An economic depression can be defined as an economic downturn that generally lasts for several years. Primarily, it is characterized by the growth in unemployment rates along with the falling of Gross Domestic Product (GDP). Today if we talk in terms of the occurrence of economic depression in the United States, fortunately the country has not experienced an economic depression since the last one that occurred during the 1930s. It was one of the most serious economic downfalls in the U.S economy that lasted for almost 10 years. In fact, the decline in the GDP growth rates was of such a large scale that the United States has not witnessed since 1930. The key highlights, during the economic depression were unemployment that almost increased to 25% and wages fell by 42%. Besides this, the economic output of United States also chopped from $103 to $55 billion.

If we try to have a deep insight on reasons that caused an economic depression of 1930 then there are several factors. During the 1920s, the country enjoyed a booming economy. In fact, the US was among few nations who were actually producing goods in big amount for which there was little market demand. Unfortunately, this led to a slowdown in agriculture and over production of goods in the factory, which resulted in lose of jobs of millions of people.

The depression was even provoked by deprived monetary policy. Rather pumping money into the economy, the Federal Reserve even permitted the money supply to fall 30%. Though, the “New Deal” was started to end the depression, but government programs alone could not end it. Unemployment remained in the double-digits until 1941. Moreover, many greedy bankers on Wall Street overlooked the warning signs and remained busy in borrowing and investing in stocks for earning more profit. In the end, reality hit the stock market and company valuations finally started to fall. It was during this period when U.S economy witnessed a deep panic selling and the markets went out of control. And, it was just matter of days when the Wall Street officially collapsed.

Today there are many people who still get confused with the usage of terms – “Depression” and “Recession” in terms of economic fall down. Although, both economic recession and depression generally refer to a fall in the economic activity, but more often they have are used interchangeably. Therefore, it is very important to understand that both are very dissimilar, especially if we try to relate in context of their severity.

A decline in the economy for a period of two consecutive quarters can be defined as a recession. Economic depression on other hand is basically considered a more extended slump during which the decline in GDP is almost 10 % or even more high. Therefore, it is very important to note that even a country have more than two successive quarters of recession, it can’t be assumed to have entered into a economic depression phase until the down turn in the GDP in almost all the quarters collectively signs up to at least 10%.
It is important to remember that the economy of every country is fragile. Economy or GDP rate are bound to go through a number of minor fluctuations, but the important point that one need to keep in mind is – whether there is economic recession or depression, one need to prepared to overcome from each fall and learn from mistakes.

No doubt, economic depression is an unavoidable element of any economy. Although it always spell and indicates towards difficult times, but looking on the positive sides such plunges in economy even motivate to formulate new and innovative ideas. Job openings in new sectors are created, as certain businesses unable to prosper in normal periods of economic growth find newer opportunities to grow. The economic depression of 1929 also resulted in the introduction of many new laws and government agencies that work in order to prevent the type of cataclysmic economic pain. Besides this, in present time the Federal Reserve, are even more aware of the significance of monetary policy in regulating the economy. In fact, it was this awareness and learning that helped in preventing a recession of October 2008 turn into severe depression.

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Economics is the science that primarily deals with the making, sharing and utilization of goods and services that a society produces. In fact, the most interesting aspect of economics is that it affects almost every walk of life, be it political, social or financial. Economic growth is very important for any country as it basically relates or acts as the pillar of the country. Now, if there is a decent economic growth, it usually defines that the businesses in the country are earning a good profit. And adding to this, it even shows that the rate of employment is high and the nation is strong on forex reserves. However, the reality of other side of the coin is that the economic growth can’t always remain unaffected. The economy of any country too goes through a cycle of ‘peaks’ and ‘troughs’ that constitutes the ‘Economic Cycle’ and this basically relates to “Economic Recession”.

Today an economic recession can generally be referred as a downfall of commercial activities over an extended period of time. Though, this duration is basically connected with a radical crash in the Gross Domestic Product, it can also be considered as a phase that basically emphasize on budgets and essential capacity-utilization alteration. During this phase, strict business-contractions take a toll on a country’s financial system, over a constant period of time. Apart from all these, this period is exemplified by the presence of macroeconomic deviations and a severe fall in the business profits and personal income. Moreover, other than Gross Domestic Product growth, elements like the current national unemployment rates, consumer self-belief and their level of spending are also measured while deciding whether the financial system is going through a recession or not.

What makes an economic recession a serious issue for any country is that during a recession, the government generally implements macroeconomic policies like raising the supply of money and in return decreasing the taxation. However, in the US economy, the Federal Government resorts to lessening the Federal Funds rate to revitalize the slow growth of economy. During the reviving the economy, basically the interest rates are decreased by the supervisory body to pull business and aid people to borrow money at a reduced level. However, the best part of a recession is it even provides numerous opportunities to view the competence of government machinery and further review its expansionary macroeconomic policies.

Along with its drawbacks, an economic recession also offers a number of benefits. No doubt, in adversity there is always an opportunity and perhaps the same rule applies with an economic recession. The period actually enables the evaluation of the efficacy of a community crisis management and budget plans. Besides this, for individual or unit, like a family or society, this period even provide an opportunity to re-work on the previously designed survival strategies and create new ones in order to test the onset of economic disorder. Adding to this, it is a time, when entrepreneurs are able to sift the innovative from the fair-weather employees. New investors benefit from buying low and selling high. And, the same approach relates to the ground of real estate. Perhaps, you must not surprise to see that homeowners taking gain of the marketplace and job loss situation, and getting property renovated.

Thus, on a broad positive note and more on psychological aptitude, this is a period when downturn fuels to turn as volunteer and leads to emotional healing. In fact, one cannot deny that an economic recession makes an individual and the government machinery of a nation wiser. Consequently, it results to the employment of management strategies and necessary decision-making in good times.

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If you have heard of Al Capone and you will understand what I am talking about when I say that it was the Accountants who took on the Mob.

Al Capone was a legendary criminal. He never finished his sixth grade but the man was not stupid. At the age of 26 he became the head of Chicago’s underworld. He gained a stature of an international celebrity because of the odd blend of charm and brutality. In the year 1930, he was the top most wanted man in Chicago.

Chicago in 1920s was facing a lot of brutality and killings. The rival gangs were killing each other and their drive-by shootings became quite common. No one was safe:  neither general people nor public servants. The gangland murders which previously totaled to 16 in  a year, in his rule increased to a massive total of 64.

Al Capone was basically from NY but drifted to the west later on. His career as a gangster started when he was working under the crime leader Johnny Torrio. Johnny was involved in the inner circle of gangsters. After his death, Capone took over and consolidated his criminal career with prostitution, gambling, extortion and liquor racket. He made piles of money from his business ventures, which actually came from the killings and crimes but the case that was handled by his prosecutors make it look like a tax evasion.

He was an astute businessman. He hid most of his illegal earnings and never endorsed a single check in his lifetime. He did not maintain a bank account in his name and therefore conducted all his dealings in cash. After long inquiries and searches, the government was able to find out few people who agreed to testify against him and finally filed a case of tax evasion.

He was ultimately found guilty on that ground and was sentenced to a ten year long imprisonment and one year in Chicago prison. While he was serving his imprisonment Capone contracted Syphilis and brain damage as well. He grew insane after the seventh year due to an infection.

The year 1946 saw the death of Al Capone. His death had quite unexpected effect on the legitimate citizens as well as criminals. They began paying IRS for their back taxes. A grand total of $1million was deposited in the name of unpaid tax-fillings and this amount was just double the amount the previous year’s total.

It was only through the ingenuity of the accountants that a dangerous criminal like Al Capone was arrested. And it is also because of the hard work put in by these Accountants that the common people re-established their belief in the government.

A Ponzi Scheme essentially works as long as new investors are investing into the scheme. This in turn propels the continuous returns to the earlier or older investors. Thus, as and when, with time, the new investors stop investing in the scheme, the entire house of cards will collapse automatically. These sorts of investment plans are short-term scams that aid a company to attract or lure fresh and new investors, who invest their money and thus help with unusually consistent and abnormally high returns to the earlier investors. This scheme is often compared to the illegal pyramid schemes.

According to Investopedia, a Ponzi Scheme is named and termed after the clerk Charles Ponzi, who was blamed with notoriety for using such luring investment schemes to dupe thousands of people in New England into investing into Postage Stamp Scheme, back in the year 1919. The man immigrated to the United States from his hometown in Italy. Although, he did not invent this investment scheme, he surely made huge money with the help of this operation and thus came into the eyes of the people who later used the same technique to do the same.

However, the scheme collapses with time as the earnings are comparatively less than the payments made. Also the scheme is watched on with suspicion and thus might get interrupted by the legal authorities. The scheme is often seen as an investment boon for all its investors providing them with high returns even at the time of completion of the scheme. But in reality, such schemes only serve the initial investors or the people who started the scheme – all at the cost of innocent investors who invest towards the later part of the scheme.

A Ponzi Scheme, therefore is essentially a fraudulent operation. Throughout history, there have been several such Ponzi Schemes perpetrated by many people. One of the latest well known scams was the one run by Bernie Madoff who was then sentenced to 150 years in prison. The unveiling of this 50 million dollar scam will remain in the minds of the people of America, close as it came at the early days of the current economic recession.

Accounting is an integral part of every business and should be handled with utmost care and precision. Small or large, every enterprise has to maintain its market and accounts. There are number of tasks involved in the process of maintaining accounts and it should not be misjudged as a simple and easy task. It is in fact a tedious affair that is required by law, and fast and perfect solutions to all kinds of accounting needs are the need of the hour. Today, numerous of accounting software like QuickBooks, are available in the market that proves to be efficient and reliable.

There are several corporate and enterprises whose business requirements are not fulfilled by one accounting software and thus they require several customized tools of this particular trade which meet their specific needs and provide with special features as well as functionality.

Business demands are diverse. Every business requires specific tools that carry its business effortlessly and immediately. As for instance, back-office functionality or vertical-specific are some of the functions that are not supported by QuickBooks. This led to the development of other tools which then came into existence.

Thus, IDN (Intuit Developer Network) was designed that bridged the problems for small businessmen and individual developers and even enhanced QuickBooks experience. The software reduces the entry and calculation errors. The integration of the software in QuickBooks solved numerous issues that were earlier unresolved. The Intuit integrated QuickBooks by now has presented over 400 service solutions to their buyers.

There are other accounting softwares too that have helped many entrepreneurs. Sage Master Builder, the QuickBooks Contractor and QuickBooks Point of Sale are some of the examples of good, reliable accounting softwares that proved beneficial to the business owners. These assist in creating and maintaining payroll essentials, constructing balance sheets, and information of other depreciations, taxes and assets.

Apart from these, there are several software that have been created to address the different and specific needs of businesses and accounting needs. For example, Peachtree, a software developed by Sage has specific solutions based on the number of users (accountants) and solutions developed for construction, manufacturing, non-profit organizations and distribution networks.

Even Microsoft offers an Accounting package that works with Quickbooks files, and can also import data from Excel or a CSV file. It also offers several online banking features along with the ability to create eBay listings and download PayPal transactions.

To list all the different software and their features is an exhaustive task. But from this brief look, we can understand how each software development company is trying to further its reach by providing accountants with several different tools of their trade, which are chock full of features that are specifically designed for their particular industry, trade, or business practice.

Technology has laid its impression on almost every field today. There is hardly anything that has not been improved or enhanced by the technology. With all the improvement and development going, the need for getting better is still on. Accounting is not an exception when it comes to the alterations and changes produced by technology. So if you’re wondering how technology has changed accounting then there are few points that you might feel worth reading.

Accounting is equally old as civilization. It existed from the time of the invention of abacus. After that, came the commercial revolution that introduced double-entry bookkeeping. Also, at that time, there were hardly any industries, factories and organizations that have to be looked after to calculate the profit, losses and other tax statements to keep the business running smoothly. In the early times, people were hardly aware of different formulas and applications applied in the field of accounting.  But today accounting is commonly offered as a major study subject.

Although we can say that the changes and updates in the field of accounting have not been made quickly but slowly and steadily, the methods, techniques and principles of accounting have been modified and improved with time. As compared to the 20th century, today we have computers and laptops that completely eliminate the requirement of calculators, pencils and ledgers in just one fell swoop. Now it has become easier and simpler for the accountants to keep a record of the information so that they can eliminate the most frequent mistakes completely. Not only it has provided greater accountability and efficiency but has also transformed the accounting phase considerably.

Although everything has its own qualities and flaws and same can be said about the technology. The electronic information is subjected to sabotage and also several frauds can be made by processing the information. Such kind of illegal activities have opened a new area of forensic accounting. It helps in keeping a track on frauds.

The improvement in the field of accounting has not only assisted the organization and businesses but has also allowed people to maintain a track on their personal money. We are now provided with more facilities like online banking, and a variety of accounting software that helps us in calculating our taxes, automatic payment of various bills, etc.  We should be perhaps thankful to the technology for bringing such an excellent change in the field of accountancy and providing common people with such a comfortable and easy to manage life as now we don’t have to depend upon the calculator anymore!

Thus, we can see that technological improvements to accounting have entered every sphere of our lives – be it personal or professional. And it is with a lot of advantages for the end user – whether it is an accounting professional or a regular person like you and me.

Most of us have heard the word audit but we rarely know what it actually means. If you are also trying to understand what an audit is then you are at the right place. An audit is basically an accounting technique in which the financial records of an organization, company or an individual are inspected accurately to ensure that they are precise and accurate. 

Most of the the taxpayers fear an Internal Revenue Service audit, whereas the dishonest organizations fear the independent audits as it may reveal the misuse or embezzlement of their funds. An audit helps in keeping the company honest and also reassures the investors and the employer about the financial condition of the organization in which they are working.

There are basically two types of audits. They are:

1. Internal audits
2. Independent audits

The audits are usually performed without any partiality.

The internal audits of the company are generally conducted by the accounting department of the concerned organization. It is seen that various companies carry out regular internal audit checks so as to keep different finances in order and to see if the public trading of the company is going smoothly, and also to find out whether the reports are available for inspection by the stockholders.

The external or independent auditing is basically done by the third party like a professional accounting organization that specializes in providing external auditing services.

In both the cases, the financial records of an organization including bank statements, ledgers, tax information, pay rolls, official published reports, internal financial reports, accounts receivable and accounts payable will be scrutinized. At the time of an audit, the records of the company are inspected closely to search for any kind of discrepancies and inaccuracies so that they can be repaired and addressed.

Conducting audits is very important for most companies and organizations. There are many reasons for that.

An audit commonly brings the simplest accounting mistakes into notice. Also, during the time of an audit the sinister issues like misappropriations of funds (if any) are also brought into the limelight. The organizations that are struggling financially usually end up making some wrong financial decisions in order to salvage their organization and such decisions are then disclosed by a very close audit. 

It so happens that an audit also discloses if a company on the verge of bankruptcy due to the high misuse of the funds. Examples like WorldCom and Enron will come to mind where such discrepancies were exposed via audits.

Typically when any kind of inaccuracy is disclosed through an independent audit, it is repaired by the auditors in its final report to the company. In few cases, the audit is ordered by an external body like the Exchange Commission who will also receive a copy of the audit report. 

So, to sum it up, companies are audited to remove inaccuracies and prevent the misuse of funds available to an organization.

A tax is a payment or more precisely a fee that is paid by businesses and individuals to the government. The taxes are usually paid in cash. The funds collected via taxation are usually used by the government to fund various public spending ventures. Let us have a look at the different reasons for why we are taxed and the different places where this money is spent by the government.

Most of us have seen our fathers and other family members pay tax every year but hardly any of us have tried to know the reason for it. The government has been collecting taxes for many different purposes. The main and the primary purpose or an answer for why we are taxed is for the benefit of general public.

There are many reasons for which we are taxed by the government. These are:

1. To support different governmental operations
2. To improve and influence the performance of the economy
3. Let the government perform different functions like national defense and several such services properly
4. To redistribute the resources between classes or individuals in the population
5. To make the life of the common man more comfortable by providing them different amenities and latest technologies
6. To modify the patterns of employment and consumption in an economy by making the classes of transaction less or more attractive

In plain and simple terms, the money taken from us via taxation is used by the government in a number of activities that make sure that we citizens have access to a variety of amenities and facilities. On a broader perspective, the money collected via taxes also helps the government to maintain a certain level of equilibrium in the economy with regards to prices and costs.

Mostly the uses of the money we pay as taxes is seen when we see crews building roads and bridges. There are also other places where this money gets spent. These funds go towards maintaining schools, libraries, police and fire services. These funds also help pay the salaries of the government employees. The money thus collected is also used to build and maintain public buildings. Several health services and pensions are also funded by the tax money paid out by us. One more use of the money collected via taxes is to help in the maintenance of the defense services of the country.

There are also a number of other means via which the government collects funds for maintaining the public services that it provides. For example, when we pay a toll for using a stretch of the freeway, we are also contributing towards helping the government in keeping the road in good order. This kind of a payment is also a type of tax that we pay to the government.

Ideally, the funds collected from us via taxes are supposed to be equal to, if not more than the expenses incurred by the government. However, more often than not, such is not the case. The government usually ends up spending more than what it receives. This is probably the reason why the government has to borrow funds to remain afloat, and yet another reason why we should pay our taxes on time!

As an accountant, your job is to maintain your client’s accounts. And to add to that, computers and accounting software simply make your life great. Here is a review of the top 10 accounting software which will help you and your clients to manage their finances better.

Accounting software is a boon for so many of us – accountants included! These help us maintain  our accounts – whether personal or for our business. However, with so many options available in the market, it sometimes becomes very difficult to choose the right accounting software package that will be perfect for the accountant as well as for the individuals. Hopefully, this review will help you narrow down your choices.

Peachtree

This software comes in different flavors depending on the number of users. Between Peachtree Pro, Peachtree Complete, Peachtree Premium and Peachtree Quantum buyers can choose from among several features, depending on what they specifically require. Of these, Peachtree Premium and Peachtree Quantum also have Accountants’ Editions, which can prove to be of great use for professional accountants. Added to these are several accounting and business management tools, reports customized for industry specific needs, and even payroll management solutions – you have a complete accounting software package that is just right for your pocket as well.

Quickbooks

A very popular choice of accounting software for personal and professional accounts management, Quickbooks offers something for everyone. Quickbooks is offered in versions Simple Start, Pro and Premier. There is also a free version of the software available for download from the website, and an online version of the software which you can access via the Internet. There is also a Premier version specifically for Accountants. Each of the versions offers a number of features – typically a simple and intuitive interface, access to several reports, payroll and even tax management.

MYOB

This is another popular choice across the board for individuals, small businesses and accountants. A cross-platform software package, MYOB offers the versions Premier Accounting and Business Essentials for Windows users, and AccountEdge, FirstEdge and Checkout for Mac users. Typically the features include invoicing, banking, contacts management, payroll management, inventory management, time billing, purchase management, and over 200 different reports.

Microsoft Accounting Express

Microsoft offers an accounting suite that integrates seamlessly with your other Microsoft products, while allowing you to manage your accounts, invoices, payrolls and even accept credit cards. You can also track your billable time, create quotes and invoices and custom create your reports from 50 available templates.

NetSuite

This is an online accounts management system. There is no software to download and install because it is web based. The website offers different roles for managing accounts, along with a variety of reports and tools for managing accounts receivables, accounts payable, payroll and inventory management along with time billing, costing and banking functions. A good option if you don’t want to install another software package on your computer and want to be able to access your accounts via the Internet.

FreshBooks

This is another web-based accounts management system. Freshbooks offers several features like invoicing, time tracking, estimate creation, tracking of expenses, and client and staff tracking among others. You can have either a free account with FreshBooks or a paid account depending on the number of contractors you want to add. FreshBooks also offers branding solutions helping you create an interface which is in line with your logo and company colors.

BookKeeper

This is a software package offering a complete suite of accounting features like integration with banking, expense tracking, payroll management, creating customized invoices, credit card payment processing, and over 125 custom reports. An additional purchase of Tax Table Updates enables you to automatically calculate your taxes and deductions.

DacEasy

DacEasy is a fairly good accounting software package which offers the typical features and sections like accounts receivable, accounts payable, payroll management, inventory tracking, banking and general ledger entries. A variety of reports from these different sections also allow you to review and manage your business more effectively.

CYMA

CYMA is also another preferred accounting package. Like several accounting software packages, this software also offers accounts payable and receivables, payroll management, banking integration, job costing and general ledger entries. However, it also offers two sections which are not offered by many other accounting software packages: Purchase Order management and Systems management. However, this software doesn’t offer features like inventory and time billing.

NolaPro

A web-based suite of accounts features, NolaPro offers a number of facilities like accounts payable and receivable, payroll management, order tracking, inventory control, point of sale management, and an e-commerce shopping cart. NolaPro also has a number of plugins which enhance the functionality of the accounts suite.

These accounting software packages should give you an idea of what is available out there in the market. Thus, depending on your requirement and the size of your business you can make the right choice.

No matter what the state of the economy is, there is always room in the business industry for students who finished accounting degrees.

Accounting is actually one of the oldest professions in the world and if you are considering a career in this field, there are 5 accounting degrees that you can choose from:

1. Public Accounting
2. Management Accounting
3. Forensic Accounting
4. Government Accounting
5. Internal Auditing

Tips when Looking for an Accounting Training Program

Now, if you are considering establishing a career in the field of accounting, the first thing that you need to do is choose from one of the many accounting schools that you can enroll at.

Some of the factors that you need to consider when choosing which accounting school to go to includes its proximity to where you live, the availability of the accounting programs and accounting majors that you wish to take and the type of accounting degrees that the school awards to students.

However, aside from focusing on the accounting majors that you are taking up, there are other skills that you should work on if you want to stand out among the rest once you go job hunting. First, make sure to brush up on your computer skills. No matter how good you are at the basics of accounting, it will not be enough if you don’t know how to use a software or an accounting program that will make your auditing and accounting job easier.

Prior to the actual job hunting, get an internship so that the experience can be added on to your resume. Lastly, after deciding which of the many accounting majors it is that you wish to focus on, you need to brush up on your skills regarding the fields outside of accounting to widen your scope as a professional.