Financial Accounting Ch 3- Article: Making a Success of Designer Jeans

During this point in time in the North American markets, not only are large corporations at risk of financial failure, but also small businesses. One of these small businesses is Dorinha Jeans Wear, owned by Dorinha Reynolds herself. Although she only has a small business, rather than a corporation, she caused quite a stir in 2001 with her designer label, and has now decided to have a relaunch for 2009. As an entrepreneur herself, the advice she gives to other aspiring entrepreneurs is to “Get off your duff, and take a chance” and try to not think of the possible risks of failure.

http://www.canada.com/vancouversun/news/business/story.html?id=feec0f55-6f38-4f48-a669-56a030c35fd8

Because Dorinha only owns a small business, many of her transactions and bookkeeping are much less complex, when compared to a large corporation. For example, when it comes to financial statements such as income statements, she would most likely use a single step format, instead of a multistep format. This is because she does not have shareholders and board of directors, who may want to be specified on what types of revenues and expenses are made and used in a period. Although there is a small difference between the different income statements, it is important her business makes enough gross profit, in order to cover all her costs. As she continues to follow the accounting cycle, it is crucial she notices the trends her business is having, and know when it is time to lower prices, decrease wages, increase prices, make lay off, etc.

One thing that was shocking to me was the advice she gave to aspiring entrepreneurs. I agree that it is important to take some chances when starting a business, but you must have some discretion to the risks. During the beginning stages of opening a business, you do not want to put yourself in a position where you can lose almost everything you own, especially when you are not financially stable. This is especially a bad time to start a business, with this current financial crisis. She says to not procrastinate in starting a business, but at the same time, it is better to be safe than sorry.

Economics Ch 3- Article: Pass The Plate

With all the economic turmoil of late, many problems have come up for company owners. These companies include car makers, such as General Motors, Ford, and Chrysler, all of which have asked the Senate Banking Committee to hand a possible cash bail out for each of the companies. This situation is not only happening in the US, European unions are also thinking of giving a €40 billion in soft loans to carmakers. Although Ford has stated that they may be able to scrape by and barely pay all its bills by the end of the year, this is not the situation for both GM and Chrysler, who will definitely need financial aid from the government.

http://www.economist.com/business/displaystory.cfm?story_id=12638642

Government involvement is a major issue in this situation. Although these companies are privately owned, the government can still help them be bailed out of this predicament. A bailout would be a positive effect for the carmakers, allowing them to continue producing automobiles, only at a lower rate, but is negative to its third party- the environment. If the government grants cash for the car companies, the environment will be greatly affected, because of the many more cars out there contributing to pollution; and if the government doesn't grant the money, it will be responsible for thousands of jobless American citizens- GM alone already employs over 266,000 workers around the world. They have to keep in mind however, that GM and Chrysler are not small car companies: if these two companies were to go down, Ford may also plunge in the markets, due to the fact that all three companies get their automobile parts from the same supplier.

This to me, comes as a surprise, because GM, Chrysler, and Ford are some of the largest carmakers around the world, so having them on the verge of bankruptcy is astonishing, even with the recent slumps in the market. When it comes to whether or not the government should give the companies a grant, many factors come into play. In 2007, GM lost $38.7 billion in lost profits and Chrysler $2.92 Billion, so doesn’t this seem like giving to a lost cause? The $25 billion asked by all three companies combined does not even compare to the $38.7 billion debt for GM. Although GM has played a large role in revolutionizing the automotive world, it is time they step down and allow the more popular carmakers of today to take over. The debts of Chrysler and Ford are much lower; therefore, it would be reasonable to bail out Ford and Chrysler, rather than GM