Pro Athletes Make a Lot of Money, and Free Agency Is a Big Reason Why - OppLoans

Pro Athletes Make a Lot of Money, and Free Agency Is a Big Reason Why - OppLoans Pro Athletes Make a Lot of Money, and Free Agency Is a Big Reason Why Pro Athletes Make a Lot of Money, and Free Agency Is a Big Reason WhyBefore free agency was instituted prior to the 1976 season, baseball players had almost no way to field multiple offers from multiple teams.As anyone who has ever had to bid against their friends and/or coworkers in a fantasy football draft can tell you, it is incredibly easy for the price of players to get out of controlâ€"and fast. But in real sports, the big price tags for players don’t happen through the draft. They happen through free agency. That’s because free agency is the only time where players are able to offer their services to any team willing to sign them.Here on the OppLoans Financial Sense Blog, we’re always pro people making an extra buck or twoâ€"or, when it comes to professional athletes, an extra million or so. So we decided to dive into the history of free agency in sports to let you know how it came about and how it’s taken player salaries from pretty all right to a total home run.1879- 1975: Major League Baseball and the reserve system.As America’s oldest professional sports league, Major League Baseball (MLB) was the organization that all the other leaguesâ€"like the NFL, NBA, and NHLâ€"imitated in their approach to labor relations and player salaries. The MLB is the reason that free agency took so long to take hold in American sportsâ€"but it’s also the place where the shift finally occurred.In 1879, the business of baseball was booming, and so the fledgling National League took steps to prevent player salaries from growing beyond their control. They took an unofficial handshake agreement between teams not to poach each other’s five best players and turned it into an official, on-the-books rule. Over the course of the 1880s, this rule expanded to cover teams’ entire rosters. And thus, baseball’s reserve system was born. The reserve system was based on something called the reserve clause. Here’s how it worked: When a player’s contract with a team wa s up and they couldn’t come to terms on a new one, the reserve clause allowed the team to renew the player’s old contract for the following year at the same salary. But here’s the catch: The one-year option also implicitly contained the reserve clause, which meant that the team could just keep renewing a player’s contract year-to-year until the player decided to either retire or sit out a year in order to sign with another team. Otherwise, a player’s only option to play for a new team was to convince his current team to trade him.Through the first half of the 20th century and well into the second half, this system remained in place, with other leagues following suit. Even when the NFL limited their reserve clause to a one-time-only use in 1947, it would still be another 16 years before a free agent would actually switch teams when R.C. went from the San Francisco 49ers to the Baltimore Colts. In response, the NFL adopted the “Rozelle Rule” which dictated that the signi ng team had to provide “compensation” to the team the player was leaving, effectively chilling player movement. Now, it wasn’t like these athletes were playing for pennies. Players made good money, and star players made very good money, with their teams frequently signing them to contracts beyond the simple rollover of their previous agreement. But players were still making far less than they would have without the leverage provided by free agency, with multiple teams bidding against each other for their services. Things wouldnt change until the 1970s, and when they did it was thanks to three men in particular: player Curt Flood, lawyer Peter Seitz, and player’s union president Marvin Miller. 1970-1976: Goodbye reserve system, hello free agency.Following the 1969 season, St. Louis Cardinals center Curt Flood believed that he was due for a big raise. After all, he was a two-time World Series Champion, a three-time All-Star, and a Seven-Time Gold Glove Winner. Cardinals owners hip, however, disagreed. They offered him only a minor raise, well short of what he sought. The two sides became estranged, which meant that the only option left was a trade.After 12 years spent suiting up for the Cardinals, Flood was traded (along with other players) to the Philadelphia Phillies. And there’s no nice way to say this, but the Phillies back then really stunk. As such, Flood did not want to play for them and refused to report. With the backing of his unionâ€"and of union president Marvin Miller in particularâ€"Flood wrote to MLB commissioner Bowie Kuhn and demanded that he be declared a free agent.When Kuhn denied Flood’s requestâ€"citing the reserve clauseâ€"Flood sued him and Major League Baseball in federal court. The one million dollar suit made its way to the Supreme Court, where it was heard on March 20, 1972. By a decision of 5-3 (with Justice Lewis Powell recusing himself), the Supreme Court ruled against Flood in favor of Kuhn and Major League Baseball.Whi le Flood didn’t defeat the reserve system, the cracks were certainly beginning to show. In 1974, independent arbitrator Peter Seitz voided star Oakland Athletics pitcher Catfish Hunter’s contract with the team after A’s owner Charlie Finley (a notorious cheapskate) refused to hold up certain provisions. Now a free agent, Hunter signed with the New York Yankees for a salary that made him the highest-paid pitcher in MLB history. In late 1975, the Major League Baseball Players Association (MLBPA) filed grievances on behalf of veteran pitches Andy Messersmith and Dave McNally, both of whom had played under the reserve clause for the preceding season. According to the grievance, both players had played under the clause, per their contracts, but had not signed a new contract afterward. Therefore, they should be declared free agents.The case went to a three-person arbitration panel that featured one representative from each side of the dispute and a neutral arbitrator. Miller represe nted the players, MLB Player Relations Committee chief negotiator John Gaherin represented the owners, and Seitz served as the impartial arbitrator.On December 23rd, 1975, Seitz ruled in favor of Messersmith and McNally, reasoning that their contracts did not include the right for owners to indefinitely revoke the reserve clause. After it had been invoked once, the contract was ended. Teams would now have no option but to sign players to multi-year contractsâ€"and to bid against each other in doing so.  The result of this ruling could have been complete and utter chaos, as it would have meant that almost every single contract in Major League Baseball was null and void. But that’s where Miller stepped in to negotiate a compromise: Players would only become free agents when their contracts expired and they had already accumulated six years of major league service time. To kick off the free agency era, the following 1976 season began with a “re-entry draft” in which teams drafte d the bargaining rights to players. If your rights were drafted by three or more teams, you could only negotiate with those teams, but if you were drafted by two teams or fewer, you could negotiate with every team. As clubs jockeyed for the right to sign stars like Reggie Jackson and Rollie Fingers, player salaries were already on the rise. Professional athletes make a lot more money now.As the free agency era took hold, player salaries in the MLB began to growâ€"slowly at first, but quickly gaining steam. In just a five-year span between 1977 and 1981, average MLB player salaries rose by an average of $26,380 per year from $76,066 to $185,651, a total increase of over 140 percent! For comparison: In the five years spanning the 1971 through 1975 seasons, average player salaries rose by an average of $3,075 per year from $31,543 to $44,676, for a total increase of only 41.6 percent. Free agency basically took normal MLB salary growth and added double what the average player was alrea dy making on top of it.That growth hasn’t stopped, either. In 2018, the average salary for an Major League Baseball player was $4.095 million. And 2018 was actually one of the few years that the average MLB player salary was down from the previous year. In 2017, the average MLB player salary was $4.097 million, representing a year-over-year drop of $1,436 in average annual money.Meanwhile, it took the NFL a while to catch up on free agency, and a great deal more pain for players, fans, and owners. In 1987, NFL players went on strike, and the NFL responded by finishing the season with replacement players. In 1989, the player’s union sued the NFL but had their case dismissed, forcing them to decertify the union and sue the league as individuals. It wasn’t until the 1993 Collective Bargaining Agreement that the NFL owners agreed to institute free agency. Still, NFL players were able to realize some large salary increases of their own, even before free agency was implemented. Perh aps spurred on by the success of their MLB counterpartsâ€"and jealous of their sizeable paychecksâ€"the NFL player’s union adopted a much stronger hand in the 1980s, one that led to a large boost in salaries. Still, the players would not be satisfied until they had the right to free agencyâ€"a fight they eventually won in exchange for the NFL instituting a salary capIn the NBA, the right for free agency was codified in the 1988 Collective Bargaining Agreement, with the stipulation that players had to have been in the league for seven-plus years and had to have completed at least two NBA contracts. Between 1988 and 1998, the average NBA salary increased by approximately $2 million dollars per year. Now, not all of this wage growth is due to free agency. There’s inflation, for one thing, and the fact that sports league revenues, in general, have skyrocketed over the past 30 to 40 years, due in no small part to the billions and billions of dollars they earn through their TV deals. But it’s also undeniable that the right to choose their employer and negotiate between many different offers has been great for players across all sports. Free agency has become so important that the recent chill in free-agency signings and contracts in Major League Baseball portends some serious labor strife when their next collective bargaining agreement is up. As teams get smarter about how they spend their moneyâ€"and also, perhaps, more concerned with maximizing profits than winning gamesâ€"a players strike or lockout looks increasingly likely. It was the MLB that started this whole shebang almost 150 years ago, and it will also be the arena where the next great battle over player movement and salaries is fought. Some things never change. If you enjoyed this post, check out these related posts and articles from OppLoans:A Brief History of Point-Shaving in College BasketballFrom Rags to Riches: A Financial History of the NFL10 Money Lessons From the Worst Contracts in NBA Hist oryWhy NFL Stars Often Make Less Than Pretty Good MLB PlayersDo you have a   personal finance question youd like us to answer? Let us know! 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Marital Relationships as Portrayed in the Short Stories...

Love As A Battlefield Love has always been complicated. Whether you were married in 1700 or 2012, there are many things well just never understand. But what if you were married in the late 1800s to the early 1900s? I believe Mrs. Louise Mallard and Jeanne can both agree that it was not easy. The short story â€Å"The Story of An Hour† and the drama â€Å"Im Going† will show that being a wife in that era was not all about passion and perfect families, but about control and dominance. Although the stories were written during two different time periods, the modern period and the Victorian period, there were still many similarities in both relationships. Each story centered itself around a woman†¦show more content†¦Louise has an epiphany, a profound personal discovery that a character suddenly makes-which conveys the meaning of the story (Clugston, 2010.), when she sits alone in her room and realize that her husbands death means that she is finally going to be free and that she w ill be able to be an independent woman for once in her life. â€Å"Im Going† grabbed the readers attention at approximately line 14, when Henri is confused at why Jeanne is finally agreeing to let him go to the races. It is at that point that the reader realizes that Henri is an insecure, controlling husband. In contrast, these pieces of literature were written in two different time periods. â€Å"Im Going† was written in the Modern Period, while â€Å"The Story of An Hour† was written during the Victorian Period. The modern period was a time of significant developments, some of which included science, politics, warfare, and technology (Wikipedia.) During this time period there was a lot of rapid change and can be tied to the development of individualism, capitalism, and urbanization. I believe that individualism played a key role in this time period when it comes to the theme of the drama â€Å"Im Going† because it brought about moral stance, polit ical philosophy, ideology, or social outlook that stresses â€Å"the moral worth of the individual (Wikipedia.)† Although Henri ultimately won the battle,Show MoreRelatedDeveloping Management Skills404131 Words   |  1617 PagesPreface xvii Introduction 1 PART I 1 2 3 PERSONAL SKILLS 44 Developing Self-Awareness 45 Managing Personal Stress 105 Solving Problems Analytically and Creatively 167 PART II 4 5 6 7 INTERPERSONAL SKILLS 232 233 Building Relationships by Communicating Supportively Gaining Power and Influence 279 Motivating Others 323 Managing Conflict 373 PART III GROUP SKILLS 438 8 Empowering and Delegating 439 9 Building Effective Teams and Teamwork 489 10 Leading Positive ChangeRead MoreStephen P. Robbins Timothy A. Judge (2011) Organizational Behaviour 15th Edition New Jersey: Prentice Hall393164 Words   |  1573 PagesProfitable† 83 Point/Counterpoint Employer–Employee Loyalty Is an Outdated Concept 87 Questions for Review 88 Experiential Exercise What Factors Are Most Important to Your Job Satisfaction? 89 Ethical Dilemma Bounty Hunters 89 Case Incident 1 Long Hours, Hundreds of E-Mails, and No Sleep: Does This Sound Like a Satisfying Job? 90 Case Incident 2 Crafting a Better Job 91 4 Emotions and Moods 97 What Are Emotions and Moods? 98 The Basic Emotions 100 †¢ The Basic Moods: Positive and NegativeRead MoreFundamentals of Hrm263904 Words   |  1056 PagesOrganizations Conduct Drug Tests 91 Honesty Tests 92 Whistle-Blowing 92 Employee Monitoring and Workplace Security 93 DID YOU KNOW?: By the Numbers 93 Workplace Romance 94 The Employment-at-Will Doctrine 95 Exceptions to the Doctrine 96 Contractual Relationship 96 Statutory Considerations 96 Public Policy Violation 96 Implied Employment Contract 96 Breech of Good Faith 97 PART 3 STAFFING THE ORGANIZATION Chapter 5 Human Resource Planning and Job Analysis 110 Learning Outcomes 110 Introduction 112Read MoreStrategic Marketing Management337596 Words   |  1351 Pagesand the implications for marketing planning Organizational buying behaviour The growth of relationship marketing Summary Appendix: The drivers of consumer change 6 Approaches to competitor analysis 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 Learning objectives Introduction Against whom are we competing? Identifying and evaluating competitors’ strengths and weaknesses Evaluating competitive relationships and analysing how organizations compete Identifying competitors’ objectives Identifying competitors’Read MoreOne Significant Change That Has Occurred in the World Between 1900 and 2005. Explain the Impact This Change Has Made on Our Lives and Why It Is an Important Change.163893 Words   |  656 Pagesby Susan Porter Benson, Stephen Brier, and Roy Rosenzweig Also in this series: Paula Hamilton and Linda Shopes, eds., Oral History and Public Memories Tiffany Ruby Patterson, Zora Neale Hurston and a History of Southern Life Lisa M. Fine, The Story of Reo Joe: Work, Kin, and Community in Autotown, U.S.A. Van Gosse and Richard Moser, eds., The World the Sixties Made: Politics and Culture in Recent America Joanne Meyerowitz, ed., History and September 11th John McMillian and Paul Buhle, edsRead MoreLibrary Management204752 Words   |  820 Pagesremember that they are carried out simultaneously and concurrently. The actual operation of a library or information center follows no precise linear pattern. Most managerial functions progress simultaneously; they do not exist in a hierarchical relationship. For instance, budgeting is not likely to be reflective of the enterprise’s success without some measure of planning in which goals and objectives are established. Therefore, management cannot be viewed as a rigid system, and the concepts discussed

Short Story - 720 Words

Standing behind a counter with a blank face, the cashier swiped the food items from right to left: BING†¦ BING†¦ BING. Her dark black hair laid across her pale skin, covering the entry to her soul. Her posture was poor; she was slumped over with a perfect curve in her back. Each time she reached to her right to grab a food item, her bangs would fall onto her nose leading her to blow them off angrily. As customers entered the store, someone in the back would yell, â€Å"Hey! Welcome in! Have you shopped with us before?† and the cashier would grunt under her breath â€Å"Who even cares?†. I watched her from afar and glanced at her name tag: Aggyday. No wonder she was so bitterly cold. I think I found her first problem. You can’t get through any social†¦show more content†¦The noises didn’t stop, the ringing in my ears shook my body. The cashier’s walk was more like a limp, but she creeped towards me. As she approached, she towered over me. My heart began to race, my palms were dripping sweat, and I couldn’t spit a word out of my mouth. The dark silhouette put his hand on my back and cautiously guided me to the back room, suddenly he was no longer mysterious; I felt comfortable and warm. It felt like my mother’s warm touch telling me that everything is going to be okay. I prayed that the emotionless cashier wouldn’t follow, but I could feel her footsteps rocking the floor beneath me. I felt as though the building was crumbling around us. I forced my eyes shut and hugged my knees to my chest. The man in the back with me kept trying to comfort me, but he couldn’t figure out why I was so worried. I began to question my sanity: â€Å"is she actually here or am I picturing something?†, â€Å"is this a prank?†, â€Å"why is he all of the sudden acting like†¦Ã¢â‚¬  before I could finish my thought, the window shattered behind me. The shards of glass covered the room, but I felt as though nothing had changed. The sharp feeling in my heart was equivalent to the tearing feeling the glass left on my skin. Empty. I felt nothing. My eyesight cut in and out, but my heart began to slow. All I could hear was â€Å"In and out, in and out†. I felt a gentle touch to my skin and a cradle like rocking motion under my body. I slowly opened my eyes and my mom wasShow MoreRelatedshort story1018 Words   |  5 Pagesï » ¿Short Stories:  Ã‚  Characteristics †¢Short  - Can usually be read in one sitting. †¢Concise:  Ã‚  Information offered in the story is relevant to the tale being told.  Ã‚  This is unlike a novel, where the story can diverge from the main plot †¢Usually tries to leave behind a  single impression  or effect.  Ã‚  Usually, though not always built around one character, place, idea, or act. †¢Because they are concise, writers depend on the reader bringing  personal experiences  and  prior knowledge  to the story. Four MajorRead MoreThe Short Stories Ideas For Writing A Short Story Essay1097 Words   |  5 Pageswriting a short story. Many a time, writers run out of these short story ideas upon exhausting their sources of short story ideas. If you are one of these writers, who have run out of short story ideas, and the deadline you have for coming up with a short story is running out, the short story writing prompts below will surely help you. Additionally, if you are being tormented by the blank Microsoft Word document staring at you because you are not able to come up with the best short story idea, youRead MoreShort Story1804 Words   |  8 PagesShort story: Definition and History. A  short story  like any other term does not have only one definition, it has many definitions, but all of them are similar in a general idea. According to The World Book Encyclopedia (1994, Vol. 12, L-354), â€Å"the short story is a short work of fiction that usually centers around a single incident. 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Analysis Of `` The Merchant Of Venice `` By William...

In the novel Frankenstein by Mary Shelley and the play The Merchant of Venice by William Shakespeare, love is a central mechanism to both the plot and character development. Explicitly, the action of how love is pursued is what delineates stereotypes for particular characters. Two of the most definite examples can be found with the Monster and Antonio. When viewing the goals of these two characters in their storylines, it is clear that both of them become tied to the idea of affection from a companion or friend. For Antonio, it is clear that he has strong affinity for Bassanio but nonetheless, he still puts Bassanio’s desires above his. As such, Antonio puts own life at risk to to facilitate Bassanio’s pursuit of Portia. Additionally, after Antonio has escaped Shylock s knife, he takes half of Shylock s money which is supposed to be his and gives it to Jessica and Lorenzo so as to sustain their happiness. It is apparent that Antonio’s own yearnings for compassion are overcome by his self sacrifice for others. In contrast, the Monster is selfish regarding companionship, despite his initial predilection towards humans. In addition, the monster will come to kill Victor’s wife over the destruction of his nearly complete female confidant. The disparity over how each character reacts to their situation reveals the undertones of their characters and the selfishness and selflessness are what truly identifies the characters. Love is the driving and defining force for both AntonioShow MoreRelated Homosexuality in William Shakespeares The Merchant of Venice1474 Words   |  6 PagesHomosexuality in William Shakespeares The Merchant of Venice With every great story line comes a theme. William Shakespeare created an art of intertwining often unrecognizable themes within his plays. In Shakespeare’s play, The Merchant of Venice, one hidden theme is the idea of homosexuality. This theme might not have even been noticed until modern Shakespeare fans discovered them. According to Alan Bray’s book, Homosexuality in Renaissance England, â€Å"the modern image of ‘the homosexual’Read MoreRacism And Prejudice By William Shakespeare s The Merchant Of Venice Essay1699 Words   |  7 Pagestheir religion and what they believe in, however there is racism and prejudice present in the world. William Shakespeare’s The Merchant of Venice is one of his most controversial plays. Written in the 16th century England, the play poses many questions concerning racial, religious and human differences due to anti-semitism being very common at the time. The story is set in Venice where a merchant named Antonio lived. His poor friend Bassanio wants to charm and marry a lovely, rich girl of BelmontRead MoreThe Merchant of Venice939 Words   |  4 PagesThese are two of Shakespearean antagonists of all time. They are alike in more ways than one. 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Main Ideas: The most important themes are hatredRead MoreAnalysis Of The Movie The Merchant Of Venice 1918 Words   |  8 PagesPerformance Analysis of T he Merchant of Venice Jordan Thomas Mullineaux-Davis William Shakespeare has regularly throughout time been referred to and could be viewed as anti-Semitic because of the cultural implications within many of his plays. A particularly strong example of this could be The Merchant of Venice. This essay will explore arguments of post-colonialism within The Merchant of Venice, discussing the pertinent issues of anti-semitism, racial isolation and prejudice. It will also commentRead MoreWilliam Shakespeare s A Merchant Of Venice Essay971 Words   |  4 PagesWhen interpreting literature, especially that of William Shakespeare, it can be very difficult to decipher the true meaning behind the words. 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As the antagonist, Shylock is a fearful adversary to Antonio, the protagonist. But as good begins to

Egyptian Art Essay Example For Students

Egyptian Art Essay Egyptian Art was once considered to be unchanged, when viewing this art as a whole. Egyptian Art seems to be repetitive pattern of images and ideas. Yet all of these images are uniquely different. Ranging from 3000b.c to 50b.c. Taking the same principles through out the entire period. Which consists of Old, Middle and New Kingdoms. Each dynasty had a different addition to the basic concepts that were established in the beginning, ideas of the artist grew faster and better. Many cultures shared from the influence of Egyptian Art. Even if it was not copied, their artwork was either compared or contrasted with that of the Greeks, Romans, Summerians, Assyrians and Persians. All in one way or another form have come in contact with Egyptian Art. Art is different variations of expression, either self-expression or cultural. From painting, sculpture, architecture, to funeral preparations to pottery. Art is also a form of communication. Communicating ideas theories or even history. Expressing ideas that cannot be done with words. To take something that is thought to be intangible and shape and mold it into something that can be seen or touched. One culture takes another cultures work and either copies or changes it, to fit into their views and principles. Sometimes the artwork can be viewed differently between two cultures. Yet they can have the same purpose. For example Mycenaean tomb was compared to the tombs of the New and Middle Kingdom. The tombs were made in two separate time periods; the views of the after life are different. The perception or preparing of he the dead is similar to each other. Showing how the Egyptians had an influence on many cultures. Tombs are placing for the dead. In most cultures of the Ancient world, there were tombs. Tombs were erected and built usually for the highest official in the time period. In Egypt tombs were made, there were different types. The most famous are the pyramids. These triangular buildings were made for pharaohs. Mostly done by slave labor, these tombs were made with such preciseness that it is still not known how they were made. Tombs were reflection of the deceaseds life. It was made to reflect all the things that the person had done in order to make it in the afterlife. So these tombs were decorated with everything that would be needed for the after life. The coffin that was used for the body can be seen today in modern times. In American culture when a person dies they are put into a coffin, sometimes it reflects the person.Coffins were elaborate parts of burial procedures in Egypt. Also in modern days, statues are erected for the deceased in memory of the person or their act. Egyptia n Art is linked to Greek art. The columns that the Greeks are known for, originally have come from Egyptians, many of the building that are built in present time have origins linked to Greek Art. The Artwork of the Egyptians laid down basic steps to writing. The introduction of heliographic, which is the form of having symbols to represent thing, this is the basis of words. After many years of refinement different languages are formed from these basic heliographic. In modern day art, Egyptian style can still be traces and linked. The way that humans were represented in both a standing and a sitting manner; the details to the body, to show the parts of the body, to show the differences between man and woman, gods and humans, Egyptian art is known for its representation of the pharaohs and queens. Many things that we use today have come from the Egyptians the chest that is the basis of storage. Usually all families have one for storage, the Egyptians created this between 1500bc and 12 00bc. The chest originally were the hollow dug outs of tress, with iron place in the so that they would not break and were used for storage.Soon the design of these chests meant to have a meaning. The way in which something was carves into the chest would tell what it function was. The storage of food, or to store clothing is two examples of what the meaning meant. In addition to hieroglyphics, which were mostly done on walls, the Egyptians started to use paper, it was called papyrus and it was used to document mostly all important events and history of Egypt. Most papyrus documents have been found in Egypt, where the papyrus plant was cultivated for the manufacture of writing material and the dry climate favored preservation. Papyrus documents have been found dating from as early as about 2600b.c. .uf329c4e6c284b33b5e2bc29ea605a3b9 , .uf329c4e6c284b33b5e2bc29ea605a3b9 .postImageUrl , .uf329c4e6c284b33b5e2bc29ea605a3b9 .centered-text-area { min-height: 80px; position: relative; } .uf329c4e6c284b33b5e2bc29ea605a3b9 , .uf329c4e6c284b33b5e2bc29ea605a3b9:hover , .uf329c4e6c284b33b5e2bc29ea605a3b9:visited , .uf329c4e6c284b33b5e2bc29ea605a3b9:active { border:0!important; } .uf329c4e6c284b33b5e2bc29ea605a3b9 .clearfix:after { content: ""; display: table; clear: both; } .uf329c4e6c284b33b5e2bc29ea605a3b9 { display: block; transition: background-color 250ms; webkit-transition: background-color 250ms; width: 100%; opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #95A5A6; } .uf329c4e6c284b33b5e2bc29ea605a3b9:active , .uf329c4e6c284b33b5e2bc29ea605a3b9:hover { opacity: 1; transition: opacity 250ms; webkit-transition: opacity 250ms; background-color: #2C3E50; } .uf329c4e6c284b33b5e2bc29ea605a3b9 .centered-text-area { width: 100%; position: relative ; } .uf329c4e6c284b33b5e2bc29ea605a3b9 .ctaText { border-bottom: 0 solid #fff; color: #2980B9; font-size: 16px; font-weight: bold; margin: 0; padding: 0; text-decoration: underline; } .uf329c4e6c284b33b5e2bc29ea605a3b9 .postTitle { color: #FFFFFF; font-size: 16px; font-weight: 600; margin: 0; padding: 0; width: 100%; } .uf329c4e6c284b33b5e2bc29ea605a3b9 .ctaButton { background-color: #7F8C8D!important; color: #2980B9; border: none; border-radius: 3px; box-shadow: none; font-size: 14px; font-weight: bold; line-height: 26px; moz-border-radius: 3px; text-align: center; text-decoration: none; text-shadow: none; width: 80px; min-height: 80px; background: url(https://artscolumbia.org/wp-content/plugins/intelly-related-posts/assets/images/simple-arrow.png)no-repeat; position: absolute; right: 0; top: 0; } .uf329c4e6c284b33b5e2bc29ea605a3b9:hover .ctaButton { background-color: #34495E!important; } .uf329c4e6c284b33b5e2bc29ea605a3b9 .centered-text { display: table; height: 80px; padding-left : 18px; top: 0; } .uf329c4e6c284b33b5e2bc29ea605a3b9 .uf329c4e6c284b33b5e2bc29ea605a3b9-content { display: table-cell; margin: 0; padding: 0; padding-right: 108px; position: relative; vertical-align: middle; width: 100%; } .uf329c4e6c284b33b5e2bc29ea605a3b9:after { content: ""; display: block; clear: both; } READ: The Satire and Humor In Chaucer8217s Canterbury Ta EssayWhen it comes to art and painting the Egyptians had a certain style, it was perspective, which was originated by the Chinese. Perspective is the method of graphically depicting three-dimensional objects and spatial relationships on a two-dimensional plane or on a plane that is shallower than the original (for example, in flat relief). The Egyptians used perspective when drawing images. Many Egyptian paintings and drawings, for example, show the head and legs of a figure in profile, while the eye and torso are shown frontally). This system produces not the illusion of depth but the sense that objects and their surround ings have been compressed within a shallow space behind the picture plane. As artist today we still use this style of perspective drawing. Not exactly the same as the Egyptians, the concept is still there.

The Difference in Methods Used by the French Jesuits and the Spanish Franciscans in the New World

The Catholic and Protestant churches made many efforts in order to spread their beliefs in the New World and to convert the Native Americans. The most successful were the French Jesuits and the Spanish Franciscans.Advertising We will write a custom essay sample on The Difference in Methods Used by the French Jesuits and the Spanish Franciscans in the New World specifically for you for only $16.05 $11/page Learn More The Spanish converted thousands of Indians in South and Central America: Mexico, Peru, Chile, Bolivia, Colombia, Venezuela and Ecuador, while the French settled in New France that included modern Canadian and US territory: Quebec, Nova Scotia, New Brunswick, Main, New York, Louisiana and Illinois. Historically, both orders had the same religious pursuits; however the methods used by them were different. The Franciscans converted more people than Jesuits due to the use of their methods of mass compulsion with the help of power and weapons. Aft er Columbus discovery, Queen Isabella and Pope Alexander VI claimed the importance of converting the Native Americans to Christianity. Franciscans arrived to the New Spain in 1524 and got the success, spreading their religion. However, although they converted many thousands of people, it is important to notice that the faith of the population of New World was weak and, moreover, they created a new religion combining the local beliefs with elements of Christianity (Hannon, 2010). Sanctioned by Queen and Pope, the Spanish Franciscans used all possible methods, including the use of power, weapons, and executions. According to the article Native American Voices, in Mexico, the Central and South America, the Spanish Franciscans used Native Americans as a free labor material (â€Å"Native American Voices†). Obviously, such measures led to the fear and submission of Indians. The French Jesuits, known as the Soldiers of Christ, arrived to the New World one century after Spanish, in 1 625. They used methods of persuasion and negotiation instead of force. Thereby, although a number of converted by Jesuits Indians was not huge, but their faith was real and deep. Indians were astonished by the ability of the French to read and write and step by step adopted the new culture. At the same time, the Spanish tortured Indians and destroyed their cultural objects, persecuting those people who did not want to adopt the new traditions. The French tried to find the similarities between the Christian and Indian traditions, for instance, the wear of black robes during the ceremony.Advertising Looking for essay on religion theology? Let's see if we can help you! Get your first paper with 15% OFF Learn More For both orders, education of the Native Americans was an important issue that could help spreading Christianity. Jesuits and Franciscans taught Indians sciences, culture and ethic. However, the Native Americans, and especially the population of the Central and South America, had a long history and original and unique culture and traditions. Therefore, the way of combination of the European and Indian traditions chosen by the French Jesuits was much more appropriate and adequate. The outcome of the work of French Jesuits and the Spanish Franciscans was different. The Spanish wanted to convert as more as possible Indians in spite of the real quality of their faith. For the Native Americans, Christianity had not been viewed as an inviting religion due to the force and tortures. The French missionaries did not use power and weapons, trying to convince Indians. For Jesuits, the main idea of Christianity as the peaceful religion was major power and argument into the process of converting. Jesuits used all possible methods in order to integrate Christianity, not to separate it and replace the traditional beliefs. Therefore, their work was more effective. Works Cited Hannon, Sharon M. â€Å"Birth of a New World Religion.† When Words Collid e: The Untold Story of the Americas after Columbus. 2010. Web. http://www.pbs.org/program/when-worlds-collide/ Native American Voices n.d. Web. This essay on The Difference in Methods Used by the French Jesuits and the Spanish Franciscans in the New World was written and submitted by user Rylie Barlow to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here.

Cashflow statement Essay Example

Cashflow statement Essay Example Cashflow statement Essay Cashflow statement Essay Questions, Exercises, and Problems: Answers and Solutions 1. 1The first question at the end of each chapter asks the student to review the important terms and concepts discussed in the chapter. Students may wish to consult the glossary at the end of the book in addition to the definitions and discussions in the chapter. 1. 2Setting Goals and Strategies: Although a charitable organization must obtain sufficient resources to fund its operations, it would not pursue profits or wealth increases as goals. A charitable organization would direct its efforts toward providing services to its constituencies. Financing: A charitable organization may obtain some or all of its financing from donations (contributions). A charitable organization does not issue common stock or other forms of shareholders’ equity, nor does it have retained earnings. Investing: Similar to business firms, charitable organizations acquire productive capacity (for example, buildings) to carry out their activities. Operations: A charitable organization might prepare financial statements that compare inflows (for example, contributions) with outflows. While these statements might appear similar to income statements, there would be no calculation of net income because the purpose of the charitable organization is to provide services to its constituents, not seek profits. 1. 3The balance sheet shows assets, liabilities and shareholders’ equity as of a specific date (the balance sheet date), similar to a snapshot. The ncome statement and statement of cash flows report changes in assets and liabilities over a period of time, similar to a motion picture. 1. 4The auditor evaluates the accounting system, including its ability to record transactions properly and its operational effectiveness, and also determines whether the financial reports prepared by the firm’s managers conform to the requirements of the applicable authoritative guidance. The auditor provides an audit opinion that refle cts his professional conclusions. For most publicly traded firms in the U. S. the auditor also provides a sepa- 1. 4 continued. rate opinion on the effectiveness of the firm’s internal controls over financial reporting. 1. 5Management, under the oversight of the firm’s governing board, prepares the financial statements. 1. 6Employees and suppliers of goods such as raw materials or merchandise often provide the services or goods before they are paid. The firm has the benefit of consuming or using the goods or services before it transfers cash to the employees and suppliers. The length of the financing period is the number of days between when the employees and suppliers provide goods and services and when the firm pays cash to those employees and suppliers. 1. 7Accounts receivable represent amounts owed by customers for goods and services they have already received. The customer, therefore, has the benefit of the goods and services before it pays cash. The length of the financing period is the number of days between when the customer receives the goods and services and when the customer pays cash to the seller of those goods and services. . 8Both kinds of capacity represent investments in long-lived assets, with useful lives (or service lives) that can extend for several or many years. They differ in that land, buildings, and equipment represent physical capital, while patents and licenses represent intangible or intellectual capital. 1. 9A calendar year ends on December 31. A fiscal year ends on a date that is determined by the firm, perhaps based on i ts business model (for example, many retailers choose a fiscal year end that is close to the end of January). A firm can choose the calendar year as its fiscal year, and many do. Both calendar years and fiscal years have 12 months. 1. 10Most firms report the amounts in their financial statements using the currency of the country where they are incorporated and conduct most of their business activities. Some firms use a different currency. 1. 11A current item is expected to result in a cash receipt (assets such as accounts receivable) or a cash payment (liabilities such as accounts payable) within approximately one year or less. A noncurrent item is expected to generate cash over periods longer than a year (assets, such as factory buildings that will be used to produce goods for sale over many years) or use cash over periods longer than a year (liabilities such as long term debt). Users of financial statements would likely be interested in this distinction because the distinction provides information about short term cash flows separately from long term cash flows). 1. 12Historical amounts reflect the amounts at which items entered the firm’s balance sheet, for example, the acquisition cost of inventory. Historical amounts reflect economic conditions at the time the firm obtained assets or obtained financing. Current amounts reflect values at the balance sheet date, so they reflect current economic conditions. For example, the historical amount for inventory is the amount the firm paid to obtain the inventory and the current amount for inventory is the amount for which the firm could sell the inventory today. 1. 13An income statement connects two successive balance sheets through its effect on retained earnings. Net income that is not paid to shareholders as dividends increases retained earnings. A statement of cash flows connects two successive balance sheets because it explains the change in cash (a balance sheet account) from operating, financing, and investing activities. The statement of cash flows also shows the relation between net income and cash flows from operations, and changes in assets and liabilities that involve cash flows. 1. 14The U. S. Securities and Exchange Commission (SEC) is the government agency that enforces the securities laws of the U. S. , including those that apply to financial reporting. The Financial Accounting Standards Board (FASB) is the private-sector financial accounting standard setter in the U. S. The International Accounting Standards Board (IASB) is a private- sector financial accounting standard setter that promulgates accounting standards that are required or permitted to be used in over 100 countries. Neither the FASB nor the IASB has any enforcement powers. 1. 15U. S. GAAP must be used by U. S. SEC registrants and may be used by other firms as well. International Financial Reporting Standards (IFRS) may be used by non-U. S. firms that list and trade their securities in the U. S, and these firms may also use U. S. GAAP. 1. 16The purpose of the conceptual framework developed by the Financial Accounting Standards Board (FASB) is to guide the standard setting decisions of the FASB. For example, the conceptual framework specifies the purpose of financial reporting, and the qualitative characteristics of financial information that would serve that purpose. FASB board members use this conceptual structure as they consider solutions to accounting issues. 1. 17The accrual basis of accounting is based on assets and liabilities, not on cash receipts and disbursements. It provides a better basis for measuring performance because it is based on revenues (inflows of assets from customers) not cash receipts from customers, and on expenses (outflows of assets from generating revenues) not cash payments. It matches revenues with the costs associated with earning those revenues and is not sensitive to the timing of expenditures. 1. 18(Colgate Palmolive Company; understanding the balance sheet. ) a. Property, plant and equipment, net = $3,015. 2 million. b. Noncurrent assets = $6,493. 5 (= $3,015. 2 + $2,272. 0 + $844. 8 + $361. 5). c. Long-term debt = $3,221. million. d. Current assets – Current liabilities = $3,618. 5 – $3,162. 7 = $455. 8 million. e. Yes, Colgate has been profitable since its inception. We know this because its Retained Earnings, of $10,627. 5 million, is positive. Colgate may have had a loss in one or more prior years; cumulatively, it has had positive income. f. Total Liabilities/Total Assets = $7,825. 8/$10,112. 0 = 77 . 4%. g. Total Assets = Total Liabilities + Shareholders’ Equity $10,112. 0=$7,825. 8+$2,286. 2 1. 19(Mayr Melnhof Karton; understanding the income statement. ) a. Cost of Goods Sold = (1,331,292. 1 thousand. b. Selling and distribution expenses = (172,033. 4 thousand. c. Gross margin percentage = 23. 4% (= (405,667. 1/(1,736,959. 2). d. Operating profit = (169,418. 2 thousand. Profit before tax = (170,863. 9 thousand. Difference equals (1,445. 7 thousand (= (169,418. 2 – (170,863. 9). The items comprising this difference are sources of income (expense) of a nonoperating nature for Mayr Melnhof. e. Effective tax rate = (54,289. 9/(170,863. 9 = 31. 8%. f. Profit = (116,574. 0 thousand. 1. 20(Bed, Bath and Beyond, Inc. ; understanding the statement of cash flows. ) a. Cash inflow from operating activities = $614,536 thousand. . Cash inflow from investing activities = $101,698 thousand 1. 20 continued. c. Cash inflow used in financing activities = $705,531 thousand. d. Net cash flow equals $10,703 thousand (= $614,536 + $101,698 – $705,531). e. Change in cash balance equals $10,703 thousand (= $224,084 – $213,381). The increase was attributable to the net cash inflow during the year of the same amount, $10,703 thousand. 1. 21(Alcatel-Lucent; balance sheet relations. ) (Amounts in Millions) Share- CurrentNoncurrentCurrentNoncurrentholders’ Assets+Assets=Liabilities+Liabilities+Equity (20,000+(29,402=(15,849+? (17,154 Noncurrent liabilities total (16,399 million. 1. 22(Gold Fields Limited; balance sheet relations. ) (Amount in Millions of Rand) Share- CurrentNoncurrentCurrentNoncurrentholders’ Assets+Assets=Liabilities+Liabilities+Equity R6,085. 1+R49,329. 8=R4,360. 1+R13,948. 4+? Shareholders’ Equity totals R37,106. 4 million. 1. 23(Rolls Royce Group Plc. ; income statement relations. ) Sales? 7,435 Less Cost of Sales(6,003) Gross Margin? 1,432 Less Other Operating Expenses(918) Loss on Sale of Business(2) Net Financing Income221 Profit before Taxes? 733 Less Tax Expense(133) Net Income? 600 1. 4(General Motors Corporation; income statement relations. ) Sales$207,349 Cost of Sales(164,682) Other Operating Expenses(50,335) Net Finan cing Income5,690 Net Loss$(1,978) 1. 25(Gold Fields; retained earnings relations) (Amounts in Millions of Rand) RetainedRetained Earnings NetDividendsEarnings at End ofIncomeDeclared=at End of 2006+for 2007–for 20072007 R4,640. 9+R2,362. 5–? =R5,872. 4 Dividends declared during 2007 totaled R1,131. 0 million. 1. 26(Sterlite Industries; retained earnings relations. ) (Amounts in Millions of Rupees) RetainedRetained Earnings NetDividendsEarnings March 31,IncomeDeclared=March 31, 006+for 2006–for 20062007 Rs26,575+? –Rs3,544=Rs70,463 Net income for the year ended March 31, 2007 (fiscal 2006) was Rs47,432 million. 1. 27(Target Corporation; cash flow relations. ) (Amounts in Millions) Cash atCash FlowCash FlowCash FlowCash at Feb. 3,fromfromfromFeb. 2, 2007+Operations+Investing+Financing=2008 $813+$4,125+$(6,195)+$3,707=? Cash balance at February 3, 2008 = $2,450 million. 1. 28(Edeneor S. A. ; cash flow relations. ) (Amounts in Millions) Cash atCash FlowCash F lowCash FlowCash at End offromfromfromEnd of 2006+Operations+Investing+Financing=2007 Ps32,673+Ps427,182+? +Ps(21,806)=Ps101,198 The net cash outflow for investing for 2007 = Ps(336,851) million. 1. 29(Kenton Limited; preparation of simple balance sheet; current and noncurrent classifications. ) January 31, 2008 Assets Cash? 2,000 Inventory12,000 Prepaid Rent24,000 Total Current Assets? 38,000 Prepaid Rent? 24,000 Total Noncurrent Assets? 24,000 Total Assets? 62,000 Liabilities and Shareholders’ Equity Accounts Payable? 12,000 Total Current Liabilities? 12,000 Total Noncurrent Liabilities Total Liabilities? 12,000 Common Stock? 50,000 Total Shareholders’ Equity? 50,000 Total Liabilities and Shareholders’ Equity? 62,000 1. 0(Heckle Group; preparation of simple balance sheet; current and noncurrent classifications. ) June 30, 2008 Assets Cash(720,000 Total Current Assets(720,000 Property, Plant and Equipment(600,000 Patent120,000 Total Noncurrent Assets(720,000 Total Assets(1,440,000 Liabilities and Shareholders’ Equity Accounts Payable(120,000 Total Current Liabilities(120,000 Note P ayable(400,000 Total Noncurrent Liabilities(400,000 Total Liabilities(520,000 Common Stock(920,000 Total Shareholders’ Equity(920,000 Total Liabilities and Shareholders’ Equity(1,440,000 1. 31Boeing Company; accrual versus cash basis of accounting. a. Net Income = Sales Revenue – Expenses = $66,387 million– $62,313 million = $4,074 million. Net Cash Flow = Cash Inflows– Cash Outflows = $65,995 million– $56,411 million = $9,584 million. b. Cash collections may exceed revenues for at least two reasons. First, Boeing may have collected in 2007 on customer credit sales made in 2006. Second, Boeing may have collected cash from customers in advance of providing them with goods and services. c. Cash payments may be less than expenses for at least two reasons. First, Boeing may have received goods and services from suppliers, but not yet paid for those items (i. e. the amounts are to be paid in the next year). Second, Boeing may have accrued expense s in 2007 that will be paid in cash in future periods; an example would be the accrual of interest expense on a bond that will be paid the next year. 1. 32(Fonterra Cooperative Group Limited; accrual versus cash basis of accounting. ) Calculation of net income for the year ended May 31, 2007: May 31, 2007 Revenue$13,882 Cost of Goods Sold(11,671) Interest and Other Expenses(2,113) Income before Taxes$98 Tax Expense$(67) Net Income$31 Calculation of net cash flow for the year ended May 31, 2007: May 31, 2007 Cash Receipts from Customers$13,882 Miscellaneous Cash Receipts102 Total Cash Receipts$13,996 Cash Payments to Employees and Creditors$(5,947) Cash Payments to Milk Suppliers(6,261) Cash Payments for Interest Costs(402) Cash Payments for Taxes(64) Total Cash Payments$(12,674) Net Cash Flow$1,322 1. 33(Dragon Group International Limited; balance sheet relations. ) (Amounts in Millions) The missing items appear in boldface type below. 20072006 Assets Current Assets$170,879$170,234 Noncurrent Assets28,94517,368 Total Assets$199,824$187,602 Liabilities and Shareholders Equity Current Liabilities$139,941$126,853 Noncurrent Liabilities7,0107,028 Total Liabilities$146,951$133,881 Shareholders Equity$52,873$53,721 Total Liabilities and Shareholders Equity$199,824$187,602 1. 34(Lenovo Group, Inc. ; balance sheet relations. ) The missing items appear in boldface type below. 20082007 Assets Current Assets$4,705,366$3,062,449 Noncurrent Assets2,494,4812,388,389 Total Assets$7,199,847$5,450,838 Liabilities and Shareholders Equity Current Liabilities$4,488,461$3,527,504 Noncurrent Liabilities1,098,123789,058 Total Liabilities$5,586,584$4,316,562 Shareholders Equity$1,613,263$1,134,276 Total Liabilities and Shareholders Equity$7,199,847$5,450,838 1. 5(Colgate Palmolive Company; income statement relations. ) The missing items appear in boldface type below. 200720062005 Sales$13,790$12,238$11,397 Cost of Goods Sold(6,042)(5,536)(5,192) Selling and Administrative Expenses(4,973)(4,355)(3,921) Other (Income) Expense(121)(186)(69) Interest Expense, Net(157)(159)(136) Income Tax Expense(759)(648)(728) Net Income$1,738$1,354$1,351 1. 36(Pol o Ralph Lauren; income statement relations. ) (Amounts in Millions) The missing items appear in boldface type below. 200720062005 Net Revenues$4,295. 4$3,746. 3$3,305. 4 Cost of Goods Sold(1,959. 2)(1,723. 9)(1,620. ) Selling and Administrative Expenses(1,663. 4)(1,476. 9)(1,377. 6) Operating Income$672. 8$545. 5$306. 9 Other Income (Expense)(34. 0)(43. 8)(2. 7) Interest Income (Expense), Net4. 51. 2(6. 4) Income Tax Expense(242. 4)(194. 9)(107. 4) Net Income$400. 9$308. 0$190. 4 1. 37(Ericsson; statement of cash flows relations. ) ERICSSON Statement of Cash Flows (Amounts in SEK Millions) 2007 20062005 Operations: Revenues, Net of ExpensesSEK19,210SEK18,489SEK16,669 Cash Flow from OperationsSEK19,210SEK18,489SEK16,669 Investing: Acquisition of Property and EquipmentSEK(4,319)SEK(3,827)SEK(3,365) Acquisition of Businesses(26,292)(18,078)(1,210) Sale Property and Equipment152185362 Sale of Short-Term Invest- ments3,4996,1806,375 Other Investing Activities(573)663(1,131) Cash Flow from InvestingSEK(27,533)SEK(14,877)SEK1,031 Financing: Proceeds from BorrowingsSEK15,587SEK1,290SEK657 Repayment of Borrowings(1,291)(9,510)(2,784) Sale of Common Stock94124174 Dividends Paid(8,132)(7,343)(4,133) Other Financing Activities40658(288) Cash Flow from FinancingSEK6,664SEK(15,381)SEK(6,374) Change in CashSEK(1,659)SEK(11,769)SEK11,326 Cash, Beginning of Year29,96941,73830,412 Cash, End of YearSEK28,310SEK29,969SEK41,738 1. 38(Jackson Corporation; statement of cash flows relations. ) JACKSON CORPORATION Statement of Cash Flows (Amounts in Millions) 2008 20072006 Operations: Revenues Increasing Cash$19,536$19,083$17,233 Expenses Decreasing Cash(16,394)(18,541)(18,344) Cash Flow from Operations$3,142$542$(1,111) Investing: Sale of Property, Plant and Equipment$332$401$220 Acquisition of Property, Plant and Equipment(3,678)(3,640)(1,881) Other Investing Transactions71(1,501)268 Cash Flow from Investing$(3,275)$(4,740)$(1,393) Financing: Proceeds of Long-Term Borrow- ng$836$5,096$3,190 Issue of Common Stock67373 Repayments of Long-Term Debt(766)(922)(687) Cash Flow from Financing$137$4,211$2,506 Change in Cash$4$13$2 Cash, Beginning of Year117104102 Cash, End of Year$121$117$104 1. 39(JetAway Airlines; preparing a balance sheet and an income statement. ) a. JETAWAY AIRLINES Balance Sheet (Amounts in Thousands) Sept. 30,Sept. 30, 20082007 Assets Cash$378,511$41 8,819 Accounts Receivable88,79973,448 Inventories50,03565,152 Other Current Assets56,81073,586 Total Current Assets$574,155$631,005 Property, Plant and Equipment (Net)4,137,6105,008,166 Other Noncurrent Assets4,23112,942 Total Assets$4,715,996$5,652,113 1. 39 a. continued. Liabilities and Shareholders Equity Accounts Payable$157,415$156,755 Current Maturities of Long-Term Debt11,9967,873 Other Current Liabilities681,242795,838 Total Current Liabilities$850,653$960,466 Long-Term Debt623,309871,717 Other Noncurrent Liabilities844,116984,142 Total Liabilities$2,318,078$2,816,325 Common Stock$352,943$449,934 Retained Earnings2,044,9752,385,854 Total Shareholders Equity$2,397,918$2,835,788 Total Liabilities and Shareholders Equity$4,715,996$5,652,113 b. JETAWAY AIRLINES Income Statement (Amounts in Thousands) For the Year Ended: Sept. 30, 2008 Sales$4,735,587 Salaries and Benefits Expense(1,455,237) Fuel Expense(892,415) Maintenance Expense(767,606) Other Operating Expenses(1,938,753) Interest Expense(22,883) Interest Income14,918 Net Income$(326,389) c. Retained Earnings, September 30, 2007$2,385,854 Plus Net Loss for 2008(326,389) Less Dividends Declared during 2008 (Plug)(15,390) Retained Earnings, September 30, 2008$2,044,075 1. 40(Block’s Tax and Bookkeeping Services; cash versus accrual basis accounting. ) a. Income for July, 2008: (1)Cash Basis Accounting Sales Revenues$13,000 Rent (Office)(6,000) Rent Equipment(12,000) Office Supplies Expense(370) Income (Loss)$(5,370) 1. 40 a. continued. (2)Accrual Basis Accounting Sales Revenues$44,000 Rent (Office)(2,000) Rent (Equipment)(2,000) Salaries Expense(6,000) Office Supplies Expense(90) Interest Expense(133) Income (Loss)$33,777 b. Cash on Hand: Beginning Balance, July 1$0 Financing Sources and (Uses): Jack Block Share Purchase40,000 Bank Loan20,000 Total Financing Sources$60,000 Operating Sources and (Uses): Cash Collected from Customers$13,000 Office Rent(6,000) Equipment Rental(12,000) Office Supplies Expense(370) Net Operating Uses$(5,370) Ending Balance, July 31$54,630 The ending balance in cash contains the effects of both operating activities, which have net cash flow of $(5,370) and financing activities, which have net cash flow of $60,000. The firm is financing its operating activities with a bank loan and with funds invested by its owner; both of these sources of funds represent claims on the firm’s assets, not increases in net assets. 1. 41(Stationery Plus; cash basis versus accrual basis accounting. ) a. Income for November, 2008: (1)Cash Basis Accounting Sales$23,000 Cost of Merchandise(20,000) Rent(9,000) Salaries(10,000) Utilities(480) Income (Loss)$(16,480) 1. 41 a. continued. (2)Accrual Basis Accounting Sales$56,000 Cost of Merchandise(29,000) Rent(1,500) Salaries(10,000) Utilities(480) Interest(1,000) Income (Loss)$14,020 b. Income for December, 2008: (1)Cash Basis Accounting Sales Made in November, Collected in December$33,000 Sales Made and Collected in December34,000 Cost of Merchandise Acquired in November and Paid in December(20,000) Cost of Merchandise Acquired and Paid in December(27,500) Salaries(10,000) Utilities(480) Interest(2,000) Income (Loss)$7,020 (2)Accrual Basis Accounting Sales$62,000 Cost of Merchandise(33,600) Rent(1,500) Salaries(10,000) Utilities(480) Interest(1,000) Income (Loss)$15,420 1. 42(ABC Company; relation between net income and cash flows. ) a. [pic] January$875$1,000$750$1,125 February1,1251,0001,500625 March6251,5001,875250 April2502,0002,2500 1. 42 continued. b. The cash flow problem arises because of a lag between cash expenditures incurred in producing goods and cash collections from customers once the firm sells those goods. For example, cash expenditures during February ($1,500) are for goods produced during February and sold during March. Cash is not collected from customers on these sales, however, until April ($2,000). A growing firm must generally produce more units than it sells during a period if it is to have sufficient quantities of inventory on hand for future sales. The cash needed for this higher level of production may well exceed the cash received from the prior periods sales. Thus, a cash shortage develops. The difference between the selling price of goods sold and the cost of those goods equals net income for the period. As long as selling prices exceed the cost of the goods, a positive net income results. As the number of units sold increases, net income increases. A firm does not necessarily recognize revenues and expenses in the same period as the related cash receipts and expenditures. Thus, cash decreases, even though net income increases. c The income statement and statement of cash flows provide information about the profitability and liquidity, respectively, of a firm during a period. The fact that net income and cash flows can move in opposite directions highlights the need for information from both statements. A firm without sufficient cash will not survive, even if it perates profitably. The balance sheet indicates a firms asset and equity position at a moment in time. The deteriorating cash position is evident from the listing of assets at the beginning of each month. Examining the cash receipts and disbursements during each month, however, identifies the reasons for the deterioration. d. Strategies for dealing with the cash flow problem center around (a) reducing the lag b etween cash outflows to produce widgets and cash inflows from their sale, and (b) increasing the margin between selling prices and production costs. To reduce the lag on collection of accounts receivable, ABC might: (1)Provide to customers an incentive to pay faster than 30 days, such as offering a discount if customers pay more quickly or charge interest if customers delay payment. (2)Use the accounts receivable as a basis for external financing, such as borrowing from a bank and using the receivables as collateral or selling (factoring) the receivables for immediate cash. (3)Sell only for cash, although competition may preclude this alternative. To delay the payment for widgets, ABC might: 1. 42 d. continued. ) Delay paying its suppliers (increases accounts payable) or borrow from a bank using the inventory as collateral (increases bank loan payable). 2) Reduce the holding period for inventories by instituting a just-in-time inventory system. This alternative requires ordering raw materials only when needed in production and manufacturing widgets only to customer orders. Demand appears to be sufficiently predictable so that opp ortunities for a just-in-time inventory system seem attractive. To increase the margin between selling price and manufacturing cost, ABC might: 1)Negotiate a lower purchase price with suppliers of raw materials. (2)Substitute more efficient manufacturing equipment for work now done by employees. (3)Increase selling prices. The cash flow problem is short-term because it will neutralize itself by June. This neutralization occurs because the growth rate in sales is declining (500 additional units sold on top of an ever-increasing sales base). Thus, the firm needs a short-term solution to the cash flow problem. If the growth rate were steady or increasing, ABC might consider obtaining a more permanent source of cash, such as issuing long-term debt or common stock. . 43(Balance sheet and income statement relations. ) a. Bushels of wheat are the most convenient in this case with the given information. This question emphasizes the need for a common measuring unit. 1. 43 continued. b. IVAN AND IGOR Comparative Balance Sheets (Amounts in Bushels of Wheat) IVAN IGOR BeginningEnd ofBeginningEnd of Assetsof Period Period of Period Period Wheat2022310105 Fertilizer21 Ox40364036 Plow2 Land100100 50 50 Total Assets162359101193 Liabilities and Owner’s Equity Accounts Payable3- Owner’s Equity162356101193 Total Liabilities and Owner’s Equity162359101193 Questions will likely arise as to the accounting entity. One view is that there are two accounting entities (Ivan and Igor) to whom the Red Bearded Baron has entrusted assets and required a periodic reporting on stewardship. The â€Å"owner† in owner’s equity in this case is the Red Bearded Baron. Another view is that the Red Bearded Baron is the accounting entity, in which case financial statements that combine the financial statements for Ivan and Igor are appropriate. Identifying the accounting entity depends on the intended use of the financial statements. For purposes of evaluating the performance of Ivan and Igor, the accounting entities are separate- Ivan and Igor. To assess the change in wealth of the Red Bearded Baron during the period, the combined financial statements reflect the accounting entity. 1. 43 continued. c. IVAN AND IGOR Comparative Income Statement (Amounts in Bushels of Wheat) IVANIGOR Revenues243138 Expenses: Seed2010 Fertilizer21 Depreciation on Ox44 Plow31 Total Expenses2916 Net Income 214 122 Chapter 1 does not expose students to the concept of depreciation. Most students, however, grasp the need to record some amount of expense for the ox and the plow. d. (Amounts in Bushels of Wheat)IVANIGOR Owner’s Equity, Beginning of Period162101 Plus Net Income214122 Less Distributions to Owner(20)(30) Owner’s Equity, End of Period 356 193 e. We cannot simply compare the amounts of net income for Ivan and Igor because the Red Bearded Baron entrusted them with different amounts of resources. We must relate the net income amounts to some base. Several possibilities include: IVANIGOR Net Income/Average Total Assets82. 2%83. % Net Income/Beginning Total Assets132. 1%120. 8% Net Income/Average Noncurrent Assets155. 1%137. 1% Net Income/Beginning Noncurrent Assets152. 9%135. 6% Net Income/Average Owner’s Equity 82. 6%83. 0% Net Income/Beginning Owner’s Equity132. 1%120. 8% Net Income (in bushels)/Acre10. 7012. 20 This question has no definitive answer. Its purpose is to get students to think about performance measurement. The instructor may or may not wish to devote class time at this point discussing which base is more appropriate.