbers around in the application to make the income to debt ration number smaller to get the loan “workable”, and this has casued many fraud cases. (http://activerain.com/blogsview/791334/Things-The-Loan-Officer-Cannot-Tell-The-Real-Estate-Agent-But-REALLY-Wants-To). Every now and then a few of these careless people are being caught doing this horrible deal with people who are most of the time unknowing. There is some talk that there are going to be new rules applied to the mortgage industry for the loan officers to carry out when helping people decide on a loan that’s rihgt for them.
Depository institutions are supposed to be managed to limit risk. Their managers, thus, may not be conditioned to operate prudently in more speculative securities businesses... The case against preserving the Glass-Steagall Act: 1. Depository institutions will now operate in "deregulated" financial markets in which distinctions between loans, securities, and deposits are not well drawn. They are losing market shares to securities firms that are not so strictly regulated and to foreign financial institutions operating without much restriction from the Act.
Economic Advisement Paper ECO372 Economic Advisement Paper In wake of the recent downturn of the Unites States economy many major elements in the economy have suffered. Unemployment rates are still at unsatisfactory levels, expectations remain low among consumers, and consumer income is also lower than satisfactory. Although, current interest rates remain low it is believed that more needs to be done to ensure an economic rebound remains within grasp. The following represents recommended changes needed to ensure United States Citizens do not suffer more than they already have. The economy is considered to be very unstable at the current time, and it is the duty of the United States government to do everything in their power to once again stabilize the once booming economy for the sake of the entire country and its citizens.
Name at least two risks banks face. (1.0 points) When the bank puts money into an investment, it can be difficult to get that money back out right away. It's possible that a bank could make so many bad investments that it loses money. Lesson 2 (3.0 points) 1. List the three main types of transactions.
At this time they would need to provide cheaper price to attract their consumers and to increase the demand. They would have to reduce the number of staffs as it may become difficult to pay wages. This leads to rise in unemployment. During recession businesses also tries to get loan from the bank and the bank wants to see their financial statements and if they find out that the business is not capable of paying the money back then they won’t lend any money therefore, the business may have to find new way of catching customers attention. For instance, they may be able to start up with a new idea.
“Because and swaps—are instruments for speculation as well as hedges bonuses on Wall Street are tied to transaction volume, this creagainst a drop in an asset’s value. They can be used to bet ates an obvious problem.” that the price of an asset will go up or down. Derivatives also One fear is that losses in the trading department of a large can have more of an effect on a portfolio than simply buying bank, say, could cause a meltdown of the financial system, a or selling a stock or bond because of the leverage involved. scenario that has sometimes prompted calls for stricter regulaLast November, for instance, an investor could buy nearly $1 tion. Critics of government meddling note that these dire million in futures contracts on the Standard & Poor’s 500 In- warnings have never
It dropped the prices for homes and the value just plummeted at exponential rates. It all started back in the banks where our money is kept. They started to make too many subprime deals with zero down financed costs. They also ignored deteriorating credit standards. On top of this there was a lot of bad lending to people who had no chance of ever returning the loans to the bank.
What happened that we needed to have the bailouts? Mortgagers and bankers were making high-risk loans that they could not cover in case of default to increase their own profits, the U.S. government was forced to buy the bank loans since lenders would not lend to each other because financers were taking their money out of the money market as well as credit swapping, trigging a recession crisis. (Stout, 2008) This fueled the OWS anger penalizing taxpayers to pay for the corruption within our financial institutions and sending our economy into a recession, causing citizens to lose their houses, jobs, and insurance. President Obama signed the DODD-FRANK Wall Street Reform and Consumer Protection Act in July of 2010. This act within its 2500 pages requires certain financial derivatives traded in markets under the subject to government regulation and oversight.