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Economics, Accounting & Business: Post your doubts here!

Mess

Mess

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Yazka Shathir said:
I have a huge doubt.
What will happen to the cost of sales if your rate of stock turnover decreases?
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Your question is unclear. Cost of sales must change before so as to affect rate of stock turnover. If it decreases the rate will increase and vice versa.
 
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panoramafolks

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Yazka Shathir said:
What will happen to cost of sales if you have a low rate of stock turnover?
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Rate of stock turnover = COGS/Avg.stock
Cost of sales is numerator.
When the rate of stock turnover is low, the numerator also has to be low other wise the denominatore should be high .Thus the following are possible:
  • High Avg.stock
  • Low Cost of sales
 
Daniel X

Daniel X

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Is there any website or link where I can download the AS and A level economics book or CD ROM ?Please help me.
 
TheZodiac

TheZodiac

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kainat husain said:
as sallam o alikum
please help me with this question in ECONOMICS
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Economics (9708)/9708_s12_qp_21.pdf
q2-a
like after defining the ppc and money..pls answer the part after it (like how the loss in confidence will effect the ppc) in detail
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It's basically asking you to explain the situation which occurs when an economy experiences 'hyper inflation'. That is when people lose the confidence in money and may lead to 'barter system' for consuming goods and services. You should define money and Production Possibility curve and also draw a relevant graph to show how ppc is shown via diagram, after that you should explain how people would lose confidence in money, i.e: When an economy would experience hyper inflation. Now you should comment on the fact that how would PPC be affected when people would lose confidence in money. This would be the following that as PPC shows the production of two goods over a relevant period of time in an economy, if people would lose confidence in money, the PPC would not be able to operate effectively. The curve would shift backwards indicating the loss in total production (shifting towards origin).
 
kainat husain

kainat husain

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TheZodiac said:
It's basically asking you to explain the situation which occurs when an economy experiences 'hyper inflation'. That is when people lose the confidence in money and may lead to 'barter system' for consuming goods and services. You should define money and Production Possibility curve and also draw a relevant graph to show how ppc is shown via diagram, after that you should explain how people would lose confidence in money, i.e: When an economy would experience hyper inflation. Now you should comment on the fact that how would PPC be affected when people would lose confidence in money. This would be the following that as PPC shows the production of two goods over a relevant period of time in an economy, if people would lose confidence in money, the PPC would not be able to operate effectively. The curve would shift backwards indicating the loss in total production (shifting towards origin).
Click to expand...
OKAYYY this answer is related to chapter INFLATION too right? i didnt study tht! thnx alot it was helpful
 
FAizan007

FAizan007

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Its a theoretic question for Accounts, Double-Entry bookkeeping

If a person lend a business and afterwards business repays him so If i have to make a single ledger account "Loan" for Debit and Credit or vice versa ?
 
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panoramafolks

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kainat husain said:
ECONOMICS HELP
http://papers.xtremepapers.com/CIE/Cambridge International A and AS Level/Economics (9708)/9708_s12_qp_21.pdf
q2b- after explaining about planned and market economy pls tell me the answer! i cant find it in book! pls
Click to expand...

This question is abt transition economy :

Ans:

Transition economies
A transition economy is one that is changing from central planning to free markets. Since the collapse of communism in the late 1980s, countries of the former Soviet Union, and its satellite states, including Poland, Hungary, and Bulgaria, sought to embrace market capitalism and abandon central planning. However, most of these transition economies have faced severe short-term difficulties, and longer-term constraints on development.

The problems of transition economies include:

Rising unemployment
Many transition economies experienced rising unemployment as newly privatised firms tried to become more efficient. Under communism, state owned industries tended to employ more people than was strictly needed, and as private entrepreneurs entered the market, labour costs were cut back in an attempt to improve efficiency. As the newly established private firms became subject to greater competition some were driven out of the market, which created job losses. In addition, a reduction in the size of the state bureaucracy also meant that many employees of the state also lost their jobs.

Transition_Economies.png


Between 1990 and 1997, unemployment rose in the three selected transition economies and was consistently above more well-established, market-based economies like the UK. Of course, the global recession of 1990 - 92 accounts for some of the rising unemployment over that period. Market reforms adopted in these countries have gradually brought down unemployment in the transition economies, to be on a par with many established market economies.

Rising inflation

Many transition economies also experienced price inflation as a result of the removal of price controls imposed by governments. When this happened, the newly privatised firms began to charge prices that reflected the true costs of production. In addition, some entrepreneurs exploited their position and raised prices in an attempt toprofit from the situation.

Transition_economies_Inflation.png


Annual inflation in the transition economies between 1990 and 1997 averaged around 20%, but then fell, moving much closer to the average found in the market economies of Western Europe.

Lack of entrepreneurship and skills
Many transition economies suffered from a lack of entrepreneurs and entrepreneurship, which make it more difficult to reform their economies and promote market capitalism. In addition, there was also a skills gap with few workers having the necessary skills required by employers in the newly privatised firms.

Corruption
It is alleged that corruption was widespread during the early years of transition in many former communist countries, and this inhibited the effective introduction of market reforms. Many products were poorly made and sold in unregulated and illegal markets, and many have claimed that criminal gangs and widespread racketeering filled the vacuum left by the deposed communist regimes.

Lack of infrastructure
The transition economies also suffered from a lack of real capital, such as new technology, which is required to produce efficiently. This was partly because of the limited development of financial markets, and because there was little inward investment from foreign investors. Clearly, this has changed as the transition economies have reformed, and joined the global market, which has encouraged inward investment (Foreign Direct Investment – FDI) from around the world.

Lack of a sophisticated legal system
Under communism, the state owned all the key productive assets, and there was little incentive to develop a sophisticated legal system that protected the rights of consumers, and regulated the activities of producers. Market-driven economies will only develop when citizens are granted extensive property rights, and can protect these rights through the legal process. This was large absent in the former communist transition economies.

Moral hazard
The problem of moral hazard implies that inferior performance can arise when the risks associated with poor performance are insured against. For example, if individuals insure the contents of their house against theft, they are more likely to leave their windows open. In the context of transition economies, under communism people felt that the state would insure them against the risks associated with global competition, including the risk of losing their jobs. The consequence is that many workers remained inefficient and unproductive, knowing that employment prospects would not be reduced.

Inequality
Economic transition also led to rapidly increasing inequality as some exploited their position as entrepreneurs and traders in commodities, while others suffered from unemployment and rising inflation.
 
kainat husain

kainat husain

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panoramafolks said:
This question is abt transition economy :

Ans:
Transition economies
A transition economy is one that is changing from central planning to free markets. Since the collapse of communism in the late 1980s, countries of the former Soviet Union, and its satellite states, including Poland, Hungary, and Bulgaria, sought to embrace market capitalism and abandon central planning. However, most of these transition economies have faced severe short-term difficulties, and longer-term constraints on development.

The problems of transition economies include:

Rising unemployment
Many transition economies experienced rising unemployment as newly privatised firms tried to become more efficient. Under communism, state owned industries tended to employ more people than was strictly needed, and as private entrepreneurs entered the market, labour costs were cut back in an attempt to improve efficiency. As the newly established private firms became subject to greater competition some were driven out of the market, which created job losses. In addition, a reduction in the size of the state bureaucracy also meant that many employees of the state also lost their jobs.

Transition_Economies.png


Between 1990 and 1997, unemployment rose in the three selected transition economies and was consistently above more well-established, market-based economies like the UK. Of course, the global recession of 1990 - 92 accounts for some of the rising unemployment over that period. Market reforms adopted in these countries have gradually brought down unemployment in the transition economies, to be on a par with many established market economies.

Rising inflation

Many transition economies also experienced price inflation as a result of the removal of price controls imposed by governments. When this happened, the newly privatised firms began to charge prices that reflected the true costs of production. In addition, some entrepreneurs exploited their position and raised prices in an attempt toprofit from the situation.

Transition_economies_Inflation.png


Annual inflation in the transition economies between 1990 and 1997 averaged around 20%, but then fell, moving much closer to the average found in the market economies of Western Europe.

Lack of entrepreneurship and skills
Many transition economies suffered from a lack of entrepreneurs and entrepreneurship, which make it more difficult to reform their economies and promote market capitalism. In addition, there was also a skills gap with few workers having the necessary skills required by employers in the newly privatised firms.

Corruption
It is alleged that corruption was widespread during the early years of transition in many former communist countries, and this inhibited the effective introduction of market reforms. Many products were poorly made and sold in unregulated and illegal markets, and many have claimed that criminal gangs and widespread racketeering filled the vacuum left by the deposed communist regimes.

Lack of infrastructure
The transition economies also suffered from a lack of real capital, such as new technology, which is required to produce efficiently. This was partly because of the limited development of financial markets, and because there was little inward investment from foreign investors. Clearly, this has changed as the transition economies have reformed, and joined the global market, which has encouraged inward investment (Foreign Direct Investment – FDI) from around the world.

Lack of a sophisticated legal system
Under communism, the state owned all the key productive assets, and there was little incentive to develop a sophisticated legal system that protected the rights of consumers, and regulated the activities of producers. Market-driven economies will only develop when citizens are granted extensive property rights, and can protect these rights through the legal process. This was large absent in the former communist transition economies.

Moral hazard
The problem of moral hazard implies that inferior performance can arise when the risks associated with poor performance are insured against. For example, if individuals insure the contents of their house against theft, they are more likely to leave their windows open. In the context of transition economies, under communism people felt that the state would insure them against the risks associated with global competition, including the risk of losing their jobs. The consequence is that many workers remained inefficient and unproductive, knowing that employment prospects would not be reduced.

Inequality
Economic transition also led to rapidly increasing inequality as some exploited their position as entrepreneurs and traders in commodities, while others suffered from unemployment and rising inflation.
Click to expand...
okayyyy thanxxx alot! so now ill modify nd write the answer!! and please tell me now how to convert it into a successful market economy like how to solve the problem
 
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