Chapter 12 Blog: Specialized Journals

The Canadian Dollar and World Strike a New Low
http://www.canadianbusiness.com/markets/headline_news/article.jsp?content=b102715A#adskip

Summary

The article that I have chosen to base my blog upon, is mainly about the devastation of the Canadian dollar, softening of oil prices, and what this means for the global economy. As of Monday October 27, 2008 the various stock markets are continuing to plunge into the unknown, and its wraith is being felt all over the world. The Hong Kong stock market dropped 12.7 percent while the Tokyo stock market dropped 6.4 percent. The Wall Street index pointed to early losses for investors, a huge plunge in commodity prices, and while we are in the mist of a depression. In retrospect to Canada the loonie is trading 77.74 cents to the Us dollar, down 16 cents since the start of October. Crude oil fell $1.87 a barrel, and slid 35 percent since the beginning of the month, even with the Organization of Petroleum Exporting Countries to cut production quotas by 1.5 million barrels a day. Also gold is down $9.00 US an once and copper is down 5.5 cents US a pound. Overseas investors are slowly withering away as they had invested yen in the higher-yielding US dollar assets, causing the US dollar to fall to 92 yen. The worlds future at this point is uncertain and action will emerge. But according to Simon Derrick, currency strategist at the Bank of New York Mellon, this action should be lead by the U.S. Treasury. At this point there is no action and stocks are quickly being sold away, so investors can cover their loans and prevent a depression.

Connection

This article connects to synoptic jounals, cash discounts and Ch.12 in a whole, in many ways. Firstly if the Canadian dollar and the other global currences continue to fall at their current rate, there will be a huge discrepency on the synoptic journal of various companies (wholesaler, merchandising and service businesses). For example, an accoutant and a company will see a drop in sales, less money in the bank, and a lower number of account recievables on the synoptic journal. This will lead to a company purchasing less, to try to stay in business. With a huge discrepency on a companies synoptic journal, the company say a wholesaler would have to give merchandising businesses a larger cash discount for early payments, to build customer loyalty and thus stay in business.

Reflection

Firstly I would just like to say it must really suck to be a stock broker, at this current time period. This article also builds upon the simple fact that an accountant needs to know about events that happen outside his/her company. If an accountant, working for an American wholesaler business for example, did not know about the global economic concerns their international sales would go down, and they would possibly go out of business, even though this could be a fixable problem. If the stock markets crash completely, then we will have another depression meaning that there will probably be a low need for accountants where it will then be survival of the most efficient. But if what I read today (Oct. 29/08) is to come true then the economic concerns would be forgotten.

Ch.11 Article for AC12

Summary

The news article that I have chosen to do my blog on was written by blog Dave Hall of the Canwest News Service, and deals with the inventory change for Canadian and American car dealerships. Across Canada the sting of rising gas costs can be felt, but especially in the Auto Industry. With the recent highs in gas prices dealerships have noticed less interest in gas guzzling trucks and a larger interest in smaller vehicles, which has forced dealerships to buy less trucks and buy more smaller cars. This 'sting' can mainly be felt in the U.S. according to auto analyst Dennis DesRosiers as he stated "that 60% of Canadians drive fuel efficient cars while only 30% of Americans drive fuel efficient cars. This shift from expensive to less expensive has been evident in U.S. auto manufactures and also in the Canadian auto manufactures. For instance the closing of the Oshawa truck plant. Unless dealorships change their ways they will be destined to fail. (http://autos.canada.com/news/story.html?id=a218e082-d7e7-4e07-bb7f-041548a87efc)

Connection

This news article connects with inventory in two ways, first by COGS and secondly by expenses. Mainly less inventory, purchases and depreciation. Car dealerships that keep their gas guzzling trucks will see a decrease in purchases, an increase in less inventory and an increase in deprecation expense. But on the other hand if car dealerships listen to consumer demands they will see an increase in purchases, a decrease in less inventory and a decrease in deprecation expense. In conclusion if the dealership stays with the old ways Gross Profit and net earnings will decrease but if they go with the new way Gross Profit and net earnings will increase.

Reflection

Firstly this article is a great stepping stone in the demolishing humanities exploitation of non-renewable and thus global warming. Now back to business this article shows us how a business and an accountant need to keep up with the times (global issues) and also consumer demands. If a business or accountant doesn't keep with times and consumers there will be tons of problems with no solutions. But if a business or accountant does the opposite of what I mentioned in the last sentence they will have fewer problems and solutions. Or in other words in with the new and out with the old.