Accounting 12 - Chapter 14 Blog

http://news.bbc.co.uk/1/hi/business/2774477.stm

Five million Visa and MasterCard credit card account information have been hacked. Two companies said that none of the accounts have been used in a fraudulent way so far, But UK businesses warn credit card users that there can still be a potential risk, if the cards weren't reissued. Visa and MasterCard, both have a Zero-Liability policy, which states that "they will protect card holders from having to pay for any unauthorised or fraudulent charges." Peter Lilley, from the UK chartered institute of banking and also the author of various books on hacking and computer crime, said that some hackers just break into security systems just to prove a point and that being that the system is flawed. He also said that even thought the hackers aren’t doing anything with the credit card accounts, the accounts still are in danger now and the future. The only way to fix this problem would be to reissue all five million cards. When asked, the spokesperson for Visa could not respond to the issue of reissuing all the cards, but the spokesman for MasterCard said that it would be up to the card issuer to decide if they would want to renew the cards.

Credit cards are basically virtually money. You use it and then you pay it off with actually cash later. The first step in using a credit card is to actually do a transaction. Then the clerk would write the sale off as a credit card slip. The clerk would also check the customer’s identification number and make sure they sign the sales slip. In a couple of weeks a price list of what you owe to the credit card companies will come in the mail and the person would pay it off. But what if someone hacked the credit card companies and obtained the information. Then he or she would be able to buy an infinite amount of anything he or she desires. Even though you need identification to purchase anything, people now can buy things only without ID. Without a proper security system any information could be obtained. This is especially important for banks, because they deal with people’s money.

Five million cards obtained through illegal means and the criminals never caught, proves that the security system thought some banks are insecure in some way. Chapter 14 states that banks are responsible for the safekeeping of money and the processing of bank credit card transactions. How can the banks do that if any average joe can bypass the banks security. The banks have the duty to protect the money of people who put and invest into the bank. In my opinion, banks should invest even more heavily into security. I know that every once and a while there will be a notorious hacker than will break the security system, but banks should still focus on their security the most. If the banks security is easily bypassed than no one would even consider that bank and therefore they will not make any profit.

Chapter 12 Blog

Cash Discount For Gas Is A Joke

http://www.courant.com/news/local/columnists/hc-ubinas1005.artoct05,0,423379.column

The article is roughly about a lady named Tracy Brown talking about how gas prices are so high that the government had to step in and create a bill, designed specifically to help consumers buy lower price gas, so they don't have to worry as much. The bill allowed gas pumps to offer cash discounts to people. This didn't really help much at all. The speaker found herself pulling over to a gas station because it was promoting attractive gas prices. She later found out that by using a credit card she would have to pay an extra 10 cents. Apparently the discounts, on this particular gas station only worked if you used cash. She goes on saying that not everyone has the money to buy gas at the prices they are at now. Some of these gas companies only use the discounts to advertise their gas, even though many people don't pay for their gas by using cash. Nearing the end of the article she talks to one of the heads of the gasoline retailers association, Michael J Fox. He says that the consumers are to narrow minded to realize that they are not getting hit as bad as the oil companies are and he ends it at that.

This article has some connections to chapter 12. The one I found to be the most obvious connection would be that the credit card companies would have to charge the user of the cards if they used it to purchase something. This would count as sales or revenue account and the accountants would have to places the transaction in the appropriate journal. I know one thing, credit card companies are usually fairly big, and because of that they must use the five journaling system. This would be the same for the gas corporations that she mentioned. Since they gave discounts they would have to adjust whatever needs to be adjusted.

I actually agree with the head of the gasoline retail association personal. The consumers aren't being hit the most if you think about it. When the demand of the gas out weigh the supply, the prices must go up at an exponential rate. If this keeps on going on, the prices would soon be so high that the worst of cars would be a luxury item. Once that happens the gas company is doomed to go out of business. Now that I think about it the ultimately the one who suffers are actually the consumers, because if the gas company goes out of business than all those employees wouldn't have a job. That’s literally millions of people on the street. With those many people without a job the economy of the country would go down into depression rates. If the country is a big world player than the world might sink into a depression as well. This would ultimately hurt the consumers.

Chapter 11 - Inventory Blog - http://www.economicnews.ca/cepnews/wire/article/117731

Oil prices slip even after inventory drops

The Energy Department of energy information administration said that crude oil inventories dropped by 5.9 million barrels, gasoline dropped by 6.5 million, and distillates, which included heating oil and diesel fuel, dropped by a 1.2 million. The did predict that the oil company who have lower inventories of each, but these results were lower than expected. In fact the oil refineries were only running at a record breaking low 78.3 percent capacity last week. OPEC, The Organization of petroleum exporting countries said they were going to reduce outputs by 520000 barrels a day, but they chosen not to take the more drastic step forward in cutting their production rates. This was viewed as a compromise to avoid a backlash from the biggest countries that consume petroleum. With it they also planned to reduce the rapid decline in oil prices. Early Wednesday hurricane Ike was about 95 Miles west of Havana, Cuba. Ike was moving at 10 miles per hour with winds near 75 miles per hour. It was expected to move across the gulf of Mexico and into the Texas coast, with winds up to 130 miles per hour and moving into a category 3 hurricane. As of Tuesday the US department of the interior minerals management service said that about 77.5 percent of oil and 64.8 percent of natural gas productions in the Gulf remained shuttered as hurricane Ike approached Texas. Since two weeks ago when hurricane Gustav hit oil and gas operators have been working around the clock to restore productions. With all these natural disasters people must be wondering why the majority of gas prices are lower than they expect them to be.

This article connects to the chapter we are learning today in many ways. The obvious connection is that the article gives you lots of examples of gas, oil and other natural gasses having their price dropped. The natural gasses represents the inventory of these companies. The article subtlety says if you have a low inventory due to some natural disaster, the prices of the affected products would have its dollar value sky rocket, but its not the case here according to the article. The opposite is happening, a hurricane hit many oil refineries and lost much of their products. What you would think would happen is gas prices would go through the roof and lots of people would be angry, but the entire opposite happened the prices of gas in most countries fell in the aftermath of the hurricane.

I personally think that raising the prices after a natural disaster hit would be a great business plan. I don't really get why these oil companies don't heighten the prices on gas, but i do know why they lowered the price. The reason was all the companies were so scared before the hurricane they shot up the price of oil. When the hurricane hit, it wasn't there wasn't as much damage as the companies thought there would be. So they lowered the price back down. If you think about it our gas prices didn't really change much before the hurricane hit. I don't really care for the gas prices because I don't own a car yet and really I don't have that big of an appreciation for money, but that because I'm still a teenager. I'm sure when I grow up ill be as angry as the rest of the world about the overpriced oil we so disparately need.