Accounting for Investments: Equity, Control, and Fair Value
Accounting for Investments: An Overview
- Provision for recovery (used to adjust the cost of the investment at market value).
- Gain / Loss Unrealized holding gains, net (like the provision for recovery, reported as part of shareholders’ equity).
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The entry to record the sale of securities available for sale, has two parts:
- The cash account will be debited for the amount received, the investment account will be credited for the original investment value, and the difference will be debited Loss on Sale
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The entry to record the sale of securities available for sale, has two parts:
Understanding Investment Resources, Financial Intermediaries, and Money Supply
Investment Resources and Financial Intermediaries
Investment of Resources
Value for money: Resources available through asset operations, including assets and rights, are recovered on mutually agreed terms.
Loans
Banks grant funds to individuals or companies, with the commitment to return them within a specified time. Types of loans include:
- Personal Loans: Designed to finance the acquisition of consumer goods.
- Mortgage Loans: House purchases remain the guarantee of repayment; ownership transfers to the
Understanding Firms, Business Survival, and Demand Elasticity
Understanding Firms and Business Dynamics
The Firm: A Focal Point of Production
A firm is a central element in a country’s production system. It uses its resources to produce goods, sometimes borrowing resources and paying for their use (e.g., land, labor, capital). A firm is an organizational unit, while a plant is a technical unit. The primary goal of a firm is to maximize profit.
In business economics, a firm is viewed from two perspectives:
- Theoretical: A firm is a fundamental component of production,
Monopoly vs. Perfect Competition: Key Differences
Formulas:
CMEV = CV / Q; CMET = TC / Q; MC = CT1 – CT0; CT = CV + CF
6 Elements to Differentiate a Product:
- Brand
- Local geographic location
- Package
- Attention (Courtesy)
- Credit
- After-sales care
- Warranty
For Existing Monopoly Firms:
Monopolistic companies already exist due to the following barriers:
- Economies of Scale: Better use of production factors, capital goods, human resources, and entrepreneurial ability. This tends to lower unit costs or average costs (a technological advantage).
- Natural Monopolies: Companies
Key Business & Economic Terms: Absolute to Economy
Key Business and Economic Terms
A
Absolute Advantage: Ability to produce a specific product more efficiently than any other nation.
Affirmative Action Program: Plan designed to increase the number of minority employees at all levels within an organization.
B
Balance of Payments: Total flow of $ into a country – total flow of $ out of that country over some period of time.
Balance of Trade: Total value of a nation’s exports – total value of its imports over some period of time.
Barter: System of exchange
Read MoreKey Economic & Business Terms: Definitions & Concepts
Economic & Business Terms: Definitions
Economic Community
An economic community is an organization of nations formed to promote the free movement of resources and products among its members and to create common economic policies.
Economic Model of Social Responsibility
The economic model of social responsibility is the view that society will benefit most when business is left alone to produce and market profitable products that society needs.
Embargo
An embargo is a complete halt to trading with a
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