Chapter 14 Media Article

"Banks freed to offer both MasterCard and Visa credit cards", National Post, Tuesday, November 18, 2008

This article talks about how Canadian banks are now free to offer both MasterCard and Visa credit cards. In the past decades, there were old restrictions that made the banks choose either MasterCard or Visa. However, it still may take some time before the issuers make any changes to their cards. They will have to work it all out first since they've been operating with only one brand or the other for 35 years. This is going to be a fundamental change to businesses in Canada. Credit rating agencies say that Canadian credit card debt levels are lower than in the US and consumers pay off more of their card bills than Americans.

In chapter 14, we learned about cash control and banking. We also learned about bank credit cards. Most small retail stores do not offer their own VISA or MasterCard systems; they use credit cards sponsored by major banks. With bank credit cards, consumers can make purchases on short-term credit at any retail store that accepts credit cards. This article relates to chapter 14 by talking about how the change of the restrictions for issuing MasterCard and Visa will be a fundamental change for the business model of Canada. We learned in chapter 14 that credit cards are used very frequently, and so any changes would make huge changes to many individuals and merchants.

In my opinion, I think it will take a long time before the banks actually start issuing both MasterCard as well as Visas. They'd have to do a lot of work to figure out how to make everything work out. Now that banks can issue both brands of credit cards, there will be more competition, and it'll be harder to keep the customers from moving back and forth between card providers for better deals. In addition, with the current weakening economy, I think that less people will use credit cards to make transactions. This could affect the banks' plans on issuing new credit cards.

http://www.nationalpost.com/story.html?id=969984

Chapter 12 Media Article

“Surviving the credit crisis”, Financial Post, Tuesday, October 28, 2008

This article talks about how companies are trying to survive what is becoming the worst credit crisis in generations. With banks collapsing, the U.S. economy rapidly shrinking and high oil prices, companies are trying hard to stay in business. The article also talks about how liquidity is the key to staying in business since all recent mega-failures in the U.S. was due to the lack of liquidity. Also, the article suggests that businesses should reduce their credit risk without losing customers by offering early discounts to riskier customers. It is very important that money is received since it is not a sale if you don’t get paid.

In chapter 12, we learned about accounting for cash discounts. We learned about the different terms of sales companies have for their customers. For example, some businesses will give a cash discount if the bill issued is paid within a certain amount of days before the invoice date. This article relates to chapter 12 by talking about how offering early discounts is beneficial to businesses. By offering early cash discounts, it can ensure that the company receives the amount due, and make customers happy. As we learned in the chapter, the purpose of a cash discount is to encourage customers to pay promptly.

In my opinion, I think that offering early cash discounts is an efficient way of making sure the company receives money from its customers. I agree where the article talks about how liquidity is the key to running a business. The companies with more cash flow will be able to survive longer. Also, with growing economic problems, I think that it is extremely important for all businesses to try to maximize liquidity. As I said earlier, cash discounts are a great way to receive cash faster, increasing liquidity. With the U.S. economy quickly shrinking, and dropping consumer confidence, businesses will have to work harder to increase liquidity and try to stay in business.

http://www.financialpost.com/story.html?id=914649&p=1

Chapter Eleven Media Article

"Chocolate coins sold in Costco, dollar stores contain melamine: CFIA", Vancouver Sun, October 08, 2008

This article talks about how a type of chocolate coins by the name Sherwood Brands Pirate's Gold Milk Chocolate Coins, sold at Costco and dollar stores, are recalled because it was found to contain melamine, a type of toxic chemical compound. This toxin killed four babies and sickened thousands in China. Garfield Balsom, CFIA spokesman, states that the levels of melamine in the chocolates are actually very low, and no illnesses have been reported, but because the chocolates were widely distributed, they decided to send out an advisory. Also, because Halloween is approaching, everyone should be aware of it so children do not eat it.

In chapter eleven, we learned about the accounting procedures of a merchandising business. We also learned about merchandise returns and allowances. Costco is a wholesaler, which is a merchandising business that buys goods from manufacturers and sells to retailers. Costco also sells to the general public. This article relates to chapter eleven by showing that when products are recalled, the company will have to give out cash refunds. Because the company will have to have many refunds for the toxic chocolate, it will affect the company’s revenue. If the company has sales returns and allowances accounts, the amount would appear on the income statement.

In my opinion, I think big companies like Costco should pay attention to what they are importing and selling. They should have been sure that all the products they sell are safe. This incident will more or less affect the company name as consumers will become cautious to what they buy in the store. Also, the company’s revenue will be affected as the chocolates are returned to the company. Moreover, I think that although the risk of the chocolates of being very toxic are low, I think it is right for the business to recall the products back before something does happen. With Halloween just around the corner, it is very important to make sure children do not become ill because of eating the chocolates.

http://www.canada.com/vancouversun/story.html?id=8a952bd5-01cd-4819-86de-275421f24f3e