What is Income Statement? Income Statement, Define Income statement

Income statement

 

A business financial statement that lists revenues, expenses, and net income throughout a given period. Because of the various methods used to record transactions, the dollar values shown on an income statement often can be misleading. Also called earnings report, earnings statement, operating statement, profit and loss statement.

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What is The Purpose of Accounting?

Purpose of Accounting

Accounting does not exist for its own sake but for the services which it provides to society. It does not end with the recoding of business transactions and events. It also reports the result of these activities to all interested parties. Accounting, through reports enables management to organize business smoothly and efficiently in such a away that all wasteful elements are eliminated and better results are achieved. It may be said, therefore, that the primary purpose of accounting for a business enterprise is to provide. Management with the information needed for efficient operation of that enterprise.

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What is Business?

Business

Any activity in which a person engages with the hope of making a profit is a business or the activity of providing goods and services or both involving financial and commercial and industrial aspects to consumers in exchange for money.

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What is Accounting?

Accounting

Accountancy is the art of communicating financial information about a business entity to users such as shareholders and managers.It may be the occupation of maintaining and auditing records and preparing financial reports for a business.

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Supply and Demand in the Bond Market, Quantity of Bond Demand and Supply, Movement along the Demand (or Supply) Curve, Shift in Demand (or Supply) Curve, and Factors that Shift the Demand curve and Supply Curve

Supply and Demand in the Bond Market

Law of Demand

It stats that “The higher the price of bond lower the demanded of bond”. The demand curve illustrates the negative or inverse relation between price and quantity of demand bond and direct between interest and quantity of demand bond.

Law of Supply

It stats that “The higher the price of bond the higher the quantity of supply bond”. The supply curve illustrates the positive or direct relation between price and quantity of supply bond and inverse between interest and quantity of supply bond.

 

Change in Equilibrium interest rates

It is important to make the distinction between movements along a demand (or supply) curve and shifts in a demand (or supply) curve.

i. Movement along the Demand (or Supply) Curve

When quantity demand (or supply) changes as a result of change in the price of the bond (a change in interest), we have a movement along the demand or supply curve

ii. Shift in Demand (or Supply) Curve

A shift in the demand (or supply) curve, by contrast, occurs when the quantity demanded (or supply) changes at each given price (or interest rate) of the bond in response to a change in some other factor besides the bond’s price or interest rate. When one of these factors changes, causing a shift in the demand or supply curve, there will be a new equilibrium value for the interest rate.

Factors that Shift the Demand curve

Variable	Change in variable	Change in Quantity Demanded	P & i
Wealth	Increase	Increase	Both Increase
Expected interest rate	Increase	Decrease	Both Increase
Expected inflation	Increase	Decrease	Both Increase
Riskiness of bonds	Increase	Decrease	Both Increase
Liquidity	Increase	Increase	Both Increase

Factors that Shift the Supply Curve

Variable	Change in variable	Change in Quantity Demanded	P & i
Profitability of investments	Increase	Increase	Both Increase
Expected inflation	Increase	Increase	Both Increase
Government Deficit	Increase	Increase	Both Increase

Effect of Expected Inflation

We have already done most of the work to evaluate how a change in expected inflation affects the nominal interest rate, in that we have already analyzed how change in expected inflation shifts the supply and demand curves. Figure shows that effect on the equilibrium interest rate if an increase in expected inflation.

When the demand and supply curves moves from point 1 to point 2, the intersection of Bd2 and Bs2. The equilibrium bond price has fallen from P1 to P2 and because the bond price is negatively related to interest rate, this means that the interest rate has risen from i1 to i2.

Effect of Business Cycle

In a business cycle expansion, the amounts of goods and services being produced in the economy rise , so national income increases. When this occurs, businesses will be more willing to borrow, because they are likely to have many profitable investment opportunities for which they need financing. Hence at a given bond price and interest rate, the quantity of bonds that firms want to sell will increase. This means that in business cycle expansion, the supply curve for bonds shifts to the right from Bs1 to Bs2.

Expansion in the economy will also affect the demand for bonds. As the business cycle expands, wealth is likely to increase, and then the theory of asset demand tells us that the demand for bonds will rise as well. We see this in figure, where the demand curve has shifted to the right from Bd1 to Bd2.

As you can see, the interest rate rises during business cycle expansions and falls during recessions, which is what the supply and demand diagram indicates.

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BUSINESS STRATEGIES OF FOREX TRADING

Does anyone really know when and how Forex trends determine its direction? My response is "YES". How about you? Even most of Forex experts give analysis of the proposed direction of the market using Mechanical Strategy (TOP FOREX TRADING STRATEGIES).

In the past, lots of strategies has been tested and created in form of Robot (Robot is a programmed software for trading instruments automatically) but later discovered that most of the programmed Robot still need mechanical skill to complete or compliments it efforts. Mechanical, in the sense of having manual intervention in other to perform well.

Easy Money is the attraction that attracts many traders from foreign exchange. FOREX websites offer ‘risk-free’ trading, ‘high performance’, ‘low investment’. These claims have a grain of truth in them, but the reality of FOREX is a bit more complex.

The errors start Trader : There are 2 common mistakes that many beginner traders make: trading without a strategy and letting emotions rule their decisions. After opening a foreign currency account may be tempting to dive right in and start trading. Watching the movements of EUR / USD for example, you may feel you are letting pass an opportunity that if you do not enter the market immediately. Buy and watch the market move against you. You panic and sell, only to see the market recover. This kind of undisciplined approach to currency is guaranteed to lose money. FOREX traders must have a rational trading strategy and no commercial decisions in the heat of the moment.

Movements of the understanding of the market : To make sound decisions on trade, currency trader must be well educated in market movements. To be able to apply technical studies to charts and maps of entry and exit points. ? l should take advantage of the different types of orders to minimize their risk and maximize profits. The first step in becoming a successful FOREX trader is to understand the market and the forces behind him. That foreign exchange trading, and why? This allows you to identify successful trading strategies and use.

Accountability : There are 5 major groups of investors who participate in FOREX governments, banks, companies, investment funds and traders. Each group has its own objectives, but 1 that all groups except traders have in common is external control. Every organization has rules and guidelines for trading currencies and can be responsible for your trading decisions. Individual traders, on the other hand, are accountable only to themselves. Large organizations and educated traders approach the exchange of strategies, and if we hope to succeed as a currency trader must follow suit.

Money Management : Money management is an integral part of any business strategy. Besides knowing which currencies to trade and how to recognize yourself? Input and output signals, the successful trader has to manage their resources and integrate money management into their business plan. There are various strategies for managing money. Many are based on the calculation of core equity - opening balance minus the money used in open positions.

Basic fairness and limited risk : When entering a position try to limit risk to 1% to 3% of each trade. This means that if you are a Forex trading lot for $ 100,000 you should limit your risk to $ 1000 to $ 3000. You can do this with a stop loss order 100 pips (1 pip = $ 10) above or below their entry position. As your core equity rises or falls, adjust the dollar amount of your risk. Starting with a balance of $ 10,000 and 1 open position, your core equity is $ 9000. If you want to add a second open position, the core capital would be reduced to $ 8000 and you should limit your risk to $ 900. The risk in third position should be limited to $ 800.

Higher gain, higher risk : It should also increase your risk level as your core equity rises. After $ 5000 profit, your core equity is $ 15,000. You can increase your risk to $ 1,500 per transaction. Alternatively, you could risk more of the profits from the initial balance. Some traders risk up to 5% against their account of profits ($ 5,000 on a $ 100,000 lot) for greater profit potential. These are the kinds of strategic tactics that allow a beginner to get a foothold in the lucrative trade in foreign currency.

I strongly advise anyone interested in Forex trading should take his/her time in learning the Mechanical Strategy. Mechanical Strategy is all about reading and interpreting candles and lots more.

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