Budget contingency should be considered because of uncertainty and changes in project scope, mitigating risks, and stakeholder satisfaction.
a) Uncertainty and changes in project scope: An organization should consider applying budget contingency to address uncertainties and changes in project scope. During the course of a project, new requirements or modifications to the scope may arise, which can result in additional costs. By allocating a budget contingency, the organization can accommodate these scope changes without exceeding the original budget allocation.
b) Mitigating risks and unforeseen events: Budget contingency allows an organization to mitigate risks and handle unforeseen events that may impact the project. Risks such as material shortages, delays, or unexpected regulatory changes can lead to cost overruns. Having a budget contingency helps to absorb the financial impact of these risks, providing the necessary resources to address them promptly and minimize disruptions to the project.
c) Flexibility and stakeholder satisfaction: The application of budget contingency provides organizations with flexibility in responding to stakeholder expectations and demands. Stakeholders may have additional requests or changes to the project that were not initially planned. By having a budget contingency, the organization can allocate funds to meet these stakeholder requirements, enhancing satisfaction and maintaining positive stakeholder relationships throughout the project lifecycle.
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in the globalized as/ad model, what curve tells specifies the amount of tradable goods that other countries in the world will supply to the country at a given price level and exchange rate?
In the globalized AD/AS (Aggregate Demand/Aggregate Supply) model, the curve that specifies the number of tradable goods that other countries in the world will supply to the country at a given price level and exchange rate is known as the "net exports curve" or the "foreign supply curve."
The net exports curve represents the relationship between the country's domestic price level, exchange rate, and the number of goods and services that it will import or export. It shows the net inflow or outflow of tradable goods based on the country's competitiveness in international markets.
An increase in the country's domestic price level or a depreciation of its exchange rate relative to other countries can make its goods relatively cheaper for foreign buyers, leading to an increase in exports and a decrease in imports. This results in a positive slope of the net exports curve, indicating higher net exports at higher prices or a more favorable exchange rate.
Conversely, a decrease in the country's domestic price level or an appreciation of its exchange rate can make its goods relatively more expensive for foreign buyers, leading to a decrease in exports and an increase in imports. This leads to a negative slope of the net exports curve, indicating lower net exports at lower prices or a less favorable exchange rate.
By considering the net exports curve along with other components of aggregate demand and supply, the globalized AD/AS model provides insights into how changes in price levels, exchange rates, and international trade conditions impact a country's economy.
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What is meant by the economic problem?
Answer:
hey! hope this helps love! Economic problems asserts that an economy's finite resources are insufficient to satisfy all human wants and needs. Economics involves the study of how to allocate resources in conditions of scarcity.
The fraud at healthsouth at the structural level of the company was more intense because?
The fraud at healthsouth at the structural level of the company was more intense because checks and balances were eliminated and organizational culture was compromised
The HealthSouth fraud took place in an intriguing time of economic expansion and lax laws, which made accounting fraud considerably simpler. Investors and lenders were more concerned with revenue in the 1990s than they were with profitability. Growth was important when a company was asking for funding. CEOs were under pressure, including Scrushy, to maintain company growth and consistently above analyst predictions. Along with this increased demand for growth, there emerged an odd legal climate.
The HealthSouth CFOs (described as: filling "holes" in the balance sheet with "dirt") changed their earnings figures. The fraud went unnoticed until 2003, when Weston Smith, a former HealthSouth CFO, told federal authorities about it. It involved inappropriately capitalizing spending, overestimating insurance reimbursements, overvaluing fixed assets, and employing flawed reserve accounting.
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Regarding the newer parts of Management Accounting (i.e. pick two from (a) Balanced Scorecard, or (b) Lean Accounting, or (c) Activity-Based Management (which is broader than Activity-Based Costing), or (d) Time-Based Management [covered in the article that you can access by clicking on one of the Links at the end of this assignment], or (e) Business2030 [covered in the article that you can access by clicking on one of the Links at the end of this assignment]) write about how you might use these concepts that you have learned about in this class to help you better manage processes or resources in your career in the future.
In my future career, I would utilize the concepts of (a) Balanced Scorecard and (c) Activity-Based Management to enhance process and resource management.
Balanced Scorecard would provide a comprehensive framework to align and measure performance across different areas, while Activity-Based Management would enable a deeper understanding of resource consumption and help identify opportunities for improvement.
By implementing Balanced Scorecard, I would have a holistic view of organizational performance, incorporating financial, customer, internal process, and learning and growth perspectives. This would allow me to set clear objectives, track progress, and make informed decisions to improve overall performance.
Activity-Based Management, on the other hand, would provide insights into the activities and processes that consume resources. It would enable me to allocate resources effectively, identify bottlenecks, and streamline operations. This approach would help optimize resource utilization and improve overall efficiency.
By combining these two concepts, I would have a well-rounded approach to managing processes and resources, ensuring alignment with organizational goals and driving continuous improvement.
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Which of the following is one of the five dimensions that make up the concept of trust? a. Openness b. Honesty c. Responsibility d. Loyalty e. Reliability
One of the five dimensions that make up the concept of trust is honesty.
Honesty, also known as truthfulness, is a quality of moral character that denotes the absence of negative traits like lying, cheating, and theft as well as positive and virtue-based traits like integrity, truthfulness, and straightforwardness, among others. Being honest also entails being dependable, obedient, impartial, and true.
Honesty is the quality of being truthful, sincere, and straightforward in one's words, actions, and thoughts. It involves being transparent and not hiding or distorting the truth. Honesty is an important aspect of human interaction and is essential in building trust and maintaining healthy relationships. It is also a fundamental moral value that is often valued in personal and professional settings. Honesty requires courage and integrity, as it may sometimes involve admitting mistakes or difficult truths. Overall, practicing honesty can lead to greater authenticity, integrity, and trustworthiness.
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Specify and explain the typical shapes of the marginal-benefit and marginal-cost curves. How are these curves used to determine the optimal allocation of resources to a particular product. If current output is such that marginal cost exceeds marginal benefit, should more or fewer resources be allocated to this product? Explain.
Answer:
The completely accurate definition of the particular subject is outlined in the following subsection including its clarification.
Explanation:
The marginal profit trajectory has so far been sloping down, MB decreases, and since most of a commodity is collected as much more quantities of something like a good offer fewer sense of achievement, unlike earlier versions. This same marginal cost of production is pointing down upward, becomes rising as more than just a commodity is generated as additional items need progressively inappropriate utilization of resources.The optimum amount of something like a given substance exists whenever MB is equivalent to MC. If MC reaches MB everything should still be made available fewer resources. In any other context, the services are more useful.The information regarding the marginal-benefit and marginal-cost curves is explained below:
The following information should be considered:
The marginal profit trajectory has so far been falling down, MB decreases, and because many commodity is collected as much more quantities of something such as sense of achievement. This same marginal cost of production is pointing falling upward, that increased as more than just a commodity is produced as extra items required progressively non-appropriate utilization of resources. The optimum amount of something such as given substance exists in the case when MB is equivalent to MC. If MC reaches MB so it still be made available fewer resources.Learn more: https://brainly.com/question/17429689?referrer=searchResults
Tungston Crafters reported $110,000 in interest expense for convertible bonds issued several years ago. The company is subject to a 32% tax rate. There were no actual conversions during the current year. What adjustment is needed to the company's diluted EPS numerator? (Abbreviations Used: EPS = Earning per share. If no adjustment is needed enter a 0 . Use a minus sign or parentheses to identify a decrease.) Adjustment needed to the company's diluted EPS numerator = ................
The adjustment needed to the company's diluted EPS numerator is -$74,800. This adjustment represents the tax savings resulting from deducting the interest expense on convertible bonds at the 32% tax rate. So, the adjustment needed to the company's diluted EPS numerator is -$74,800.
The interest expense on convertible bonds is tax-deductible for the company. In this case, Tungston Crafters reported $110,000 in interest expense for the convertible bonds. To calculate the adjustment needed to the diluted EPS numerator, we need to consider the tax savings resulting from this interest expense.
Since the company is subject to a 32% tax rate, we can calculate the tax savings as 32% of the interest expense:
Tax Savings = 32% * Interest Expense
Plugging in the given values, we have:
Tax Savings = 0.32 * $110,000 = $35,200
However, the adjustment needed to the diluted EPS numerator represents the decrease in earnings. Therefore, the adjustment needed will be the negative value of the tax savings:
Adjustment needed to the diluted EPS numerator = -$35,200
So, the adjustment needed to the company's diluted EPS numerator is -$74,800.
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4. Your portfolio manager has suggested the following three companies for investment purposes: Gamma Gum, Beta Bank, and Fond Fund. Gamma Gum shares cost $20 per share, Beta Bank shares cost $30 per share, and Fond Fund shares cost $40 per share. You have $5,000 to invest and wish to hold as many Fond Fund shares as Gamma Gum and Beta Bank shares combined. What are the possibilities of how many shares of each company you could buy? Assume we can only buy whole shares.
The three possibilities for the number of shares I could buy:
Invest entirely in Fond Fund (0 shares of Gamma Gum and Beta Bank).
Buy 100 shares each of Gamma Gum and Beta Bank, holding 200 shares of Fond Fund.
Buy 200 shares each of Gamma Gum and Beta Bank, holding 400 shares of Fond Fund.
Let's consider the possibilities of how many shares of each company you could buy given the investment amount of $5,000. We'll denote the number of Gamma Gum shares as "GG," Beta Bank shares as "BB," and Fond Fund shares as "FF."
Since the goal is to hold as many Fond Fund shares as Gamma Gum and Beta Bank shares combined, we have the equation:
FF = GG + BB
We also need to consider the cost of shares. Given that Gamma Gum shares cost $20, Beta Bank shares cost $30, and Fond Fund shares cost $40, we can express the total cost as:
20 * GG + 30 * BB + 40 * FF = 5000
Now, let's explore the possibilities by substituting different values for GG and BB while solving the equations:
Possibility: GG = 0, BB = 0
In this case, all the investment goes into Fond Fund shares.
FF = GG + BB = 0 + 0 = 0 shares
Possibility: GG = 100, BB = 100
This means you buy 100 shares of Gamma Gum and 100 shares of Beta Bank.
FF = GG + BB = 100 + 100 = 200 shares
Possibility: GG = 200, BB = 200
This means you buy 200 shares of Gamma Gum and 200 shares of Beta Bank.
FF = GG + BB = 200 + 200 = 400 shares
It's important to note that since we can only buy whole shares, we can only consider integer values for GG and BB. Therefore, these are the three possibilities for the number of shares you could buy:
Invest entirely in Fond Fund (0 shares of Gamma Gum and Beta Bank).
Buy 100 shares each of Gamma Gum and Beta Bank, holding 200 shares of Fond Fund.
Buy 200 shares each of Gamma Gum and Beta Bank, holding 400 shares of Fond Fund.
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an industry example of each of the four market structures of monopoly
Answer:
An oligopoly market structure is very usual in the context of Australian. Maximum service industry like banking, retail etc. follow the market structure of the oligopoly. The grocery retail sector in Australia is a core example of the duopoly, a narrowed version of oligopoly (Chung, 2015). Moreover, the banking sector of Australia is a proper example of an oligopoly. The main feature that the oligopoly market structure follows is, in this type of market few firm operate as a sole authority in a market (LaFrenz, 2014). In the case of monopoly, there is only one seller who rules the whole market and business as well. The monopolistic competition involves firm competing strongly among them in an industry. They do not allow any other organisation to enter the market. The Australian Post is a major example of monopoly market structure. Banking and Retail sectors are the key examples of monopoly market structure (Welch & Welch, 2009).
Apart from the banking industry, the retail industry in Australia faces very strong competition. The giant monopolistic retail companies named Coles and Woolworths have grabbed maximum market share in the industry. It is being very difficult for all other small and big organisation to sustain in the market. It is surveyed that, the banking industry of Australia is facing strong competition or oligopolistic war. Smith (2015), has informed that the existent incumbents in the banking industry are strictly prohibiting the other new entrants for the sector (Smith, 2015).
Explanation:
^^^^^^
A manager evaluates the test scores of 10 applicants for a customer service position and decides who to hire based only on the test data. This is an example of __________ decision making
why do we need to consider the important points in making the salad?.
Answer:
It is very health to eat a salad...
Explanation:
Washing Ingredients - Wash salad greens and examine to insure the removal of all aphids. Then soak in cold water for half an hour to crisp, and dry on a towel or by shaking in a wire basket
Eating a salad a day is directly correlated with higher nutrient levels. ... The fat in salad dressing helps absorb key nutrients such as lycopene and alpha- and beta-carotene. People who eat salads, salad dressing, and raw vegetables are more likely to meet recommended intakes for vitamins C, E and folic acid Loaded with vitamins and minerals, eating a salad a day will also increase the level of powerful antioxidants in your blood. The basis of any salad, leafy greens, offer a huge nutritional benefit. Among the best of the super greens group are: kale, spinach, beet greens, watercress and Romaine lettuce
you're the marketing manager for an online sporting goods store and have been tasked to optimize the company's display campaigns before increasing their budgets. what should you do to achieve this goal?
Display campaigns enable you to reach a relevant audience with visually compelling advertising as they browse millions of websites, apps, and -owned properties (such as ) to achieve your marketing objectives. One of the campaign types you have access to in Ads is a display campaign.
What is marketing?Marketing is the process of investigating, developing, and providing value in terms of products and services to fulfill the needs of a target market. Potentially includes the selection of a target audience; the selection of certain traits or themes to emphasize in advertising;
Marketing is the activity of investigating, generating, and supplying value in the form of goods and services to fulfill the demands of a target market, potentially including the identification of a target audience; the selection of specific traits or themes to stress in advertising.
Display advertising promotes goods and services by using text, images, or videos on websites owned by other people. Display advertising comes in a variety of forms. Display advertising includes, for example, banner adverts. Leaderboard advertisements on desktop and mobile devices are also.
Therefore, achieve your marketing objectives. One of the campaign
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Because susans standard deduction is greater than the amount she made, it turns out that Susan never owed taxes. How large of a refund should she expect from the Federal
government if she follows through on filing her 1040 form
Note that if Susan's standard deduction is greater than the amount she made, it means her taxable income is zero. If she had any taxes withheld from her paychecks throughout the year, she would be eligible for a full refund of those taxes.
What is the rationale for the above response?Assuming Susan is a single taxpayer under the age of 65 and not claimed as a dependent on anyone else's tax return, her standard deduction for tax year 2022 (filing in 2023) would be $12,950.
If Susan's total income for the year is less than or equal to $12,950, she would owe no federal income tax and would be eligible for a full refund of any federal income tax withheld from her paychecks or estimated tax payments she made throughout the year.
The exact amount of her refund would depend on how much federal income tax was withheld from her paychecks or paid in estimated tax payments throughout the year. Susan can determine the amount of her refund by completing her tax return using Form 1040 and any other applicable forms and schedules.
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Which of the following institutional structures promote and sustain modern economic growth? Multiple select question. Patents and copyrights giving inventors and authors the exclusive right to market and sell their creations for a period of time A system of tariffs and complete government autonomy promoting domestic production and positive net exports Strong property rights that give citizens the right to own investments and property Financial institutions that channel the savings generated by households toward businesses, entrepreneurs and inventors Widespread education for the workforce that will promote new technology innovations and implementation
Answer:
47
Explanation:
40?
The insitutional structures that promted the economic growth should be
Financial institutions A competitive market systemPatents and copyrightsStrong property rights Widespread education Promotion of the institutional structures for the economic growth:The financial insitutions where the saving should be produced by the household for the inventors, businesses, etc. There should be the market system i.e. competitive in nature where the prices & profits represent the signals for how to make and what to make. The patent & copyrights provides the inventors the right for sell the creations. There should be strong property rights where the citizen has the right for their investment and property. And, there should be enough education for the working class so that the innovation related to the technology should be promoted.
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if banks heeded shakespeare’s admonition "neither a borrower nor a lender be", what would happen to the supply of money?
The supply of money would significantly contract, leading to reduced credit availability, limited investment, and potential economic slowdown.
What would happen to the supply of money if banks heeded Shakespeare's admonition "neither a borrower nor a lender be"?If banks were to follow Shakespeare's admonition "neither a borrower nor a lender be," it would have a significant impact on the supply of money in the economy.
Banks play a crucial role in the financial system by facilitating the flow of funds from savers to borrowers.
When banks lend money, they create new money in the form of loans, which increases the overall money supply.
Conversely, when banks borrow money, they acquire funds from depositors or other financial institutions, thereby increasing the supply of money available for lending.
If banks were to stop lending and borrowing altogether, the supply of money in the economy would be severely constrained.
There would be limited availability of credit for individuals, businesses, and governments, leading to reduced investment, economic activity, and growth.
The absence of lending and borrowing would also impact interest rates, making it harder for individuals and businesses to access funds and potentially causing a liquidity crunch.
Overall, Shakespeare's admonition, if followed strictly by banks, would result in a significant contraction of the money supply and have far-reaching implications for the economy.
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Membership in the Future Business Leaders of America (FBLA) has nearly limitless benefits, including scholarships.
True
False
Answer:
True.
Explanation:
I think this will be the answer.
if a prospect calls to rsvp for a meeting, a permission to contact form is not required for that meeting but would be required for a representative to place a follow-up call to a meeting attendee.
'if a prospect calls to RSVP for a meeting, a permission to contact form is not required for that meeting but would be required for a representative to place a follow-up call to a meeting attendee.
This statement is True.
RSVP is an acronym derived from the French phrase Reponed sail Vous plait, which literally means 'reply if you want or simply 'please reply' to request confirmation of the invitation. The acronym "RSVP" is no longer used in France, where it is considered formal and outdated. If you look into etiquette books published in the early 1900s, you'll find many explanations that writing his RSVP on invitations is outdated.
Although a French acronym, RSVP is no longer widely used in France and is considered formal and very archaic. A preferred expression is response rouaite, usually followed by a date or method.
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suppose now that an individual firm that produces goods in this market has the power to influence market price, leading to an outcome different from the free market equilibrium illustrated in the previous graph. this is an example of efficiency due to market power .
Suppose that an individual firm that produces goods in this market has the power to influence market price, leading to an outcome different from the free market equilibrium illustrated in the previous graph. This is an example of market power.
Market power is the capacity of a firm to change the market price of its product. It refers to the ability of an individual firm or a group of firms to charge a price greater than the competitive price for a similar product, thereby capturing some of the consumer surplus. It is linked to the concept of market efficiency since market power prevents the attainment of a market equilibrium, leading to an inefficient allocation of resources.
Market power may lead to a decrease in consumer and producer surpluses, which leads to inefficiencies in the market. This situation arises as a result of a failure to allocate resources to their most efficient uses. Additionally, market power allows producers to charge higher prices for their goods, making them less accessible to consumers.
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what's the difference between Utility and Marginal Unility?
Answer:
One is large the other is small
Explanation:
b. Write five importance of budget.?
Answer:
Hello!!
Explanation:
1. Budgeting Helps You Control Your Spending
2. Budgeting Keeps You On Track For Your Financial Goals
3. Budgeting Can Help Your Marriage
4. Budgeting Helps You Find Financial Contentment
5. Budgeting Keeps You From Feeling Financially Overwhelmed
discretionary fiscal policy is a fiscal policy action, such as Group of answer choices an increase in payments to the unemployed, initiated by the state of the economy. a decrease in tax receipts, initiated by the state of the economy. an increase in the quantity of money. a tax cut, initiated by an act of Congress. an interest rate cut, initiated by an act of Congress.
Discretionary fiscal policy is a fiscal policy action, such as a tax cut, initiated by an act of Congress.
What is discretionary fiscal policy?Discretionary fiscal policy is a policy in which government uses taxation and spending to influence aggregate demand.
They are deliberate government policies to increase or decrease government spending or taxation inorder to control the economy optimally.
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What are the two essential principles illustrated by the production possibilities curve?
The production possibilities curve illustrates two essential principles: opportunity cost and efficiency.
What is an opportunity cost?Opportunity cost is the price of a certain economic decision in relation to the next-best option. It symbolises the advantages of the runner-up choice that were forfeited. Opportunity cost is a key concept in economics because it draws attention to the trade-off between two options and assists people and businesses in making decisions by weighing the costs of several options. For instance, if someone spends an hour working, they might have been doing something else, like relaxing or talking to friends. The happiness or advantage that might have been gained from choosing the next best option to working is known as the opportunity cost of employment. Understanding opportunity cost allows people and organizations to weigh the costs of various options and make wise decisions.
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make a list of your resources
Answer:
water, air, wood, fire. is that what ur looking for
Explanation:
gdetermine the amount of fica social security taxes and medicare taxes withheld from her salary. social security: $fill in the blank 1 medicare: $fill in the blank 2
To determine the amount of FICA Social Security taxes and Medicare taxes withheld from a salary, you will need to know the individual's gross income and the current tax rates.
For Social Security taxes, the current rate is 6.2% on the first $142,800 of income earned in 2021. Therefore, if an individual earns $50,000 per year, the amount of Social Security tax withheld from their salary would be $3,100 ($50,000 x 6.2%). For Medicare taxes, the current rate is 1.45% on all earned income, with an additional 0.9% tax for those earning over a certain threshold. Therefore, if an individual earns $50,000 per year, the amount of Medicare tax withheld from their salary would be $725 ($50,000 x 1.45%). It is important to note that these rates and thresholds are subject to change each year, so it is important to stay up to date on current tax laws.
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Which is the most important decision factor in transportation?
A.capacity
B. Cost
C.capability
D.reliability
how will you explain a yellow colour to someone who has never seen before??
Answer:
it is a bright color close to orang but lighter with a tint of white added to orange to make a bright floresent color
Explanation:
Answer:
well, I will explain it like this Yellow is the warm sun while a cool breeze blows on your face. Yellow is exciting without being loud or angry.
Explanation:
Hope this is helpful! Stay safe and God Bless you:)
If in the short run, firms in monopolistic competition _________, new firms will enter the market.
If in the short run, firms in monopolistic competition make an economic profit, new firms will enter the market.
A firm is a for-profit business organization—such as a company, limited liability company (LLC), or partnership—that provides skilled services. Most companies have only 1 location.
Companies during a monopolistic competition build economic profits within the short run, however within the long-standing time, they create zero economic profit. The latter is additionally a result of the liberty of entry and exit within the trade. Restaurants, hair salons, home items, and clothing are examples of industries with monopolistic competition.
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What is the first activity in test preparation?
The first activity in exam preparation is to determine what the exam will be about.Reviewing old tests and quizzes won't help you determine what's on a test because teachers don't like to give students clues.
In general,there are four main stages of testing that can be performed on any build.They are the Unit Tests, Integration Tests,System Tests,and Acceptance Tests preparation ensures that you complete the test to the best of your ability.You can prepare by reviewing the topics and materials through the resources that are available to you. It's also important to set yourself up for success through healthy habits more on that soon! There are four main stages of testing that must be completed before a program can be licensed for use unit testing,integration testing,system testing, and acceptance tests.
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Is eating a tomato bias?
Answer:
hindi ko po maintindihan ang tinatanong nyo
Explanation:
sa susunod po kumpletuhin nyo para masagut ko ang tanong mo
Read the first four paragraphs (1-4) of the above comprehension passage and write a summary.
Your summary should be one-third (1/3) of the original text.
Our current educational system focuses on preparing today’s youth to get good jobs by developing scholastic skills. Their lives will revolve around their wages. Many will study further to become engineers, scientists, cooks, police officers, artists, writers, and so on. These professional skills allow them to enter the workforce and work for money. But there is a big difference between your profession and your business. Often, I ask people, "What is your business?" And they will say, "Oh, I’m a banker." Then I ask them if they own the bank. And they usually respond, "No, I work there." In that instance, they have confused their profession with their business. Their profession may be a banker, but they still need their own business.
2. A problem with school is that you often become what you study. So, if you study cooking, you become a chef. If you study the law, you become an attorney, and a study of auto mechanics makes you a mechanic. a. The mistake in becoming what you study is that too many people forget to mind their own business. They spend their lives minding someone else’s business and making that person rich. To become financially secure, a person needs to mind their own business. Your business revolves around your asset column, not your income column. The number-one rule is to know the difference between an asset and a liability, and to buy assets. The rich focus on their asset columns, while everyone else focuses on their income statements.
3. That is why we hear so often: "I need a raise." "If only I had a promotion." "I am going back to school to get more training so I can get a better job." "I am going to work overtime." "Maybe I can get a second job." The primary reason the majority of the poor and middle class are fiscally conservative—which means, "I can’t afford to take risks"— is that they have no financial foundation. b. They have to cling to their jobs and play it safe. When downsizing became the "in" thing to do, millions of workers found out their largest so-called asset, their home, was eating them alive. Their "asset" was costing them money every month. Their car, another "asset," was eating them alive. The golf clubs in the garage that cost $1,000 were not worth $1,000 anymore. Without job security, they had nothing to fall back on. What they thought were assets could not help them survive in a time of financial crisis.
4. I assume most of us have filled out a credit application to buy a house or a car. It’s always interesting to look at the "net-worth" section because of what accepted banking and accounting practices allow a person to count as assets. One day when I wanted a loan, my financial position did not look too good. So, I added my new golf clubs, my art collection, books, electronics, Armani suits, wristwatches, shoes, and other personal belongings to boost the number in the asset column. But I was turned down from getting the loan because I had too much investment in renting houses. The loan committee didn’t like that I made so much money from rent. They wanted to know why I did not have a normal job with a salary. They did not question the Armani suits, golf clubs, or art collection. Life is sometimes tough when you do not fit the standard profile.
The current educational system focuses on preparing youth for jobs, but it's important to differentiate between a profession and a business .
people become what they study and spend their lives working for someone else, neglecting their own business.
Financial security lies in building assets, not just relying on income. The poor and middle class struggle due to lack of financial foundation, often clinging to jobs for security. Possessions like homes and cars can become liabilities rather than assets. Traditional net-worth calculations may not account for unconventional sources of wealth, leading to difficulties in obtaining loans.
The first four paragraphs highlight the distinction between a profession and a business. While the educational system aims to equip individuals with scholastic skills for good jobs, it's crucial to understand that a profession alone might not guarantee financial independence. Many people mistakenly confuse their profession, such as being a banker, with owning a business. Financial security comes from minding one's own business and focusing on building assets rather than solely relying on income.
The second paragraph emphasizes that becoming what one studies can lead to a narrow focus on someone else's business, which often enriches others rather than oneself. To achieve financial stability, individuals need to pay attention to their own asset column. Differentiating between assets and liabilities becomes crucial. The wealthy prioritize growing their asset columns, while those who concentrate solely on their income statements struggle to achieve financial success.
The third paragraph delves into the reasons why the poor and middle class tend to be fiscally conservative and risk-averse. Lacking a strong financial foundation, they become dependent on their jobs for stability and are reluctant to take risks. Economic downturns expose the vulnerability of their so-called assets, such as homes and cars, which turn out to be burdens rather than sources of financial security.
The fourth paragraph illustrates a personal experience related to net-worth calculations and loan applications. It highlights the disparity between accepted accounting practices and unconventional wealth sources. While personal belongings like art collections, golf clubs, and expensive suits were not questioned, the committee focused on the applicant's rental property investments instead of a traditional job with a salary. This experience serves as an example of the challenges faced when deviating from the standard profile.
Overall, the passage emphasizes the importance of minding one's own business, building assets, and understanding the difference between assets and liabilities. It sheds light on the struggles faced by those without a solid financial foundation and challenges traditional notions of wealth evaluation.
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