When presidential candidates are asked why they are running they invariably say something like “I’m bursting with so much love for this great country and its people that running for President is the only patriotic thing to do”. These candidates are also quick to assure us that they do not simply love our country in [...]

The text book definition of “sunk costs” reads something like this: Sunk Costs: Costs that were incurred in the past that cannot be recovered and thus are irrelevant for decision making. Well most costs are incurred in the past so that part of the definition is not all that helpful. More central is the idea [...]

The following item was reported in a recent American Institute of Certified Public Accountants communication: “The Exempt Organizations Division of the IRS had posted on the IRS web site a controversial document setting forth the Service’s view on what constitutes good governance practices for tax-exempt entities. Included in the document was the suggestion that audit [...]

Is there any specific experience that can best prepare an individual to be the President of the United States? Service in the military? Running a business? Governing a state? Or will the much maligned legislative experience suffice? How much of the right sort of experience is enough? Consider the resumes of two of our best [...]

The basic advantages of a computerized accounting system are efficiency and speed. In a manual system receipts and disbursements are initially recorded in registers. This can involve writing a check and then writing a description in a register or this can be done on a one-write system. Either way the transactions in the registers must [...]

It is a widely accepted belief that risk is an important factor in investment decisions. The income method of investment valuation stipulates that the price an investor is willing to pay for an investment is a function of the future expected cash flow, discounted by a rate that reflects the risk associated with receiving this [...]

Small non-profit organizations are very vulnerable to fraud.When I say small, I mean small: organizations that raise less than $100,000 per year and have only one paid staff person or no paid staff persons. I’m talking about neighborhood associations, sports and recreation leagues and all manner of civic, political and religious groups. These small organizations [...]

Businesses spend billions of dollars trying to develop new and better products, These outlays are referred to as research and development (R & D) costs. Accounting rule makers have struggled with how best to classify such expenditures. Should they be treated as expenses or assets? The classification of an outlay as an expense or an [...]

Financial accounting strives to answer two basic questions: how did the business do last year, and what did the business own and owe at the end of the year? The answers to these questions are summarized in two basic statements, the income statement and the balance sheet. If you have even a passing knowledge of [...]

Financial statement users hope that historical performance reflected on income statements might provide some meaningful grounds for predicting a company’s future performance. In the case of well established businesses operating in stable environments this would be a reasonable expectation. It’s too bad that in the real world there are so few businesses like this. Nonetheless, [...]