Thursday, May 27, 2004

Double Entry Bookkeeping 

Double Entry Bookkeeping: "double entry bookkeeping and gives it its name. But it's actually the easy part. The hard part is...
Use only addition. Not only back in 1400 but also today, people make more mistakes in subtraction. And they didn't like erasing things or marking up the figures. Therefore only use addition. (This explained for me why the numbers keep getting larger, how come they don't subtract a few and run things down to zero again.) "

Wednesday, May 19, 2004

The Language of Accounting 

The Language of Accounting: "THE LANGUAGE OF ACCOUNTING
Accounting System must be accurate, easy to use and fulfill management�s requirements
'Further, your accounting system should not require a CPA to operate it or to interpret the output.'
Accounting for the Business Cycle
Purchase raw materials.
Increase raw materials inventory
Decrease cash (if you paid on the spot)
Increase accounts payable (if you didn�t)
Enter goods into raw materials inventory.
Begin the manufacturing or assembly process
Enter goods into work in process inventory.
Pay suppliers or pay employees (at service companies).
Reduces accounts payable
Reduces cash
Complete the manufacturing or assembly process.
Reduce work in process inventory
Increase finished goods inventory
Enter goods into finished goods inventory.
Sell the inventory.
Reduction in finished goods inventory
Increase in accounts receivable.
Increase in sales revenue.
Collect the receivable payment for credit sales.
Components of the Accounting System
The General Ledger is the hub of the accounting system.
Sub ledgers
Accounts receivable
Accounts payable
Order entry
Inventory control
Cost accounting
Fixed assets accounting
General Ledger � transactions from all four categories of accounts

Organization of the Accounting Department
Assignment of Duties
Overall responsibility for the accounting system
Management of the computer system
Accounts receivable
Accounts payable
Order entry
Cost accounting
Monthly reporting


Having sufficient power or resources to accomplish something: a singer able to reach high notes; a detergent able to remove stains.
Usage Problem. Susceptible to action or treatment: The brakes were able to be fixed.
Especially capable or talented.

[Middle English, from Old French, from Latin habilis, from habre, to handle. See ghabh- in Indo-European Roots.]

ably (bl) adv.
Usage Note: The construction able to takes an infinitive to show the subject's ability to accomplish an action: We were able to get a grant for the project. The new submarine is able to dive twice as fast as the older model. Some people think it should be avoided when the subject does not have an ability, as in sentences with passive constructions involving forms of the verb be: The problem was able to be solved by using a new lab technique. The reasoning here is that since the problem has no ability to accomplish an action, it is not able to do anything, and therefore able to should not be used. Presumably this ban would apply to similar words like capable and to negative words like unable and incapable. In such cases one can usually avoid the problem by using can or could: The problem could be solved.... Keep in mind, however, that passives with get ascribe a more active role to their subjects, and here one can use able to: He was able to get accepted by a top law school.

Susceptible, capable, or worthy of a specified action: debatable.
Inclined or given to a specified state or action: changeable.

Having sufficient power, strength, force, skill, means, or resources of any kind to accomplish the object; possessed of qualifications rendering competent for some end; competent; qualified; capable; as, an able workman, soldier, seaman, a man able to work; a mind able to reason; a person able to be generous; able to endure pain; able to play on a piano.

Specially: Having intellectual qualifications, or strong mental powers; showing ability or skill; talented; clever; powerful; as, the ablest man in the senate; an able speech.

No man wrote abler state papers. --Macaulay.

(Law) Legally qualified; possessed of legal competence; as, able to inherit or devise property.

An adjective suffix now usually in a passive sense; able to be; fit to be; expressing capacity or worthiness in a passive sense; as, movable, able to be moved; amendable, able to be amended; blamable, fit to be blamed; salable.

Note: The form -ible is used in the same sense.

Note: It is difficult to say when we are not to use -able instead of -ible. ``Yet a rule may be laid down as to when we are to use it. To all verbs, then, from the Anglo-Saxon, to all based on the uncorrupted infinitival stems of Latin verbs of the first conjugation, and to all substantives, whencesoever sprung, we annex -able only.'' --Fitzed. Hall.

Friday, May 14, 2004

Overview: Credit Risk 

Overview: Credit Risk: "The risk of a trading partner not fulfilling his obligations in full on due date or at any time thereafter is a risk that affects all aspects of business. Among the risks that face financial institutions, credit risk is the one with which we are most familiar. It is also the risk to which supervisors of financial institutions pay the closest attention because it has been the risk most likely to cause a bank to fail. "

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