Discussion Questions

1. Yes. Like in the midst of crisis brought to us by Covid-19 pandemic, there has been offering for barter
trading that trends lately in Facebook. Since money is valuable for buying other essential needs, they’d
rather use some of usable things as a medium of exchange for the items they long to have.

2. No, though check can be used for payment, the value of it will not be surely recognized until it was
presented to the bank which will carry out funds deduction from the drawer’s account and transfer it
then to its issued payee. Check is just a piece of paper which serves as promise for later payment,
whereas real money, as long as we have it we can immediately use it with a direct deduction for its
currency value.

3. i. It is a simple system devoid of the complex problems of the modern monetary system.

ii. There is no question of over or under-production (or of unemployment or over-hill employment)

under the barter system since goods are produced just to meet the needs of the society.

iii. The problems of international trade, such as, foreign exchange crisis, adverse balance of payments,
do not exist under barter system.

iv. There is no problem of concentration of economic power into the hands of a few rich persons under
the barter system because there is no possibility of storing the commodities.

v. Personal and natural resources are ideally utilised to meet the needs of the society without involving
any wastage.

vi. The barter system also reaps the benefits of division of labour because it represents a great step
forward from a state of self- sufficiency hi which every man has to be a jack of all trades and master of
none.

4. There is need for storing the goods so as to make them available to buyers as and when required.
Some amount of goods is stored at every stage in the marketing process. Proper and adequate
arrangements to retail the goods in perfect condition are essential for success in marketing. Storage
enables a firm to carry on production in anticipation of demand in future.
A warehouse is a place used for the storage or accumulation of goods. It may also be defined as an
establishment that assumes responsibility for the safe custody of goods. Warehouses enable the
businessmen to carry on production throughout the year and to sell their products, whenever there is
adequate demand.

5. A coin is a piece of hard material, traditionally metal and usually in the shape of a disc, which is used
as a form of money. Traditionally the value of a coin comes from the intrinsic value of the component
metal, but in modern times most coins are made of a base metal and their value comes strictly from
their status as fiat money. Coinage is a set of coins of different values used in a country’s money system.
The CBP was constituted as a government-owned institution in line with the trend towards state
ownership and/or control of central bank. Its responsibility was to administer the monetary and banking
system. Besides its objectives to maintain monetary stability in the country and to preserve the
international value of the peso and convertibility of the peso into other freely convertible currencies, it
had to promote a rising level of production, employment, and real income in the Philippines.
Government is responsible for printing bills and coinage to handle and prevent economical loss to
maintain Price Stability, Financial Stability, and efficient Payments and settlements.
https://www.seacen.org/file/file/2016/RP98/CBFR-Chapter5.pdf

6. As with many things, there some cons to using polymer banknotes. With these newer notes, there’s a
chance that older sorting machines might not be able to sort these notes out as fast as they would with
paper money. It’s more probably that these sorting machines will have to be modified or updated to
accommodate polymer bills.
The colors of polymer banknotes can fade. A good example is Nigeria in Africa, which went back to
paper money after the polymer banknote test failed when the money started fading and sellers started
rejecting it.
Polymer banknotes can be difficult to fold. When you force-fold it, it will have a crease along the fold
line.
Polymer banknotes can get sticky when wet. This can be frustrating, especially if sorting out the notes.

7. Advantages of Credit Card

 Pay Over Time - You have the ability to pay off your balance over a period of time. It's good
practice to pay your credit card balance in full each billing period to avoid fees and interest.
 Rewards for Use - Some cards give you the ability to earn rewards that can be used for cash, gift
cards, miles, or other merchandise.
 Low Introductory Rates - Many credit cards come with 0% interest on purchases and balance
transfers for an introductory period of at least six months.
 Security Features - Credit cards are more secure than traditional checking methods. If someone
gains access to your checking account, they have the ability to drain it.
 Disputable Billing Errors - The right to withhold payment for billing errors (as long as you dispute
in writing).

Disadvantages of Credit Card

 Your Future Income is Reduced - Your income in the future is reduced each time you use a credit
card–or any other form of debt–because you’re borrowing money that you don't have.
 Credit Card Interest, Fees, and Identity - Depending on your credit card rate and how you use it,
credit cards can cost you hundreds of dollars over the course of a year.
 Debt and Life Affects - You create more debt each time you use your credit card. You can keep
the debt from growing by paying off your balance each month—but if you only make minimum
payments and keep making purchases, your debt will quickly grow.
8. (see in the module)

The benefits of the WRS include:

 i. Enabling holder of Warehouse Receipts who is the owner of the commodity to access
loan from financial institutions;
 ii. Minimizing risks and transaction costs to commodity traders and farmers in
undertaking commercial operations;
 iii. Empowering small scale farmers, traders and processors to participate more
effectively on business of commodity to improve their efficiency and effectiveness in the
market supply chain;
 iv. Providing quality assurance and certification system;
 v. creating a mechanism of getting reliable marketing information to different
stakeholders;
 vi. Increasing participation of indigenous commodity traders in the international trade;
 vii. Encouraging local processing of primary products with a view of value addition and
promotion of industrialisation;
 viii. Enhancing access to proper crop storage facilities, reduce post-harvest losses and
enhance food security;
 ix. Supporting linkage for input supply sub-system;
 x. Creating employment and contribution to national efforts in enhancing poverty
reduction especially in the rural areas.

https://www.wrs.go.tz/includepage.php?page=about_wrs

9. Barter is an act of trading goods or services between two or more parties without the use of money
(or a monetary medium, such as a credit card). In essence, bartering involves the provision of one good
or service by one party in return for another good or service from another party.

Below are three basic examples of bartering for goods and services, along with a common contemporary
barter exchange.

1. Bartering with Consumer Good - In its simplest form, bartering is the exchange of one valuable
product for another between two individuals.
2. Bartering with Consumer Services - Bartering can also take place as an exchange for services.
Services are salable acts, such as performing mechanical work or providing legal representation.

3. Modern Advertising Services - In these cases, one company sells its available ad space to
another company in exchange for the right to advertise on the second company's space. These
can be for television rights, internet advertisements, radio rights, actual billboards or various
other types of media.
Experimental exercises

1.

2.

Exercises

Surf the Internet: Ethical issue

a. ENRON SCANDAL
Enron scandal, series of events that resulted in the bankruptcy of the U.S. energy, commodities,
and services company Enron Corporation and the dissolution of Arthur Andersen LLP, which had
been one of the largest auditing and accounting companies in the world. The collapse of Enron,
which held more than $60 billion in assets, involved one of the biggest bankruptcy filings in the
history of the United States, and it generated much debate as well as legislation designed to
improve accounting standards and practices, with long-lasting repercussions in the financial
world. The scandal resulted in a wave of new regulations and legislation designed to increase
the accuracy of financial reporting for publicly traded companies. The most important of those
measures, the Sarbanes-Oxley Act (2002), imposed harsh penalties for destroying, altering, or
fabricating financial records. The act also prohibited auditing firms from doing
any concurrent consulting business for the same clients.
b. THE WorldCom SCANDAL

The WorldCom scandal was one of the most shocking and widespread frauds to rock Wall Street in a
generation. In 2001, WorldCom, one of the world's largest telecommunication companies and a
core dividend-paying stock that many retirees held in their portfolios, attempted to falsely inflate the
earnings on its profit and loss statement by nearly $4 billion. 1 It did so by manipulating its financial data,
which affected its: 

 Income statement
 Balance sheet
 Form 10-K filing
 Annual report

WorldCom carried out the fraudulent accounting through the machinations of upper management. To
grasp how the events happened, you'll need to understand how Chief Financial Officer (CFO) Scott
Sullivan treated capital expenditures and expenses and understand the accrual accounting method,
which is a basic principle of accounting.

c. Arthur Andersen scandal

Arthur Andersen, Arthur Andersen LLP was one of the largest public accounting firms in the
1990s, with more than 85,000 employees operating in 84 countries. During the last decade of
the partnership’s life, auditors at several regional offices failed to detect, ignored, or approved
accounting frauds for large clients paying lucrative consulting fees, including Enron Corp. and
WorldCom Inc. In 2002 the partnership was found guilty of obstruction of justice for destroying
 documents related to the Enron audit, a decision later unanimously overturned by the United
States Supreme Court.

d. Lehman Brothers scandal

On Sept. 15, 2008, Lehman Brothers filed for bankruptcy.1 That name may bring up images
millions of people saw in the news for the first time: Hundreds of employees, mostly dressed in
business suits, leaving the bank's global offices one-by-one with bankers boxes in their hands. It
was a sombre reminder that nothing is forever—even in the richness of the financial and
investment worlds.
With $639 billion in assets and $619 billion in debt, Lehman's bankruptcy filing was the largest in
history, as its assets far surpassed those of previous bankrupt giants such
as WorldCom and Enron. Lehman was the fourth-largest U.S. investment bank at the time of its
collapse, with 25,000 employees worldwide. 1
Lehman's demise also made it the largest victim of the U.S. subprime mortgage-
induced financial crisis that swept through global financial markets in 2008. Lehman's collapse
was a seminal event that greatly intensified the 2008 crisis and contributed to the erosion of
close to $10 trillion in market capitalization from global equity markets in Oct. 2008—the largest
monthly decline on record at the time. 2
e. Tyco Scandal
The case of Tyco’s corporate scandal of 2002 focuses on the problem of unethical business
practice and related issues. Tyco was a large organization that grew through numerous
acquisitions. Tyco’s case shows that the problem was the unethical business practices of a
number of its top ranking officers, especially CEO Kozlowski. Kozlowski was involved in
numerous financial transactions that were not included in the financial reports of the company.
Kozlowski was also involved in unethical transactions with other Tyco officers and lower ranking
employees to cover up for Kozlowski’s illegal financial transactions. Kozlowski even got outsiders
involved in the problem when his second wife received money diverted from the firm. Court
proceedings proved that Kozlowski stole millions of dollars from Tyco, and that his illegal
financial transactions were extensive. Kozlowski and other officers from Tyco were imprisoned.
Tyco declined as investors lost confidence in the company.

Finance terms to Enrich Your Business English vocab

1. Financial Statements

Financial statements are a collection of summary-level reports about an organization's financial

results, financial position , and cash flows. They are useful for the following reasons:
 To determine the ability of a business to generate cash, and the sources and uses of that
cash.

 To determine whether a business has the capability to pay back its debts .

 To track financial results on a trend line to spot any looming profitability issues.

 To derive financial ratios from the statements that can indicate the condition of the
business.

 To investigate the details of certain business transactions , as outlined in the disclosures

that accompany the statements.

2. Accounting Principles
Accounting principles are the rules and guidelines that companies must follow when reporting
financial data. The Financial Accounting Standards Board (FASB) issues a standardized set
of accounting principles in the U.S. referred to as generally accepted accounting
principles (GAAP)

3. Economic theory