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how to get started on sam gov | there are a few steps to take to start looking for federal assistance on sam gov first you ll need to decide whether you want to register to bid and apply for federal awards or simply obtain a unique entity id without completing a full registration if you want to apply for federal awards or bid on government contracts you ll need to complete a registration which includes being assigned a unique entity id 5start the process on sam gov once you ve decided on the type of registration you want you can check the status of your registration and find more information about the registration process on its website the website also has a federal service desk available to help you with any technical issues or if you need further assistance you must renew your sam gov registration every 365 days to keep it active and you can update your registration at any time there are many different programs available through the gsa s sam gov some of the most common ones include smaller programs also exist to benefit small businesses for instance the small business administration sba offers almost two dozen programs such as the federal and state technology partnership program fast 59 058 this is awarded to strengthen the technological competitiveness of small business concerns in the u s 8government assistance scamsneither the cfda nor sam gov has ever directly solicited awards or applications unfortunately this transition led to the creation of new scams via phone internet and social media falsely claiming to offer easy government grant money these scammers may pose as members of the nonexistent cfda people who perpetrated these grant frauds typically promised grant approval in exchange for a fee or their personal information 9 | |
what was the catalog of federal domestic assistance | the catalog of federal domestic assistance cfda was a government wide catalog of federal programs projects services and activities that provided assistance or benefits to a variety of recipients | |
what was the purpose of the catalog of federal domestic assistance | the cfda provided information about federal grants loans scholarships counseling and other forms of assistance offered by the u s government it aimed to make it easier for these recipients to find and access the support they needed | |
does the cfda still exist | in 2018 the cfda was integrated with other government systems a listing of programs from the federal government is now accessible through the assistance listings section of sam gov | |
is the catalog of federal domestic assistance legit | yes the cfda and programs offered through sam gov are sponsored by the federal government however beware of grant scams that may pose as the cfda but are trying to defraud you the government warns that agents claiming to be with the community for federal domestic assistance cfda or a similarly named organization and not the federally run catalog of federal domestic assistance cfda may attempt to defraud you they represent themselves as agents of cfda 10the bottom linethe cfda was a comprehensive directory of federal assistance programs including federal grants and scholarships in 2018 it was integrated into sam gov under the assistance listings section you can apply for assistance on sam gov after registering and receiving a unique entity id while the programs available on sam gov are legitimate and federally sponsored users should be aware of potential scams for example some fraudsters may falsely claim to provide government grants by calling consumers and saying they are part of the cfda | |
what does caveat emptor mean | caveat emptor is a latin phrase that translates to let the buyer beware it means that an individual buys at their own risk potential buyers are warned by the phrase to do their research and ask pointed questions of the seller the seller isn t responsible for problems that the buyer encounters with the product after the sale caveat emptor is sometimes used in legal contracts as a type of disclaimer in many jurisdictions it is the contract law principle that places the onus on the buyer to perform due diligence before making a purchase the term is commonly used in real property transactions it relates to adverse situations that may arise with real estate after the date of closing it also applies to transactions that involve other types of goods such as cars or items at thrift stores or yard sales investopedia jake shiunderstanding caveat emptorcaveat emptor is intended to preclude post purchase disputes arising from information asymmetry a situation in which the seller has more information than the buyer about the quality of a good or service for example if hasan wants to buy a car from allison and caveat emptor applies he is responsible for gathering the necessary information to make an informed purchase in gathering this information hassan may decide to ask allison how many miles the car has on it whether any major components need to be replaced whether it s been serviced regularly and more if he buys the car for the asking price making little or no effort to assess its true condition or value and the car subsequently breaks down allison is not technically liable for damages however in practice there are exceptions to this principle caveat emptor doesn t give sellers carte blanche to promote a fraudulent transaction for example if allison lied about the car s mileage maintenance history or repair needs she would have committed fraud in theory hasan would be entitled to damages caveat emptor can apply in real estate transactions involving previously owned houses in all u s states therefore buyers need to make every effort to discover any and all property defects they might hire a highly rated house inspector to help however in the majority of states this principle is not necessarily business as usual what s more within the u s home builders are required to issue an implied warranty of fitness to buyers of new properties these properties come with the expectation that the seller is liable for faults 1reducing caveat emptormarket forces and other factors can reduce the feasibility of caveat emptor in some cases for example with real estate because a seller typically knows the condition of a property better than a buyer legal decisions relating to quality issues have begun to favor the buyers 2 there are other ways that buyers can feel more assured of quality warranties are guarantees of quality or satisfaction that sellers issue voluntarily to buyers if sellers provide a quality product they will not need to provide refunds or replacements very often buyers will be inclined to choose those vendors that provide a perception of quality or a warranty there are several types of implied warranties 3these laws have been enacted for the protection of consumers buying certain goods and services especially since the 2008 financial crisis for instance financial services institutions know much more information about their products and services than their customers do this information can relate to fees responsibilities risks and benefits the truth in lending act tila requires financial services providers to inform consumers of the terms and costs of consumer credit products 4informal transactions such as the one between allison and hasan are usually unregulated however the u s government pushes back against the principle of caveat emptor to protect consumers interests in more than just the financial services industry as referred to above many other industries must provide buyers clear largely standardized information about a product or service at the same time safe harbor statements and legally mandated quarterly reports can reinforce the principle of caveat emptor many companies continue to promote the expectation that buyers have access to all the information they need to make a reasonably informed decision if you see the term as is on the tag of any item for sale caveat emptor applies be sure to examine the item carefully and to your satisfaction ask the seller questions about condition once you buy it you cannot return it for a refund states that apply caveat emptormost states don t uniformly apply caveat emptor offering buyers some assurance of product service protection however the courts in the states below still tend to uphold it for real estate transactions 1caveat emptor vs caveat venditorcaveat emptor refers to instances when buyers must be vigilant about researching the condition of an item for sale the seller has no responsibility for after sale problems that occur however a different phrase often applies to sales in the u s nowadays it s caveat venditor and it translates to let the seller beware times have changed and goods and services are often covered by an implied warranty 56unless they re labeled sold as is or some other understanding between the buyer and seller is reached most consumer products are guaranteed to function when used for their intended purpose | |
what is caveat emptor | caveat emptor is a latin phrase that means that buyers are responsible for making sure that a product works to their satisfaction before buying it they must be confident about the product because the seller will be under no obligation to provide a refund for it | |
is caveat emptor wrong | caveat emptor isn t necessarily wrong it s just that it puts too heavy a burden on ordinary consumers to understand the intricacies of certain complex products and services for example most of those offered by financial institutions or tech companies can t be readily understood or even researched appropriately by the majority of individuals many people accept the principle of caveat emptor where items sold in thrift shops and garage sales are concerned they understand that a seller in such circumstances might not know the true condition of a product that has been used or owned many times over by the time the seller obtained it | |
what replaced caveat emptor | in general caveat venditor has replaced caveat emptor it means that sellers now need to be sure that their products and services function as advertised unless they re told otherwise buyers expect that items have an implied warranty and can be returned for a refund the bottom linecaveat emptor is a latin phrase that translates to let the buyer beware in use for hundreds of years in the u s it puts the burden of researching the quality of products and services on the buyer in a transaction it s often used when selling previously owned real estate these days caveat emptor isn t applied very often to other types of transactions that s due to regulations that are intended to provide consumers with more information and protection it s more likely that caveat venditor or let the seller beware applies | |
what is a central counterparty clearing house ccp | a central counterparty clearing house ccp is an entity that helps facilitate trading in various european derivatives and equities markets typically operated by the major banks in each country ccps strive to introduce efficiency and stability into various financial markets it reduces counterparty operational settlement market legal and default risk for traders understanding a central counterparty clearing house ccp central counterparty clearing houses ccps perform two primary functions as the intermediary in a transaction clearing and settlement as counterparties to the buyers and the sellers ccps guarantee the terms of a trade even if one party defaults on the agreement ccps bear the lion s share of the buyers and sellers credit risk when clearing and settling market transactions the ccp collects enough money from each buyer and seller to cover potential losses incurred by failing to follow through on an agreement in such cases the ccp replaces the trade at the current market price monetary requirements are based on each trader s exposure and open obligations functions of a central counterparty clearing house ccp as a means of privacy protection ccps shield the associated traders identities from one another ccps also protects trading firms against default from buyers and sellers who are matched by an electronic order book and whose creditworthiness is unknown furthermore ccps reduce the number of transactions that are being settled this helps smooth operations while reducing the value of the obligations which helps money move more efficiently among traders in the u s the equivalent of a ccp is known as a derivatives clearing organization dco or a derivatives clearinghouse and is regulated by the commodity futures trading commission cftc moody s rating methods for central counterparty clearing housesin january 2016 moody s investors service made headlines by revealing its new methodology for rating ccps worldwide in its clearing counterparty rating ccr report moody s evaluates how a ccp may meet its clearing and settlement obligations in an efficient manner and how much money will likely be lost if a trader defaults on an obligation the ccr report factors in the following considerations blockchain technology and ccpsblockchain technology which is described as an incorruptible digital ledger of economic transactions that can be programmed to record financial transactions arguably represents a new frontier for ccps in november 2015 clearinghouses from several nations joined forces to create a think tank known as the post trade distributed ledger group which studies how blockchain technology can affect the way in which security trades are cleared settled and recorded the group which in 2018 began collaborating with the global blockchain business council now includes around 40 financial institutions all around the world the ptdl group believes new technology can reduce risk and margin requirements save on operational costs increase settlement cycle efficiency and facilitate greater regulatory oversight both before and after trading and because this group s members represent various parts of the securities settlement process they comprehensively understand how the blockchain technology can aid the settlement clearing and reporting processes | |
what is the central limit theorem clt | in probability theory the central limit theorem clt states that the distribution of a sample variable approximates a normal distribution i e a bell curve as the sample size becomes larger regardless of the population s actual distribution shape put another way clt is a statistical premise that given a sufficiently large sample size from a population with a finite level of variance the mean of all sampled variables from the same population will be approximately equal to the mean of the whole population furthermore these samples approximate a normal distribution with their variances being approximately equal to the variance of the population as the sample size gets larger according to the law of large numbers although this concept was first developed by abraham de moivre in 1733 it was not formalized until 1920 when noted hungarian mathematician george p lya dubbed it the central limit theorem 12investopedia jiaqi zhouunderstanding the central limit theorem clt according to the central limit theorem the mean of a sample of data will be closer to the mean of the overall population in question as the sample size increases notwithstanding the actual distribution of the data in other words the data is accurate whether the distribution is normal or aberrant as a general rule sample sizes of 30 are typically deemed sufficient for the clt to hold meaning that the distribution of the sample means is fairly normally distributed therefore the more samples one takes the more the graphed results take the shape of a normal distribution 3the central limit theorem is often used in conjunction with the law of large numbers which states that the average of the sample means will come closer to equaling the population mean as the sample size grows which is extremely useful in accurately predicting the characteristics of populations investopedia sabrina jiangkey components of the central limit theoremthe central limit theorem is comprised of several key characteristics these characteristics largely revolve around samples sample sizes and the population of data the central limit theorem in financethe clt is useful when examining the returns of an individual stock or broader indices because the analysis is simple due to the relative ease of generating the necessary financial data consequently investors of all types rely on the clt to analyze stock returns construct portfolios and manage risk say for example an investor wishes to analyze the overall return for a stock index that comprises 1 000 equities in this scenario that investor may simply study a random sample of stocks to cultivate estimated returns of the total index to be safe at least 30 50 randomly selected stocks across various sectors should be sampled for the central limit theorem to hold furthermore previously selected stocks must be swapped out with different names to help eliminate bias | |
why is the central limit theorem useful | the central limit theorem is useful when analyzing large data sets because it allows one to assume that the sampling distribution of the mean will be normally distributed in most cases this allows for easier statistical analysis and inference for example investors can use central limit theorem to aggregate individual security performance data and generate distribution of sample means that represent a larger population distribution for security returns over a period of time | |
why is the central limit theorem s minimize sample size 30 | a sample size of 30 is fairly common across statistics as the minimum for applying the central limit theorem 6 the higher your sample size the more likely the sample will be representative of your population set | |
what is the formula for central limit theorem | the central limit theorem doesn t have a formula used in its practical application its principle is simply applied with a sufficiently large sample size the sample distribution will approximate a normal distribution and the sample mean will approach the population mean so if we have a sample size of at least 30 we can begin to analyze the data as if it fit a normal distribution | |
what is a centrally planned economy | a centrally planned economy also known as a command economy is an economic system where a government body makes economic decisions regarding the production and distribution of goods centrally planned economies are different from market economies where these decisions are the result of thousands of choices by producers and consumers the production of goods and services in planned economies is often done by state owned enterprises although independent companies may sometimes be incorporated into economic planning prices wages and production schedules are typically set by a centralized bureaucracy understanding centrally planned economiescentral planning is frequently associated with marxist leninist governments such as the soviet union north korea and east germany for most of their history market activity was extremely limited in these countries and the government directed economic activity through state owned enterprises after the second world war many socialist countries chose to adopt economic planning in order to focus resources on government priorities that may not be adequately served by market forces alone moreover since these countries were ideologically opposed to private enterprise central planning also helped eliminate capitalist modes of production while central planning is typically associated with socialist or communist political systems many other countries may enact elements of economic planning in times of war or national emergency for example many countries implemented rationing systems during the world wars in order to prevent shortages and control the prices of essential goods there are few countries that can truly be described as a command economy today even in north korea the private sector performs more economic activity than the state theory of central planningadvocates of central planning believe that the government can direct economic investment more efficiently than private actors especially towards social goals with lower potential for profits moreover since the planning authority has more resources than any single company or business government projects can also benefit from economies of scale that make government projects more productive in the long run however in order to coordinate among different producers and resources central planning typically requires a highly educated technical bureaucracy this creates something of a paradox for socialist countries since the bureaucrats may take the role of a de facto ruling class criticism of centrally planned economiesthe concept of central planning is subject to heavy criticism especially from scholars in the austrian school of economics one major critique associated with friedrich hayek is that central planners cannot efficiently respond to supply and demand in a market economy businesses respond to price signals by increasing or decreasing the production of their goods in a planned economy there are no price signals so planners cannot accurately forecast which products will be needed or adapt to changing conditions this means that there may be unnecessary shortages or surpluses of certain goods another critique is that command economies may be less efficient due to the lack of competitive pressures while private companies must avoid waste in order to remain profitable enterprises in a command economy have no pressure to earn profits or reduce expenses examples of centrally planned economiescentral planning is typically associated with the formerly communist countries of eastern europe and the soviet union as well as the contemporary governments of cuba china and parts of asia in each of these examples the state acted as the principal manufacturer distributor and employer in almost all sectors of the economy almost all of these countries abandoned central planning in favor of a capitalist or mixed economic model starting in the 1980s in some cases such as in china the privatization of state assets combined with an influx of foreign investment resulted in extremely rapid economic growth | |
which countries have a centrally planned economy | while central planning once dominated eastern europe and a large part of asia most planned economies have since given way to free market systems china cuba vietnam and laos still maintain a strong degree of economic planning but they have also opened their economies to private enterprise today only north korea can be accurately described as a command economy although it also has a small degree of underground market activity | |
how are economic decisions made in a planned economy | in a planned economy important economic decisions are made through a combination of political or administrative bodies typically this involves local administrators communicating their capacity and needs to central authorities who use that information to create a nationwide economic plan this plan may go through several rounds of revision before it is submitted to the government or legislature | |
do all socialist countries have a planned economy | while socialist economies are typically associated with central planning several socialist countries incorporated market price signals or private enterprise into their economic systems examples include market socialism in the former yugoslavia the socialist market economy in vietnam or the economic reforms in china under deng xiaoping | |
what is the certainty equivalent | the certainty equivalent is a guaranteed return that someone would accept now rather than taking a chance on a higher but uncertain return in the future put another way the certainty equivalent is the guaranteed amount of cash that a person would consider as having the same amount of desirability as a risky asset | |
what does the certainty equivalent tell you | investments must pay a risk premium to compensate investors for the possibility that they may not get their money back and the higher the risk the higher premium an investor expects over the average return if an investor has a choice between a u s government bond paying 3 interest and a corporate bond paying 8 interest and he chooses the government bond the payoff differential is the certainty equivalent the corporation would need to offer this particular investor a potential return of more than 8 on its bonds to convince him to buy a company seeking investors can use the certainty equivalent as a basis for determining how much more it needs to pay to convince investors to consider the riskier option the certainty equivalent varies because each investor has a unique risk tolerance the term is also used in gambling to represent the amount of payoff someone would require to be indifferent between it and a given gamble this is called the gamble s certainty equivalent example of how to use the certainty equivalentthe idea of certainty equivalent can be applied to cash flow from an investment the certainty equivalent cash flow is the risk free cash flow that an investor or manager considers equal to a different expected cash flow which is higher but also riskier the formula for calculating the certainty equivalent cash flow is as follows certainty equivalent cash flow expected cash flow 1 risk premium text certainty equivalent cash flow frac text expected cash flow left 1 text risk premium right certainty equivalent cash flow 1 risk premium expected cash flow the risk premium is calculated as the risk adjusted rate of return minus the risk free rate the expected cash flow is calculated by taking the probability weighted dollar value of each expected cash flow and adding them up for example imagine that an investor has the choice to accept a guaranteed 10 million cash inflow or an option with the following expectations based on these probabilities the expected cash flow of this scenario is expected cash flow 0 3 7 5 million 0 5 1 5 5 million 0 2 4 million begin aligned text expected cash flow 0 3 times 7 5 text million quad 0 5 times 15 5 text million quad 0 2 times 4 text million 10 8 text million end aligned expected cash flow 0 3 7 5 million 0 5 15 5 million 0 2 4 million assume the risk adjusted rate of return used to discount this option is 12 and the risk free rate is 3 thus the risk premium is 12 3 or 9 using the above equation the certainty equivalent cash flow is certainty equivalent cash flow 1 0 8 million 1 0 0 9 begin aligned text certainty equivalent cash flow frac 10 8 text million left 1 0 09 right 9 908 text million end aligned certainty equivalent cash flow 1 0 09 10 8 million based on this if the investor prefers to avoid risk he should accept any guaranteed option worth more than 9 908 million | |
what is a certificate of deposit cd | a certificate of deposit cd is a type of savings account that pays a fixed interest rate on money held for an agreed upon period of time cd rates are usually higher than savings accounts but you lose withdrawal flexibility if you withdraw your cd funds early you ll be charged a penalty cds come in a variety of terms from 3 6 or 12 months to 4 5 and even 10 year terms learn more about how cds work and about the advantages and disadvantages mira norian investopedia | |
how certificates of deposit cds work | opening a cd is similar to opening any standard bank deposit account when you shop around consider these factors you ll get either monthly or quarterly statement periods paper or electronic statements monthly or quarterly interest payments will be deposited to your cd balance and the interest will compound | |
why should i open a cd | unlike most other investments cds offer fixed interest rates that are often higher than the rates on other bank accounts generally the longer the terms the higher the rates cds are an attractive option for savers who want to earn more than most savings checking or money market accounts without taking on more risk want more advice for saving money toward your financial goals order a copy of investopedia s what to do with 10 000 magazine cds vs savings and money market accountscds are like savings or money market accounts in that they allow you to put money away for a set period that way you can save toward a specific goal like a down payment on a house a new car or a vacation or you may want to use a cd as an emergency fund that earns a guaranteed return savings and money market accounts allow you to make additional deposits as well as withdrawals but with cds you make one initial deposit that stays in the account until its maturity date in return for giving up access to your funds cds generally pay higher interest rates than savings or money market accounts | |
how are cd rates determined | the federal reserve s rates play a large role in what you earn on your deposits 1 that s because the fed s decisions can directly affect a bank s costs here s how it works every six to eight weeks the federal open market committee fomc decides whether to raise lower or hold the federal funds rate 2 this rate is the interest that banks pay to borrow and lend their excess reserves to each overnight through the fed 3this benchmark rate influences what banks and credit unions are in turn willing to pay consumers for their deposits in savings money market and cd accounts the higher the federal funds rate the more interest you can earn on a cd in december 2008 the fed reduced its rate to the lowest level possible of essentially zero as a stimulus to lift the u s economy out of the great recession it left rates anchored there for a full seven years 1 during that time deposit rates of all kinds savings money market and cds tanked the fed did the same in 2020 in 2022 amid record setting inflation the fed aggressively raised interest rates between 2021 and 2023 average cd rates tripled or quadrupled depending on the term 45 | |
when opening a cd or choosing your term pay attention to the fed s rate opening a long term cd right before a fed rate hike may hurt your future earnings decreasing rates can signal a good time to lock in a long term rate | each bank determines how much interest it will pay on cds if a bank may need more deposits to fund loans it may be more aggressive in trying to attract deposits a large bank with sufficient deposit reserves may be less interested in growing its cd portfolio and offer lower rates | |
are cds safe | cds are one of the safest ways to invest your money first their rate is fixed and guaranteed second cd investments are protected by the same federal insurance that covers all deposit products the federal deposit insurance corp fdic insures bank accounts and the national credit union administration ncua insures credit union accounts in both cases up to 250 000 of your funds are protected in the rare event that institution were to fail 67if you are holding more than 250 000 in deposits you can spread your funds across multiple institutions for full coverage | |
when is opening a cd a good idea | cds can be a good idea in several situations a cd may be a good option if you have cash that you don t need now but that you will want within a few years investing in a cd can help you save for a vacation a new home or a car a cd may be a good idea if you want some of your savings invested conservatively it can help you achieve lower risk and volatility than investing in the stock and bond markets one of the downsides of cds is that your money is locked into the investment however that can be a benefit for some savers who worry that they will be tempted to withdraw from their savings the fixed term of a cd and the penalty for early withdrawal provide a deterrent to spending rates are typically higher than savings or money market accountsguaranteed predictable rate of return is less risky than volatile stocks and bondsfederally insured if opened with an fdic or ncua insured bank or credit unioncan help you avoid spending temptations since withdrawing funds early triggers a penaltypenalties for withdrawing funds earlytypically earns less than stocks and bonds over timefixed rate could cost you if interest rates rise during the terminflation can eat away at the value of money locked in at a fixed rate | |
where can i get a cd | most banks and credit unions offer at least one cd with a wide array of terms this includes large banks smaller banks and online banks in addition you can open cds through your brokerage account find the best cd rateswith the growth of online banking you can shop for cds at hundreds of banks and credit unions including those that allow you to open an account online in addition you ll have access to a number of regional and state banks and credit unions based on your residency cd rates can vary widely shop for options available everywhere not just at your current bank leverage online tools to aid in your search | |
how much do i need to open a cd | each bank and credit union establishes a minimum deposit required to open a cd sometimes a bank will set a minimum deposit policy across all cds some offer rate tiers with a higher annual percentage yield apy if you have higher minimum deposits in theory a greater deposit will earn you a higher return in practice this doesn t always hold true many of the top 10 rates in each cd term can be achieved with modest investments of just 500 or 1 000 and the majority of top rates are available to anyone with at least 10 000 a 25 000 deposit is only occasionally required for a top rate the jumbo cds requiring a minimum deposit of 50 000 or 100 000 typically pay more but not always | |
which cd term should i choose | you ll need to determine the cd term that is right for you consider your plans for the money if it s for a specific goal or project the expected start of that project will help you determine your ideal cd term length if you re just socking away cash with no particular goal you may opt for a longer term and higher interest rate also consider what s expected to happen with the fed s rate if it s anticipated that the fed will raise rates and bank and credit union cd rates will likely rise as well then short and mid term cds will make more sense than long term cds that s because since you won t want to be committed to a lesser rate for five years when new higher rates appear conversely if you expect rates will decrease in the near term you may want long term cds so you can lock in today s higher rates for years one other way to invest in cds when interest rates are rising is to buy a variable rate cd or a bump up cd a variable rate cd has an apy that changes based on an index rate it can go up or down essentially you should aim buy a variable rate cd when rates are expected to go up and stay up a bump up cd allows you to increase the rate at one time of your choosing and the rate can not go down variable rate cds and bump up cds typically have lower starting rates than traditional cds you ll need to weigh that when considering these products a cd ladder why should i build one a cd ladder enables you to access the higher rates offered by 5 year cd terms the twist is that a portion of your money becomes available every year rather than every five years here s how to build a cd ladder at the outset you take the amount of money that you want to invest in cds and divide it by the number of cds you will invest in let s say you will invest in five cds you then put one fifth of the funds into a top earning 1 year cd another fifth into a top 2 year cd another into a 3 year cd and so forth through a 5 year cd let s say you have 25 000 available that would give you five cds of varying length each with a value of 5 000 then when the first cd matures in a year you take the resulting funds and open a top rate 5 year cd a year later your initial 2 year cd will mature and you ll invest those funds into another 5 year cd you continue doing this every year with whichever cd is maturing until you end up with a portfolio of five cds all earning 5 year apys but with one of them maturing every 12 months cd ladders keep your money more accessible than if all of your money were locked up for a certain term | |
when you hold a cd the bank will apply interest to your account at regular intervals this is usually done either monthly or quarterly and will show up on your statements as earned interest | just like interest paid on a savings or money market account interest will accumulate and be reported to you in the new year as interest earned then you report it as income when you file your tax return 8for tax reporting purposes your cd earnings are taxed when the bank applies them to your account regardless of when you withdraw your cd funds 8 | |
what happens to my cd at maturity | leading up to your cd s maturity date the bank or credit union will notify you of the impending end date you will receive instructions on how to instruct the bank with what to do with the maturing funds typically they will offer you three options in many cases the bank will default to rolling your proceeds into a new cd | |
what if i need to withdraw my money early | even though opening a cd involves agreeing to keep the funds on deposit without withdrawals for the duration of the term that doesn t mean you lack options if your plans need to change whether you encounter an emergency or a change in your financial situation or you simply feel that you can use the money more usefully or lucratively elsewhere all banks and credit unions have stipulated terms for how to cash your cd out early the exit won t be free of course the most common way that financial institutions accommodate a premature termination is by assessing an early withdrawal penalty ewp on the proceeds before your funds are distributed according to specific terms and calculations that were set out in your deposit agreement when you first opened the certificate this means that you can know before you agree to the cd if the ewp is acceptable to you most typically the ewp is charged as a number of months interest with a greater number of months for longer cd terms and fewer months for shorter cds for instance a bank s policy might be to deduct three months interest for all cds with terms up to 12 months six months interest for those with terms up to three years and a full year s worth of interest for its long term cds these are just examples of course every bank and credit union sets its own ewp so it s important to compare ewp policies whenever you are deciding between two similar cds it s especially wise to watch out for ewps that can eat into your principal the typical ewp policy described above will only cause you to earn less than you would have if you had kept the cd to maturity you will generally still have earnings as the ewp will usually only eat up a portion of your earned interest but some particularly onerous penalties exist in the marketplace where a flat percentage penalty is applied since this percentage can outweigh what you ve earned on a cd that you haven t kept very long you could find yourself collecting less in proceeds than you invested as a result these ewp types are best avoided always check a bank s ewp policy before committing to a cd if it s especially aggressive or if you can find another cd with a similar rate and a milder term then you ll be wise to stay away from the toughest penalties frequently asked questions faqs | |
how do you find the best cd rates | shopping for the best cd rate takes a lot of research but investopedia has done the hard work for you and maintains lists of the best rates available no matter what length of time you re looking for | |
how does a certificate of deposit cd work | a certificate of deposit cd is a simple and popular savings vehicle offered by banks and credit unions when a depositor purchases a cd they agree to leave a certain amount of money on deposit at the bank for a certain period of time such as one year in exchange the bank agrees to pay them a predetermined interest rate and guarantees the repayment of their principal at the end of the term for instance investing 1 000 in a 1 year 5 certificate would mean receiving 50 in interest over the course of one year plus the 1 000 you initially invested can you lose money on a cd practically speaking it is almost impossible to lose money on a cd for two reasons first they are guaranteed by the bank or credit union that offers them meaning that they are legally required to pay you exactly the amount of interest and principal agreed upon second they are generally also insured by the federal government for up to 250 000 that means that even if the bank or credit union went bankrupt your principal would very likely still be repaid 69 for these reasons cds are considered one of the safest investments available | |
what are the advantages and disadvantages of a cd | some savers like cds because of the safety they provide as well as the fact that they are perfectly predictable on the other hand cds generally promise a very modest rate of return compared to riskier investments like stocks and bonds if the interest rate offered is below the current inflation rate then investors in cds will actually lose money on their investment when it s measured on an inflation adjusted basis for this reason yield conscious investors might prefer investments that are riskier but offer higher potential returns | |
should i let my cd roll over | as a general rule letting your cd roll over into a similar cd term at the same institution is unwise shopping around is important if you want to earn the top rate on your cds the bottom linecertificates of deposit offer stability for people who want to earn more on their money without the risk inherent in stocks and bonds although interest rates may be higher than savings accounts and money markets read the fine print carefully tying up your money for long set terms may be safe but you may lose out on higher interest returns if the federal funds rate increases while you may be able to withdraw your money early there will be penalties some of which can cut into your principal know the limitations and benefits of any investment | |
what is a certificate of insurance coi | a certificate of insurance coi is a document issued by an insurance company or broker the coi verifies the existence of an insurance policy and summarizes the key aspects and conditions of the policy for example a standard coi lists the policyholder s name the policy s effective date the type of coverage policy limits and other important details of the policy without a coi a company or contractor will have difficulty securing clients because they will likely not want to assume the risk of any costs that might be caused by the contractor or provider | |
how certificates of insurance coi work | certificates of insurance cois are used in situations where liability and significant losses are of concern and require a coi which is in most business contexts a certificate of insurance is used for proving insurance coverage small business owners and contractors often have a coi that proves they have insurance that protects against liability for workplace accidents or injuries when you purchase liability insurance the insurance company will usually provide an insurance certificate without a coi a business owner or contractor may have difficulty winning contracts because many companies and individuals hire contractors the client wants to know that a business owner or contractor has liability insurance so that they will not assume any risk if the contractor is responsible for damage injury or substandard work a company that hires a contractor or another entity for services should obtain a copy of their coi and ensure that it is up to date typically a client will request a certificate directly from the insurance company rather than the business owner or contractor the client should confirm that the name of the insured on the certificate is an exact match of the company or contractor they are considering also the client should check the policy coverage dates to ensure that the effective date of the policy is current the client should secure a new certificate if the policy is set to expire before the contracted work is complete details of a certificate of insurancecertificates of insurance contain separate sections for different types of liability coverage listed as general auto umbrella and workers compensation the term insured refers to the policyholder person or company appearing on the certificate as being covered by the insurance in addition to coverage levels the certificate includes the policyholder s name mailing address and describes the operations that the insured performs the address of the issuing insurance company is listed along with contact information for the insurance agent or the insurance agency s contact person if several insurance companies are involved all names and contact information are listed | |
when a client requests a coi they become a certificate holder the client s name and contact information appear in the bottom left hand corner along with statements showing the insurer s obligation to notify the client of policy cancellations | the certificate briefly describes the insured s policies and limits provided for each type of coverage for example the general liability section summarizes the six limits that the policy offers by category and indicates whether coverage applies per claim or per occurrence because state laws determine the benefits provided to injured workers1 the workers compensation coverage will show no limit however an employer s liability coverage limits should be listed | |
how to get a certificate of insurance | if you are requesting a coi from a contractor or business they should either be able to retrieve it from their insurance company or provide you with their insurance company s contact information so you can ask for that proof to be sent to you directly be careful however if you ask your vendor to provide you with a coi there have been documented cases of contractors submitting fraudulent cois who needs a certificate of insurance coi simply put if you are hiring an independent contractor or business for their services on your property you should require a certificate of insurance coi if you are a contractor or business you should have a coi so you can prove to your clients that you are insured | |
how long is a certificate of insurance good for | it would be safest to hold on to any coi you get indefinitely since you do not know when a problem may arise for a job either carried out on your premises or that you completed for someone else keeping proof of the coi will help address any issues at that point | |
when should i get a certificate of insurance | you should ask for and receive a coi before anyone works on your home or property if you have a written contract it should contain insurance requirements including coverage and limits required that are verified with a coi the bottom lineyou may need a certificate of insurance coi in a number of situations generally a client will request a coi directly from your insurance company to confirm you have appropriate insurance coverage if you are hiring a contractor consider getting a coi from their insurance company even if you have worked with them before because their coverage may have changed | |
in international trade where goods traverse borders and navigate across diverse regulations the certificate of origin co is a vital document it not only establishes a product s nationality for example a good may be marked made in the usa or made in china but also plays a crucial role in fostering fair trade practices protecting workers rights and promoting economic cooperation among nations | cos verify that traders are following customs and tariff requirements help determine eligibility for preferential treatment under trade agreements and verify that goods aren t from a country subject to trade sanctions or restrictions or produce goods under unethical or exploitive conditions 12in the u s cos are now primarily electronic americans can obtain them from the american world trade chamber of commerce awtcc accredited by the international chamber of commerce icc to provide them below we explain what cos are why they are important and how they are obtained 3understanding certificates of origin cos cos are important tools for promoting transparency accountability and informed decision making in international commerce most cos in the u s are digital though paper versions are used more elsewhere these documents support fair labor practices protect workers rights and enable governments and intergovernmental bodies to enforce trade policies sanctions and embargoes by requiring exporters to declare the origin of their goods cos help identify products manufactured under unethical or exploitative conditions such as sweatshops or forced labor this transparency can support those wanting to take action based on ethical environmental and socioeconomic considerations for governments cos are essential in enforcing trade policies and upholding national security and foreign policy objectives customs officials rely on these electronic documents to identify and prevent the entry of prohibited goods from nations that engage in human rights abuses support terrorism or threaten international security they are also vital for implementing international treaties and agreements to protect the environment such as the convention on international trade in endangered species of wild fauna and flora 4 by mandating cos for certain products governments can better monitor and regulate the trade of endangered species combat illegal wildlife trafficking and promote the sustainable use of natural resources chambers of commerce designated government agencies or other authorized bodies in the exporting country issue cos they include essential information such as exporter and importer details a description of the goods the country of origin and a digital signature and verification from the issuing authority to obtain a co from the awtcc exporters can register in the awtcc s online certification system 3 they can submit their applications electronically any time of the day seven days a week and receive their certificates within the next business day the certificates issued by the awtcc display the icc accreditation logo and can be verified electronically by customs authorities worldwide 5exporters must ensure that their cos are accurate and follow the relevant international rules and guidelines failing to do so can lead to delays in shipping additional fees or the goods being turned away altogether 6sometimes the destination customs authority may request proof of review from a specific chamber of commerce chambers of commerce usually only certify verifiable information however if presented with a declaration attesting to commercial details that can t be checked the chamber will digitally stamp the document and attest to the position and identity of the signatory in addition the buyer may require a co in a letter of credit as part of the documentary requirements the letter of credit may specify additional certifications or language that must be included in the co for it to follow requirements 6the co process is increasingly paperless many countries offer an online co service allowing exporters to apply and obtain certificates online 72 this has made getting a co a lot quicker and easier with an electronic co you can submit the required documentation online get an electronic certificate stamped by a chamber of commerce in less than a day or get an expedited paper certificate overnight 8the icc issues the rules about cos and maintains a verification website for certificates which are widely used by customs authorities banks and other parties involved in international trade compliance 3types of certificates of originthere are no standard co forms in global trade but a co usually prepared by the exporter of goods has at least the essential details about the product being shipped a tariff code the exporter and importer and the country of origin the exporter with knowledge of the specific border control requirements at the importing country will document these details get the co notarized or electronically confirmed by a chamber of commerce and submit the form the details required depend on the type of goods being exported and where they are going the two main types of cos are nonpreferential and preferential 5nonpreferential cos also known as ordinary cos indicate that the goods do not qualify for reduced tariffs or tariff free treatment under trade arrangements between countries 39if an exporting country does not have a treaty or trade agreement with the importing country an ordinary co is used if a particular product being shipped has been excluded from tariff relief it also must be declared using an ordinary co preferential cos are for goods that qualify under a free trade agreement for reduced tariffs between countries 39 for example exports between the united states mexico and canada are exempt under the usmca free trade agreement they would be shipped with a preferential co 10 a commercial invoice or bill of lading is used in these and similar cases in the u s the generalized system of preferences gsp was enacted by congress in 1974 to promote economic development in developing nations and eliminate duties on thousands of products imported from over 100 countries given this status 11 countries like bolivia cambodia haiti namibia and pakistan are presently on the list as are many other developing countries 12 the eu and countries worldwide have their versions of a gsp to foster economic growth through trade with friendly nations free trade agreement certificates of originfree trade agreements between the u s and other countries often require exporters to use a specific form as proof of origin so products can qualify for preferential duty rates these forms can be found on the awtcc platform steps for obtaining a certificate of originthe icc has an online platform to assist in issuing and verifying electronic cos third parties too can be used to help with the process for the icc here are the steps accredited companies can create valid certificates on your behalf and get them certified by chambers of commerce all you need to do is provide them with all the relevant information and wait for the certificate 13certificates of origin will typically contain the following information 6 | |
why do you need a certificate of origin | certificates of origin serve several purposes above all they satisfy custom requirements in the country where the items are heading and determine the amount of duty to pay certain goods may qualify for tariff reductions or exemptions if they originate from a certain country or are of a certain type 14can i produce my own certificate of origin only exporters can issue a certificate of origin 6 contact your local chamber of commerce or similar authority to learn more about the process and what is needed for approval | |
is a certificate of origin the same as a title | cos state a product s origin with its export and import information however it does not provide a title in the sense of a legal transfer of ownership of the good this is done via a separate transaction involving an invoice or similar proof of sale the bottom linea co is a document used in international trade to identify a product s country of origin the co will also detail the product s specifications and the identities of the exporter and importer the co is used for customs purposes especially when a tariff or other import duty is required preferential cos are used when a free trade agreement is in place in which case less information and scrutiny are needed exporters are responsible for issuing and filling out a co which is then endorsed by the relevant chamber of commerce | |
what is a certified financial planner cfp | certified financial planner cfp is a formal recognition of expertise in the areas of financial planning taxes insurance estate planning and retirement saving owned and awarded by the certified financial planner board of standards inc the designation is awarded to individuals who successfully complete the cfp board s initial exams then continue ongoing annual education programs to sustain their skills and certification roles and responsibilities of a certified financial planner cfp cfps are there to help individuals manage their finances this can include a variety of needs such as investment planning retirement planning insurance and education planning the most important aspect of a cfp is to be a fiduciary of your assets meaning that they will make decisions with your best interests in mind cfps are all encompassing particularly when compared to investment advisors cfps will usually start the process by evaluating your current finances including any cash assets investments or properties to come up with an estimate of your income and net worth they also take a look at your liabilities such as mortgages and student debt from this point on they work with you to come up with an individualized financial plan for example say you are nearing retirement the cfp will create a financial plan that can see you through your retirement years or perhaps you have a child that will be starting college the cfp can help create a financial plan to manage that cost a cfp is a financial adviser who has earned a certification that indicates in depth knowledge of financial planning the requirements to become a cfp are some of the most difficult and stringent in the financial industry cfp and fiduciary dutyall cfps are held to the standard of fiduciary duty that means they must always put your interests as a client ahead of their own for example if they would make more money selling one product over another but the product that made them less money was better for you that is the product they must recommend a cfp s fiduciary duty is clearly laid out by the cfp board and states at all times when providing financial advice to a client a cfp professional must act as a fiduciary and therefore act in the best interest of the client the board goes on to state that three duties must be met by an adviser with a fiduciary duty these are 1 duty of loyalty 2 duty of care and 3 duty to follow client instructions 2 | |
how to become a certified financial planner cfp | earning the cfp designation involves meeting requirements in four areas formal education performance on the cfp exam relevant work experience and demonstrated professional ethics the education requirements comprise two major components the candidate must hold a bachelor s or higher degree from an accredited university or college second the candidate must complete a list of specific courses in financial planning as specified by the cfp board 3much of this second requirement is typically waived if the candidate holds certain accepted financial designations such as a chartered financial analyst cfa or certified public accountant cpa designation or has a higher degree in business such as a master of business administration mba 3as for professional experience candidates must prove they have at least three years or 6 000 hours of full time professional experience in the industry or two years 4 000 hours in an apprenticeship role 4lastly candidates and cfp holders must adhere to the cfp board s standards of professional conduct they must also regularly disclose information about any involvement in criminal activity inquiries by government agencies bankruptcies customer complaints or terminations by employers the cfp board conducts an extensive background check on all candidates before granting the certification 5even successful completion of the above steps doesn t guarantee receipt of the cfp designation the cfp board has final discretion on whether to award the designation to an individual 6the certified financial planner cfp examthe cfp exam includes 170 multiple choice on more than 100 topics related to financial planning the scope includes professional conduct and regulations financial planning principles education planning risk management insurance investments tax planning retirement planning and estate planning 7the various topic areas are weighted and the most recent weighting is available on the cfp board website further questions test the candidate s expertise in establishing client planner relationships and gathering relevant information and their ability to analyze develop communicate implement and monitor the recommendations they make to their clients 7here s some additional information on the administration costs and scoring of the cfp exam cfp vs cfathough a certified financial planner cfp and a chartered financial analyst cfa may sound similar they are different certifications with different job functions and clients a cfp works with individuals often retail clients helping them achieve their financial goals this includes help in investing and retirement planning a cfa works with corporations performing investment analysis cfas focus on financial reporting analysis and portfolio management they can trade financial products such as derivatives and help in mergers and acquisitions cfa s usually work for investment banks and hedge funds | |
when do you need a cfp | if you are just looking to invest money in stocks and bonds a cfp probably isn t needed if you are looking to manage your finances investment choices estate planning and retirement planning a cfp can help you with all of those needs a cfp is a step above a non designated financial advisor and has demonstrated expertise in financial planning | |
is cfp the same as cfa | no cfp and cfa are not the same a cfp is a certified financial planner who provides financial planning advice to individuals this includes help with investing retirement planning estate planning and tax law a cfa is a chartered financial analyst who may work for an investment bank or hedge fund and performs financial analysis modeling trading and portfolio management services | |
is cfp equivalent to mba | no a cfp is not equivalent to an mba a certified financial planner cfp is qualified to advise individuals on financial planning the holder of a master of business degree has studied the way businesses operate the career paths differ a cfp works in financial consulting or wealth management an mba may be a business manager portfolio manager financial analyst financial strategist or even an entrepreneur | |
is the cfp exam hard | the cfp exam requires a lot of preparation and covers a wide range of topics in depth the best way to ensure you pass the cfp exam is by preparing for it well in advance and sticking to a study schedule the bottom linebecoming a cfp takes education and experience as well as a strong grasp of financial ethics the test to gain this distinction is comprised of 170 questions and is split into two three hour sessions 8even if candidates pass the test and meet all the requirements the cfp board still has the final say about whether to award this distinction given the stringent requirements cfps can be assumed to have an in depth understanding of financial planning | |
what is a certified information systems auditor cisa | certified information systems auditor cisa refers to a designation issued by the information systems audit and control association isaca the designation is the global standard for professionals who have a career in information systems in particular auditing control and security cisa holders demonstrate to employers that they have the knowledge technical skills and proficiency to meet the dynamic challenges facing modern organizations understanding certified information systems auditors cisas to receive a certified information systems auditor certification candidates must pass a comprehensive exam and satisfy industry work experience requirements candidates must also undergo continuing education and professional development and adhere to isaca s code of professional ethics and information systems auditing standards responsibilities of a certified information systems auditorcertified information systems auditors are often in charge of appraising a company s technology related systems and assessing a company s set up for vulnerabilities a cisa will often be tasked with implementing an audit strategy to review potential risk areas as well as executing and overseeing that audit a cisa is often heavily involved in processes before and after an audit as well before doing any testing a cisa will evaluate a company s objectives systems and risks to better understand its potential vulnerabilities and strengths after the audit a cisa delivers the audit results and often makes recommendations to management for steps to perform if as suggestions are approved and adopted by management the cisa will often be involved in the implementation and monitoring of security upgrades this includes performing new tests once the recommendations have been put in place or ensuring management has followed through on control changes in addition to overseeing audits a cisa will often have less formal projects with management on review practices building risk strategies performing continuity planning and monitoring it personnel a cisa may also be responsible for drafting and maintaining up to date it policies standards or procedures the cisa exam costs 575 for isaca members and 760 for non members | |
how to become a certified information systems auditor | there are five steps to become a cisa certified information systems auditor examthe cisa exam lasts four hours and consists of 150 multiple choice questions to sit for the exam the candidate must meet specific requirements discussed below as well as pay an upfront fee this fee is value for 12 months exam registration must be completed online candidates must score 450 to pass the exam the exam scores on a scale between 200 and 800 candidates have the option to sit the exam in june september or december in testing centers worldwide the exam is also available in multiple languages including chinese mandarin simplified and traditional spanish french japanese and korean exams scheduled at in person centers is often highly regulated the testing center will often require an acceptable form of id the testing center may also limit the use of prohibited items such as phones smart watches headphones food beverages or visitors the testing center often does now allow for discussion between test participants any violation of these rules may lead to discontinuation of your exam session the number of cisa certification holders as of september 2022 the cisa exam tests candidates knowledge of five job practice domains certified information systems work experience requirementscisa candidates must have a minimum of five years of professional experience in information systems auditing control or security there are several work experience substitutions and waivers up to a maximum of three years that candidates can satisfy university instructors who have two years of experience in a related field such as computer science information systems auditing or accounting can substitute that experience for one year of work experience certified information systems auditor continuing professional educationto ensure professionals who hold the cisa designation keep their knowledge of information systems auditing and control updated they are required to undertake 20 hours of training per year and a minimum of 120 hours in a three year period isaca charges an annual maintenance fee to renew the cisa certification isaca members pay 45 and nonmembers pay 85 the isaca has communicated a broad range of ways cisas can earn these continuing education credits this includes attending specific conferences completing an isaca training week course performing online training certified by the isaca attending specific tech education events or completing on demand learning cisas can also earn cpe for journal quizzes accessible to members only volunteering with isaca volunteering with one in tech or attending certain isaca activities or meetings each cisa is expected to manage and report their own cpe hours this is done by logging into their isaca profile and navigating to the certifications cpe management area there users can add new cpe records enter in training or educational details and enter the number of cpe earned the average salary of a cisa certification holder as of september 2022 benefits of the certified information systems auditor certificationby demonstrating professional competency cisa holders reap several different benefits | |
how do i become a certified information systems auditor | to become a cisa you must pass an exam hosted by the isaca meet application requirements and earn continuing education credits upon achieving certification in addition you must act in accordance with the isaca s ethical and professional standards | |
how long does it take to become a certified information systems auditor | the most direct timeline to become a cisa is five years as the isaca requires half of a decade of professional experience on your application there are exceptions to this rule and candidates can apply for a waiver in addition there are educational requirements to satisfy as part of the certification process | |
what does a certified information systems auditor do | a cisa oversees manages and protects a company s information systems it or related departments this includes performing audits of processes and products performing risk mitigation techniques to prevent security breaches and collaborating with other departments to ensure their technology needs are being met without comprising security or creating system vulnerabilities the bottom linethe certified information systems auditor cisa certificate demonstrates professional proficiency in the field of it security and risk mitigation cisa must have years of professional experience and pass a 150 question exam to demonstrate this knowledge once armed with a cisa license auditors may enjoy greater job security better knowledge of their industry and continual growth through cpe requirements | |
what is a certified management accountant cma | certified management accountant cma is an accounting designation that signifies expertise in financial accounting and strategic management the professionals who obtain this designation are colloquially known as cmas and are qualified for a variety of roles ranging from financial controller to chief financial officer cfo | |
how certified management accountants cmas work | the certified management accountant cma certification which is issued by the institute of management accountants ima builds on financial accounting proficiency by adding management skills that aid in making strategic business decisions based on financial data oftentimes the reports and analyses prepared by certified management accountants cmas will go above and beyond those required by generally accepted accounting principles gaap for example in addition to a company s required gaap financial statements cmas may prepare additional management reports that provide specific insights useful to corporate decision makers such as performance metrics on specific company departments products or even employees unlike the certified public accountant cpa certification cma certification is not mandatory for many jobs in finance as with other financial designations such as certified public accountant cpa or chartered financial analyst cfa certifications certified management accountants cmas are subject to a strict code of ethics 2 to obtain the cma candidates must have a bachelor s degree or a related professional certification as well as two years of continuous work experience in a related field 3 candidates must also pass a rigorous exam which typically requires over 300 hours of preparation according to the financial industry regulatory authority finra cmas must also hold active membership in the institute of management accountants 4real world example of a certified management accountant cma dorothy is an entrepreneur who manages a small construction supply company recently she was invited to bid on a contract that would require her to significantly increase her number of employees although she felt that the project would be a great opportunity for her business she wondered whether she would have the financial reporting capacity to effectively manage that increased headcount to help address this problem dorothy decides to hire dennis a certified management accountant cma to obtain his designation dennis had to pass a two part exam covering subject areas such as budgeting and forecasting performance management cost measurement and internal controls in interviewing for the position dennis argues that these skills would allow him to support dorothy in assessing the costs and benefits of this new project while also effectively managing the costs and logistics involved in servicing new customers with dennis s expertise dorothy is able to increase her team size without losing oversight of her internal costs and procedures on the contrary dennis s skill set provides newfound transparency to her business allowing dorothy to better assess the performance of individual team members and the profitability of specific projects in the future dennis s combination of accounting skills and fluency with managerial decision making puts him in a good position to adopt executive positions within the company or at another employer special considerationscertified management accountants cmas and other accountants are expected to be in growing demand over the coming years between 2019 and 2029 the hiring of accountants is projected to grow by 4 due to the absence of standardization this growth is expected to continue in the management accounting sector because companies have considerable freedom in designing management accounting systems 5 | |
what is a certified public accountant cpa | a certified public accountant cpa is a licensed professional who has passed an examination administered by a state s board of accountancy state cpa exams are created under guidelines issued by the american institute of certified public accountants aicpa the uniform cpa exam can only be taken by accountants who already have professional experience in the field and a bachelor s degree other countries have equivalent certifications notably the chartered accountant ca designation created in scotland and now used in many countries role and responsibilities of a cpanot all accountants are cpas accountants who are cpas are licensed by their state s board of accountancy after passing the uniform cpa exam cpas prepare reports that accurately reflect the business dealings of the companies and individuals that hire them many prepare tax returns for individuals or businesses and advise them on ways to minimize taxes obtaining the cpa designation requires a bachelor s degree typically with a major in business administration finance or accounting other majors are acceptable if the applicant meets minimum requirements for accounting courses candidates are required to complete 150 hours of education and have no fewer than two years of public accounting experience to receive the cpa designation a candidate also must pass the uniform cpa exam keeping the cpa designation requires completing a number of continuing education hours 1the cpa examthe cpa exam has 276 multiple choice questions 28 task based simulations and three writing portions these are divided into four main sections multiple choice questions count for 50 of the total score and tasked based simulations count for 50 in three of the four sections the section with writing tasks are worth 15 and task based simulations count for 35 it takes a score of at least 75 to pass each section 3candidates have four hours to complete each section with a total exam time of 16 hours 4 each section is taken individually and candidates can choose the order in which they take them but must pass all four sections of the exam within 18 months 5international equivalency exams are offered so that cpas can work in countries other than the one in which they were certified 6cpa career pathscpas have a wide range of career options available in public accounting that is working for an accounting firm corporate accounting working inside a company or government service individuals with the cpa designation can also move into executive positions such as controller or chief financial officer cfos regardless of their employer most cpas compile maintain and review financial statements and related transactions many cpas file tax forms or returns for individuals and businesses cpas are authorized to perform and sign off on audits though known for their role in income tax preparation cpas can specialize in other areas such as auditing bookkeeping forensic accounting managerial accounting and even aspects of information technology it a cpa license isn t required to work in corporate accounting or for private companies however public accountants individuals working for firms such as deloitte or ernst young that provide accounting and tax related services to businesses must hold cpa designations cpa ethicscertified public accountants are subject to a code of ethics the aicpa requires that all cpa designation holders adhere to the code of professional conduct which lays out the ethical standards cpas must adhere to 7the enron scandal is an example of cpas not adhering to the code arthur andersen company executives and cpas were charged with illegal and unethical accounting practices federal and state laws require cpas to maintain independence when performing audits and reviews while consulting at enron arthur andersen cpas did not maintain independence and performed both consulting services and auditing services which violates the cpa code of ethics 8the cpa designation became more important after the sarbanes oxley sox act of 2002 which was passed partly in response to corporate financial scandals like the enron affair 9to give yourself the best chance possible when taking the exam consider taking one of the best cpa prep courses history of the cpa designationin 1887 a group of accountants created the american association of public accountants aapa to define moral standards for the accounting industry and u s auditing standards for local state and federal governments private companies and nonprofits renamed several times over the years the organization has been known as the american institute of certified public accountants aicpa since 1957 the first cpas received licenses in 1896 1011in 1934 the securities and exchange commission sec required all publicly traded companies to file periodic financial reports endorsed by members of the accounting industry 12 the aicpa established accounting standards until 1973 when the financial accounting standards board fasb was launched to set standards for private companies 13the accounting industry thrived in the late 1990s due to the expansion by large accounting firms into various forms of consulting the enron scandal in 2001 resulted in major changes in the accounting industry not least the collapse of arthur andersen one of the nation s top accounting firms 148 since the sarbanes oxley act passed in 2002 accountants have been subject to tougher restrictions concerning their consulting assignments 9 | |
what are the responsibilities of a cpa | cpas compile maintain and review financial statements and related transactions they also prepare tax returns for individuals and businesses they are authorized to perform audits some cpas specialize in areas like forensic accounting personal financial planning and taxation a cpa is required to complete continuing education requirements and uphold a standard of professional ethics 17 | |
what can cpas do that accountants cannot | a cpa is an accountant who has earned a professional credential their main responsibilities are the same and involve preparing or reviewing financial documentation for businesses or individuals cpas are authorized to take on certain other roles these include performing audits of public u s companies and preparing audited financial statements for a company such as a balance sheet or an income statement | |
which is better an mba or cpa | the master of business administration mba is an academic degree in management if you are interested in starting or running a business the mba program will help you prepare the certified public accountant cpa is a license for working accountants that signals a degree of professional expertise if you are an accountant or want to be one it s a valuable tool to help you move up the ladder | |
is becoming a cpa worth it | earning the cpa credential is a big time commitment and the exam is challenging still those with a cpa earn 25 more on average than non cpa accountants 15 also accountants with a cpa certification tend to advance to positions of more responsibility within one to two years and often are promoted to senior level jobs within a few years after that the bottom lineyou can be an accountant without being a certified public accountant but earning a cpa license adds a valuable credential to your resume it means you ve passed a nationally recognized test that has been modified to reflect your state s regulations it opens the way to jobs that other accountants can t take on such as performing audits of public companies | |
what is ceteris paribus | ceteris paribus literally holding other things constant is a latin phrase that is commonly translated into english as all else being equal a dominant assumption in mainstream economic thinking it acts as a shorthand indication of the effect of one economic variable on another provided all other variables remain the same constant in the scientific sense if we claim that one variable influences another ceteris paribus we are essentially controlling for the effects of some other variables investopedia katie kerpelunderstanding ceteris paribusin the fields of economics and finance ceteris paribus is often used when making arguments about cause and effect an economist might say raising the minimum wage increases unemployment increasing the supply of money causes inflation reducing marginal costs boosts economic profits for a company or establishing rent control laws in a city causes the supply of available housing to decrease of course these outcomes can be influenced by a variety of factors but using ceteris paribus allows all other factors to remain constant focusing on the impact of only one ceteris paribus assumptions help transform an otherwise deductive social science into a methodologically positive hard science it creates an imaginary system of rules and conditions from which economists can pursue a specific end put another way it helps the economist circumvent human nature and the problems of limited knowledge most though not all economists rely on ceteris paribus to build and test economic models in simple language it means the economist can hold all variables in the model constant and tinker with them one at a time ceteris paribus has its limitations especially when such arguments are layered on top of one another nevertheless it is an important and useful way to describe relative tendencies in markets 1applications of ceteris paribussuppose that you wanted to explain the price of milk with a little thought it becomes apparent that milk costs are influenced by numerous things the availability of cows their health the costs of feeding cows the amount of useful land the costs of possible milk substitutes the number of milk suppliers the level of inflation in the economy consumer preferences transportation and many other variables so an economist instead applies ceteris paribus which essentially says if all other factors remain constant a reduction in the supply of milk producing cows for example causes the price of milk to rise as an example take the laws of supply and demand economists say the law of demand demonstrates that ceteris paribus more goods tend to be purchased at lower prices or that if demand for any given product exceeds the product s supply ceteris paribus prices will likely rise in this situation the price of an item is the only variable that should change all else should remain ceteris paribus if only the price were to change we can appropriately forecast the outcome because of the laws of supply and demand in general economists and other social scientists will report how variables influence one another while holding all else constant so if we say that low unemployment is associated with higher inflation ceteris paribus it means holding everything else constant like gdp growth balance of trade money supply and so on however each of these other factors among others also can play into inflation we can also say the same thing about the minimum wage ceteris paribus raising the minimum wage is thought to lower employment as businesses cut costs but this also ignores many other social and political factors for example employees may work harder and be more productive with higher wages or better paid workers may spend more and increase aggregate demand there is often an inverse relationship between interest rates and the demand for borrowing this is because higher interest rates cause loans to become more expensive therefore ceteris paribus higher interest rates cause decreased demand for debt of course other factors consumer demand consumer preference consumer creditworthiness are all considers that may change the outcome of the statement however when all factors regarding the borrower are isolated higher interest rates mean higher loan costs which decreases demand there are a tremendous amount of factors that go into a unit s production this includes delivery of raw materials labor hours equipment availability ingredient pricing packing and delivery or distribution therefore when considering how an item may move throughout the supply chain process economists may make claims on outcomes assuming all other variables are constant for example ceteris paribus higher raw material prices will decrease manufacturing supply if companies don t increase their production budgets this claim does not consider labor hours packaging or delivery since economic variables can only be isolated in theory and not in practice ceteris paribus can only ever highlight tendencies not absolutes ceteris paribus and economic sciencetwo major publications helped move mainstream economics from a deductive social science based on logical observations and deductions into an empirically positivist natural science the first was l on walras elements of pure economics published in 1874 which introduced general equilibrium theory 2 the second was john maynard keynes the general theory of employment interest and money first published in 1936 which created modern macroeconomics 3in an attempt to be more like the academically respected hard sciences of physics and chemistry economics became math intensive variable uncertainty however was a major problem economics could not isolate controlled and independent variables for math equations there was also a problem with applying the scientific method which isolates specific variables and tests their interrelatedness to prove or disprove a hypothesis economics does not naturally lend itself to scientific hypothesis testing as does physics in the field of epistemology scientists can learn through logical thought experiments also called deduction or through empirical observation and testing also called positivism geometry is a logically deductive science physics is an empirically positive science unfortunately economics and the scientific method are naturally incompatible no economist has the power to control all economic actors hold all of their actions constant and then run specific tests no economist can even identify all of the critical variables in a given economy for any given economic event there could be dozens or hundreds of potential independent variables enter ceteris paribus mainstream economists construct abstract models where they pretend all variables are held constant except the one they want to test this style of pretending called ceteris paribus is the crux of general equilibrium theory 1as economist milton friedman wrote in 1953 theory is to be judged by its predictive power for the class of phenomena which it is intended to explain 4 by imagining all variables save one are held constant economists can transform relative deductive market tendencies into absolute controllable mathematical progressions human nature is replaced with balanced equations ceteris paribus drives supply and demand curve expectations the relationship between quantity and price can only be determined if the variables in question are influenced and the rest are held constant benefits of ceteris paribussuppose an economist wants to prove a minimum wage causes unemployment or that easy money causes inflation they could not possibly set up two identical test economies and introduce a minimum wage law or start printing dollar bills so the positive economist charged with testing their theories must create a suitable framework for the scientific method even if this means making very unrealistic assumptions the economist assumes buyers and sellers are price takers rather than price makers the economist also assumes actors have perfect information about their choices since any indecision or incorrect decision based on incomplete information creates a loophole in the model if the models produced in ceteris paribus economics appear to make accurate predictions in the real world the model is considered successful if the models do not appear to make accurate predictions they are revised this can make positive economics tricky circumstances might exist that make one model look correct one day but incorrect a year later some economists reject positivism and embrace deduction as the principal mechanism of discovery the majority however accept the limits of ceteris paribus assumptions to make the field of economics more like chemistry and less like philosophy as economists compile data from various scenarios static supply and demand charts are formed to devise a strategic plan of pricing supply or other economic factors as a single variable is tweaked a demand curve should be formed that allows for theoretical pricing application without having to go to market with those actual prices without ceteris paribus many scenarios that are analyzed simply would not be able to happen for example consider the situation where only variable along a supply chain changes and all other variables remain static and unchanged this situation would not able to occur in real life as so many aspects of the supply chain are uncontrollable therefore ceteris paribus allows for economists and analysts to devise scenarios that would otherwise not be able to exist criticisms of ceteris paribusceteris paribus assumptions are at the heart of nearly all mainstream microeconomic and macroeconomic models even so some critics of mainstream economics point out that ceteris paribus gives economists the excuse to bypass real problems about human nature 5 though this can be a benefit for theoretical application these scenarios also may never play out in the real world which contests how applicable some findings may be let s go back to the example of supply and demand one of the favorite uses of ceteris paribus every introductory textbook on microeconomics shows static supply and demand charts where prices are given to both producers and consumers that is at a given price consumers demand and producers supply a certain amount this is a necessary step at least in this framework so that economics can assume away the difficulties in the price discovery process but prices are not a separate entity in the real world of producers and consumers rather consumers and producers themselves determine prices based on how much they subjectively value the good in question versus the quantity of money for which it is traded economists admit these assumptions are highly unrealistic and yet these models lead to concepts such as utility curves cross elasticity and monopoly antitrust legislation is actually predicated on perfect competition arguments the austrian school of economics believes ceteris paribus assumptions have been taken too far transforming economics from a useful logical social science into a series of math problems 5financial consultant frank shostak wrote that this supply demand framework is detached from the facts of reality 6 rather than solving equilibrium situations he argued students should learn how prices emerge in the first place he claimed any subsequent conclusions or public policies derived from these abstract graphical representations are necessarily flawed like prices many other factors that affect the economy or finance are continuously in flux independent studies or tests may allow for the use of the ceteris paribus principle but in reality with something like the stock market one can never assume all other things being equal there are too many factors affecting stock prices that can and do change constantly you can t isolate just one as nice as a black and white world would be the truth is there are too many variables tied to human nature humans are naturally unpredictable and act in irrational ways though economic laws may make sense there are situations in which people don t do what is theoretically the best for them to do in these cases items like the law of supply and the law of demand may be broken causing any analysis to falter employs a scientific method approach to solving for variablesuses positive economics that can test theories | |
is extensively used in both macroeconomics and microeconomics | allows for otherwise impossible situations to be analyzedmay aid in helping form price discovery or demand chartsmay represent impossible situations which may hold little to not analytical valueoften omit the human element as it assumes all actions are rational and follow strict economic law | |
does not consider the subjective value consumers may pursue | may detract from focusing on the aspects of a situation that do change in tandem with other variablesceteris paribus vs mutatis mutandiswhile somewhat similar in assumption aspects ceteris paribus is not to be confused with mutatis mutandis translated as once necessary changes have been made it is used to acknowledge that a comparison such as the comparison of two variables requires certain necessary alterations that are left unsaid because of their obviousness in contrast ceteris paribus excludes any and all changes except for those that are explicitly spelled out more specifically the phrase mutatis mutandis is largely encountered when talking about counterfactuals used as a shorthand to indicate initial and derived changes that have been previously discussed or are assumed to be obvious the ultimate difference between these two contrasting principles boils down to correlation versus causation the principle of ceteris paribus facilitates the study of the causal effect of one variable on another conversely the principle of mutatis mutandis facilitates an analysis of the correlation between the effect of one variable on another while other variables change at will 7 | |
what is ceteris paribus in economics | ceteris paribus in economics is a reference to how one isolated variable may change an economic environment assuming all other variables remain the same in economics ceteris paribus is often highly hypothetical as national economics and macroeconomic conditions are highly intricate and complex however ceteris paribus is the practice of seeing how a single economic concept i e inflation can impact broader concepts | |
what is an example of ceteris paribus in economics | all things being equal if the price of milk increases people will buy less milk this assumption ignores how other substitutes are behaving how household income is behaving or non economic factors such as the health benefits of milk ceteris paribus people will buy less of a product if the price is higher | |
is ceteris paribus a law | ceteris paribus is considered natural law it is not codified by any government instead it is thought to naturally occur based on how certain variables interact for example if the united states drilled for more oil domestically there would be more supply for gasoline and the price of gas would drop there is no law that defines that this would happen it s simply assumed as the outcome based on how situations naturally flow together | |
what does ceteris paribus help find | ceteris paribus helps determine what variables impact outcomes by holding one variable constant or assuming that only one variable changes it is inferred that any corresponding change is directly correlated to that single variable ceteris paribus may help drive metrics on customer taste customer preference consumer spending the price of goods market expectations or government policy the bottom lineceteris paribus is a broad term that defines what variables are changing or what variables are remaining the same in a given situation often to isolate only one variable economists cite ceteris paribus to clarify that their assumptions on a given outcome are only valid if all other variables are remaining the same though ceteris paribus is truly unlikely due to the complexity of macroeconomic factors it may still be useful in testing variables and determining what causes outcomes | |
what is a chair | a chair is an executive elected by a company s board of directors who is responsible for presiding over board or committee meetings a chair often sets the agenda and has significant sway as to how the board votes the chair ensures that meetings run smoothly and remain orderly and they work at achieving a consensus in board decisions understanding a chairthe chair heads up the board of directors for a company a board of directors is a group of individuals elected to represent shareholders a board s mandate is to establish policies for corporate management and oversight making decisions on major company issues the board of directors should be a representation of both management and shareholder interests and typically consists of both internal and external members every public company must have a board of directors the board is tasked with making important decisions which can include corporate officer appointments executive compensation and dividend policy as a result the chair has significant power and clout when it comes to influencing decisions made by the board the chief executive officer ceo runs the company and is the person whose company executives report to but the ceo is appointed by the board so a chair can influence who will be chosen as ceo or to lead the company however in most cases the chair doesn t get involved with the ceo s responsibilities which helps maintain clarity of roles and separation of powers as more women take on chair positions at leading organizations some confusion has arisen over the correct title to use i e chair or chairwoman christine lagarde who was managing director of the international monetary fund imf decided on the term madame chair of the executive board for the position 1chair vs ceothe chair is a different position than that of the ceo and can be either a non executive or executive position in some companies the roles of ceo and chair are combined which can reduce transparency and accountability due to fewer checks and balances which are created by having two separate positions with separate job functions while the chair of the board has several supervisory abilities the ceo s primary responsibilities include all major corporate decisions ranging from day to day operations to managing company resources serving as the main point of communication between the board of directors and other executives also a ceo often has a position on the board the ceo s role depends on the size culture and industry of the company for example in small companies the ceo will often take on a more hands on role making a range of lower level choices such as interviewing and hiring of staff in larger e g fortune 500 companies the ceo typically deals with macro level strategy and the direction of growth other tasks are delegated to division executives ceos set the tone and the vision for their organization and are responsible for executing the strategy to achieve that vision typically ceos of major corporations are well known to investors shareholders and analysts while chairmen or chairpersons usually remain out of the spotlight although the ceo runs the company the chair is considered a peer with the other board members and it s possible to overrule a ceo s decisions if the board votes together the chair can have significant power and clout when it comes to influencing decisions made by the board including choosing the ceo examples of a chairjp morgan chase co jpm combines the positions with jamie dimon as both the ceo and chair of the financial services company 2apple inc aapl splits the roles with tim cook holding the ceo position while arthur d levinson holds the chair position mr levinson was the former ceo and chair of genentech and is currently the ceo of calico 34on the other hand meta meta formerly facebook has one role for mark zuckerberg as founder chair and ceo of the social media giant 5as stated earlier some companies have the ceo and chair roles as separate positions while others combine the roles in the case of founder led companies it s common to see the founder have multiple roles including chair and ceo however over time the roles might be bifurcated in founder led companies if the financial results are not up to par or the founder wants to move on to other endeavors | |
what is channel stuffing | channel stuffing is a deceptive business practice used by a company to inflate its sales and earnings figures by deliberately sending retailers along its distribution channel more products than they are able to sell to the public channel stuffing typically would take place immediately prior to a reporting period such as quarter end or year end so that management fearful of bad consequences to their compensation can make their numbers | |
how channel stuffing works | channel stuffing refers to the practice of a company shipping more goods to distributors and retailers along the distribution channel than end users are likely to buy in a reasonable time period this is usually achieved by offering lucrative incentives including deep discounts rebates and extended payment terms to persuade distributors and retailers to buy quantities in excess of their current needs usually distributors retain the right to return any unsold inventory which calls into question whether a final sale has actually occurred stuffing the distribution channel is frowned upon by the securities and exchange commission sec as a practice used by companies to accelerate revenue recognition to reach short term revenue and earnings targets and as such misleading to investors by channel stuffing distributors temporarily increase sales figures and related profit measures for a particular period this activity also causes an artificial bump up of accounts receivables however unable to sell the excess products retailers will send back the surplus goods instead of cash to the distributor who then must readjust its accounts receivable if it adheres to gaap procedure and ultimately its bottom line in other words stuffing always catches up with the company because it cannot maintain sales at the rate it is stuffing channel stuffing is not confined to the wholesale and retail trade it can take place in the industrial sector high tech industry and the pharmaceutical industry as well valeant pharmaceuticals is an egregious example of a company found guilty in 2016 of channel stuffing channel stuffing accusations have also been levied against the automobile industry which sends too many new cars to dealerships than demand warrants in order to inflate sales figures this fraudulent practice is usually done in an attempt to hit compensation targets or to raise the value of the stock or prevent its fall upon release of quarterly or annual results an example of channel stuffingin august of 2004 pharmaceutical company bristol meyers squibb nyse bmy agreed to pay 150 million to settle a channel stuffing suit by the sec 1court documents reveal the following in addition to paying its multi million dollar fine in march 003 bristol myers restatedpior financial statements and disclosed its channel stuffing activities and improper accounting 2 | |
what is chapter 11 | chapter 11 is a form of bankruptcy that involves the court supervised reorganization of a debtor s assets and liabilities it is most commonly used by businesses and is also referred to as a reorganization bankruptcy | |
how chapter 11 bankruptcy works | chapter 11 is named after a section of the u s bankruptcy code companies that file chapter 11 do so in order to obtain time to reorganize and make a fresh start during a chapter 11 proceeding the court will help a business restructure its debts and assets in most cases the company can continue to operate many large u s companies have filed for chapter 11 bankruptcy at one time or another to stay afloat they include such well known names as general motors united airlines and texaco as well as thousands of other companies of all sizes corporations and partnerships are the most common filers of chapter 11 but in rare cases individuals with a lot of debt who do not qualify for chapter 7 or 13 may be eligible for chapter 11 however the process is not a speedy one as mentioned the debtor called a debtor in possession can generally run the business more or less as usual however in cases involving dishonesty fraud or gross incompetence a court appointed trustee will step in to run the company throughout the bankruptcy proceeding the business is not allowed to make certain decisions without the permission of the courts these include the sale of assets other than inventory starting or terminating a rental agreement and stopping or expanding business operations the court also has control over decisions related to retaining and paying attorneys and entering contracts with vendors and unions finally the debtor cannot arrange a loan that will commence after the bankruptcy is complete in chapter 11 the business or individual filing for bankruptcy has the first chance to propose a reorganization plan these plans may include downsizing business operations to reduce expenses as well as renegotiating debts in some cases plans will involve liquidating all assets to repay creditors if the suggested path is deemed feasible and fair the court will accept it and the process will move forward chapter 11 and small businessthe small business reorganization act of 2019 which went into effect on feb 19 2020 added a new subchapter v to chapter 11 designed to make bankruptcy easier for small businesses the act defined eligible businesses as entities with less than about 2 7 million in debts that also meet other criteria the cares act of 2020 temporarily increased to the debt limit to 7 5 million for bankruptcy cases filed on or after march 27 2020 then in 2022 the bankruptcy threshold adjustment and technical corrections act btatca extended the temporary limit for cases filed on or after march 27 2022 for another two years or until march 27 2024 subchapter v imposes shorter deadlines for completing the bankruptcy process allows for greater flexibility in negotiating restructuring plans with creditors and provides for a private trustee who will work with the small business debtor and its creditors to facilitate the development of a consensual plan of reorganization the justice department says because chapter 11 is the most expensive and complex form of bankruptcy companies generally explore all alternative routes before filing for one chapter 11 examplein january 2019 gymboree group inc a popular children s clothing chain announced that it had filed for chapter 11 and was closing all of its gymboree gymboree outlet and crazy 8 stores in canada and the united states according to a press release from gymboree the company had received a commitment for a debtor in possession financing 30 million in new loans provided by ssig and goldman sachs specialty lending holdings and a roll up of all of gymboree s obligations under a prepetition term loan credit agreement it added that it was continuing to pursue a going concern sale of its janie and jack business and a sale of the intellectual property and online platform for gymboree gap inc announced in march 2019 that it had purchased janie and jack in early 2020 gymboree made its return as a shop in a shop in children s place locations and with a new online store this was the second time in two years that the gymboree group inc had filed for bankruptcy under chapter 11 the first occurred in 2017 when the company was able to successfully reorganize and significantly lower its debts | |
what are all the chapters of the u s bankruptcy code | there are currently six chapters in the u s bankruptcy code they are chapter 7 liquidation for individuals or businesses chapter 9 for municipalities chapter 11 reorganization usually for businesses chapter 12 for family farmers and fishermen chapter 13 reorganization for individuals and chapter 15 international bankruptcies of these chapter 7 chapter 11 and chapter 13 are the most common | |
what is the difference between chapter 7 and chapter 11 | chapter 7 also referred to as liquidation bankruptcy is when the court appoints a trustee to oversee the sale of as many of debtor s assets as are needed to pay their creditors unsecured debt such as credit card debt is usually erased however chapter 7 does not forgive any tax obligations alimony or child support or student loans filers are allowed to keep certain exempt property by contrast chapter 11 is a form of bankruptcy that involves a reorganization of a debtor s financial affairs it is most often used by companies though it is available to some individuals as well the main difference is that the entity filing for bankruptcy remains in control of more of their assets as long as they comply with the agreed upon plan | |
are there advantages to filing chapter 11 | the biggest advantage is that the entity usually a business can continue operations while going through the reorganization process this allows it to generate cash flow that can aid in the repayment process the court also issues an order that keeps creditors at bay most creditors are receptive to chapter 11 as they stand to recoup more if not all of their money over the course of the repayment plan than if the company simply went out of business | |
what are the disadvantages of filing chapter 11 | chapter 11 bankruptcy is the most complex of all bankruptcy types it is also usually the most expensive for a company that is struggling to the point where it is considering filing for bankruptcy the legal costs alone might be onerous plus the reorganization plan has to be approved by the bankruptcy court and must be manageable enough that the business can reasonably pay off the debt over time the bottom linechapter 11 can allow a business that is experiencing serious financial difficulties to regroup and get back on track however it is complex costly and time consuming for these reasons a company should consider chapter 11 reorganization only after exploring other possible alternatives | |
what is a chart of accounts | a chart of accounts coa is an index of all of the financial accounts in a company s general ledger in short it is an organizational tool that lists by category and line item all of the financial transactions that a company conducted during a specific accounting period | |
how a chart of accounts works | large and small companies use a coa to organize their finances and give interested parties such as investors and shareholders a clear view and understanding of their financial health separating expenditures revenue assets and liabilities helps to achieve this and ensures that financial statements are in compliance with reporting standards 1here is a way to think about a coa as it relates to your own finances say you have a checking account a savings account and a certificate of deposit cd at the same bank when you log in to your account online you ll typically go to an overview page that shows the balance in each account similarly if you use an online program that helps you manage all your accounts in one place like mint or personal capital you re looking at basically the same thing as a company s coa you can see all your assets and liabilities on one page there is no single format for a chart of accounts typically they all follow the essential structure described below but the final structure and look will depend on the type of business and its size the coa is typically set up to display information in the order that it appears in financial statements that means that balance sheet accounts are listed first and are followed by accounts in the income statement 2these primary accounts of assets liabilities shareholders equity revenue and expenses can then be broken down into sub accounts such as operating revenues operating expenses non operating revenues and non operating losses in addition the operating revenues and operating expenses accounts might be further organized by business function and or by company divisions 2as an example a small company coa might include these sub accounts under the primary assets primary liabilities and primary shareholders equity accounts 3assetsliabilitiesshareholders equityto make it easy for readers to locate specific accounts or to know what they re looking at instantly each coa typically contains identification codes names and brief descriptions for accounts this coding system is important because the coa can display many line items for each transaction in every primary account for example a company may decide to code assets from 100 to 199 liabilities from 200 to 299 equity from 300 to 399 and so forth those could then be broken down further into e g current assets 110 119 and current liabilities 210 219 the number of figures used depends on the size and complexity of a company and its transactions many organizations structure their coas so that expense information is separately compiled by department thus the sales department engineering department and accounting department all have the same set of expense accounts examples of expense accounts include the cost of goods sold cogs depreciation expense utility expense and wages expense 45special considerationscoas can differ and be tailored to reflect a company s operations however they also must respect the guidelines set out by the financial accounting standards board fasb and generally accepted accounting principles gaap 6of crucial importance is that coas are kept the same from year to year doing so ensures that accurate comparisons of the company s finances can be made over time 7examplehere s one example of a chart of accounts 8my accounting course | |
why is a chart of accounts important | it is a very important financial tool that organizes a lot of financial transactions in a way that is easy to access because transactions are displayed as line items they can quickly be found and assessed this is crucial for providing investors and other stakeholders a bird s eye view of a company s financial data | |
is there a single coa format | not precisely a company can use create or modify any format that it wishes but experience has shown that the most common format organizes information by individual account and assigns each account a code and description what s important is to use the same format over time for the consistency of period to period and year to year comparisons | |
is a chart of accounts required | no but it s considered necessary by all kinds of companies seeking to categorize all of their transactions so that they can be referenced quickly and easily the bottom linea chart of accounts is a document that numbers and lists all the financial transactions that a company conducts in an accounting period the information is usually arranged in categories that match those on the balance sheet and income statement the chart of accounts is a very useful tool for the access it provides to detailed financial information for individuals within companies and others including investors and shareholders | |
what is a chartered accountant ca | a chartered accountant ca is a financial professional who is qualified to execute certain accounting procedures it also refers to an accounting designation granted internationally to individuals aside from the united states cas work in four main areas including applied finance financial accounting and reporting management accounting and taxation their responsibilities may include filing taxes and auditing financial statements this designation is the same as the certified public accountant cpa designation in the united states duties and responsibilities of chartered accountants cas as noted above a chartered accountant is a financial professional who works in the field of accounting the designation held by cas is the international equivalent of a cpa in the united states cas earn their designation based on the rules and regulations of the country in which they work chartered accountants work both in the private and public sectors for organizations businesses governments and individuals to help them meet their financial needs they generally focus on one of four areas depending on their area of focus cas may handle one aspect of a company s business such as auditing financial statements others may oversee all of a company s accounting needs or they may work as freelancers who handle accounting matters for multiple clients the ca designation proves cas are qualified to file a business s tax return audit financial statements and business practices and offer advisory services to clients cas and cpas perform very similar tasks on a day to day basis | |
how to become a chartered accountant | different countries impose different rules and regulations on the process of becoming a ca which means there is no streamlined path to becoming designated but cas generally need a university degree in a related field such as math accounting or finance special coursework may also be required to get certified for example prospective accountants in new zealand must complete a recognized academic program such as a three year bachelor s degree or an accredited master s degree covering accounting and business topics candidates must then complete a practical experience program before they enroll in and complete a ca program these programs train candidates in modern accounting methods 2in canada people who wish to become chartered professional accountants must complete an undergraduate degree with coursework in business and accounting areas then they can enroll in a professional education program for chartered professional accountants 3chartered accountants claim to be the first accounting group to form a professional body in 1854 in scotland 4 there are now many organizations that cas belong to across the world including the institute of chartered accountants in england and wales and the canadian institute of chartered accountants job outlook and salary for casthe job outlook for chartered accountants depends on the country in which you are employed but there is generally a strong demand for cas because of the skills they possess including analytical and technical skills communication skills time management and problem solving in canada the median hourly salary for cas was 38 46 in 2021 the national job market is characterized as good when taking provincial markets into account the period between 2022 and 2031 is expected to see 88 000 new jobs in this field 3the bureau of labor statistics bls in the united states combines accountants and auditors into a single category the job outlook is expected to be 6 between 2021 and 2031 which is as fast as average it s expected that there will be 81 800 additional jobs created during this 10 year period the median annual salary was 77 250 in 2021 5chartered accountant ca vs certified public accountant cpa the main difference between cas and chartered public accountants is that the cpa is a designation used in the united states while ca is used in many other countries the cpa abbreviation can refer to different types of accounting professionals in different parts of the world for example in canada a cpa is a chartered professional accountant in australia a cpa is a certified practicing accountant members of chartered professional accountants canada chartered accountants australia and new zealand and chartered accountants ireland have a reciprocity agreement with the united states if these ca professionals pass a test their qualifications can transfer to the united states where they may work as cpas | |
what s the difference between a chartered accountant and a certified public accountant | the primary difference between chartered accountants and certified public accountants is that these designations are used in different parts of the world but they do perform many of the same functions professionals with these designations work in the public and private sector for corporations individuals governments and organizations the are responsible for filing taxes applied finance auditing and financial reporting and management accounting in some countries cas can pass a test to work in the united states as cpas | |
how do i become a chartered accountant | the requirements to become a chartered accountant depend on the country where you live but in most cases you must have at least an undergraduate degree in a related field such as accounting or finance and you must complete special coursework to get your designation or certification work experience also helps so if you have the opportunity to do an internship don t pass up the chance | |
what is the job outlook for accountants and how much do they earn | according to the bureau of labor statistics accountants earned an average of 77 250 annually in 2021 the industry is expected to grow 6 between 2021 and 2031 with an additional 81 800 jobs during that time 5the bottom linedemand for accountants is strong and steady and there are a number of different options available for anyone who s looking for a career in the field including chartered accountants these professionals have special certifications in different countries and have similar job responsibilities as chartered public accountants in the u s you can find work as a ca in the public or private sector with businesses governments individual taxpayers and or organizations | |
what is a chartered financial analyst cfa | the chartered financial analyst cfa charter is a globally recognized professional designation offered by the cfa institute an organization that measures and certifies the competence and integrity of financial analysts candidates are required to pass three levels of exams covering areas such as accounting economics ethics money management and security analysis from 1963 through november 2023 more than 3 7 million candidates had taken the cfa exam the overall pass rate was 45 from 2014 through 2023 the 10 year average pass rate was 43 1investopedia julie bangthe basics of becoming a chartered financial analyst cfa the cfa charter is one of the most respected designations in finance and is widely considered to be the gold standard in the field of investment analysis the designation is handed out by the cfa institute which is a global nonprofit professional organization of more than 200 000 charter holders portfolio managers and other financial professionals in 164 countries and 160 local member societies 2the cfa meaning concerns the stated mission of the cfa institute which is to develop and promote a high level of educational ethical and professional standards in the investment industry before becoming a cfa charter holder a candidate must meet one of the following educational requirements after meeting the enrollment requirements the candidate must pass all three levels of the cfa program in sequential order 3 professional reference letters are also required the candidate must then become a member of the cfa institute and pay annual dues finally they must sign off annually that they are following the cfa institute code of ethics and standards of professional conduct failure to adhere to the code of ethics and standards is grounds for the possible lifetime revocation of the cfa charter 3examspassing the cfa program exams requires strong discipline and an extensive amount of studying level i exam can be taken four times a year in february may august and november level ii exam can be taken three times a year in may august and november level iii exam can be taken two times a year in february and august 4although the exams can be taken as many times as needed each exam typically requires candidates to study in excess of 300 hours 5 given the considerable amount of time that must be spent studying many candidates are deterred from continuing the cfa program after failing one of the levels the exams are difficult only 45 of candidates passed the exams between 1963 and 2023 having the right plan and the discipline to follow the plan are essential skills for passing all three exams notably 2019 saw the most test takers of any year but numbers have not rebounded from the sharp decline seen during the pandemic 6the cfa institute has over 400 test centers worldwide it has been adding testing locations in asia due to increased demand in that region 7the pass rate for the exam is below 50 in recent decades making the cfa charter one of the most difficult financial certifications to obtain 1 a minimum of 300 hours of study is recommended for each exam 8the cfa level i examination focuses on financial analysis using the tools of the 10 topic areas of the candidate s body of knowledge 8these areas are ethical and professional standards quantitative methods economics financial statement and analysis corporate finance equity investments fixed income derivatives alternative investments and portfolio management the exam format is 180 multiple choice questions to be completed within four and a half hours 8the level ii exam focuses on the valuation of various assets and emphasizes the application of investment tools and concepts in contextual situations exam questions referring to financial reporting and analysis are typically based on international financing reporting standards ifrs the exam has 22 item sets mini case studies with 88 multiple choice questions 110 questions total 9the level 3 exam focuses on effective wealth planning and portfolio management it requires the candidate to synthesize all the concepts and analytical methods learned from the entire curriculum the exam format is multi part with 11 item sets and 11 essay questions to be completed within four hours and 24 minutes the handwritten answers are graded by hand 10for the 10 year period of 2014 through 2023 1level i 40 the november 2023 level i exam saw just 35 of test takers pass allowing them to proceed to level ii level ii 45 the november 2023 level ii exam saw 44 of test takers pass allowing them to proceed to level iii level iii 52 challenges of achieving the cfa charterthe cfa charter is widely respected globally recognized and a worthwhile undertaking to accomplish however it is not a guaranteed path to riches and glory so before taking the plunge carefully consider how difficult it can be to earn one 1 the cfa is not a quick fix for an ailing career if that s why you re enrolling in the program you should carefully consider the work involved in the cfa path ahead of you you might instead choose to improve your soft skills such as your work ethic and communication capability 2 the cfa requires a huge investment of time a recommended minimum of 300 hours of studying per exam for three exams 5 if you don t pass an exam the first time you ll have to reapply your efforts you will likely sacrifice time with family friends and the hobbies that you enjoy and after committing all that time there is no guarantee that you will earn the charter 3 while cost may not be a major consideration it is worth careful deliberation a level i candidate pays a one time program enrollment fee plus an exam registration fee level ii and iii candidates pay a registration fee as well there is also the cost of the books and study programs you ll need altogether you should expect to spend several thousand dollars each time you attempt the exams | |
how long does it take to pass the cfa exams | the cfa exams are difficult and have a high failure rate each exam requires at least 300 hours of study on average 5 successful candidates take an average of four years to earn the designation 11 | |
how much do the cfa exams cost | each of the three levels of the cfa exam costs 1 250 which is reduced to 940 if you register early in addition there is a one time enrollment fee of 350 5 with early enrollment you would end up paying a total of 3 170 with regular enrollment the total cost is 4 100 | |
are the cfa exams multiple choice | the cfa level i exam is entirely multiple choice with 180 questions 8 the level ii exam consists of 22 item sets and 88 multiple choice questions 9 level iii consists of 11 constructed response essay questions and 11 item sets 10 constructed response items typically have several parts related to a case study that describes one or a series of investment challenges | |
are cfa charter holders paid more | industry reports indicate that cfa charter holders are paid more than those who have not completed the program according to test prep provider 300 hours a cfa charter holder earns on average 57 more than a level i candidate when controlling for years of work experience 12the bottom linethe financial designation of cfa is respected worldwide it can be a highly valuable achievement for those willing and able to devote the time effort and money to meeting its requirements which include studying for and passing three difficult exams | |
what is a chartered retirement planning counselor crpc | chartered retirement planning counselor crpc is a professional designation awarded by the college for financial planning to candidates who successfully complete its study program and pass a final examination a crpc designation is seen as a boost for a financial planner s job opportunities professional reputation and pay prospects successful applicants earn the right to use the crpc designation with their names for two years every two years crpc professionals must complete 16 hours of continuing education and pay a small fee to continue using the designation the role of a chartered retirement planning counselor crpc crpcs are not the same as certified financial planners cfp the cfp provides advisory services across all aspects of an individual s personal financial affairs while crpcs are focused on retirement planning the crpc program is developed with a focus on client centered problem solving applicants learn how to gain an in depth knowledge of their clients needs both before and after retirement the college for financial planning describes the program as helping financial planners and advisers define and create a road map for retirement for their clients the study program to become a crpc covers the entire retirement planning process including meeting multiple financial objectives sources of retirement income personal savings employer sponsored retirement plans income taxes retirement cash flow asset management estate planning and more individuals who have earned the crpc designation report a 9 increase in earnings according to the college graduates also can test out of two out of the six courses in the college s cfp certified professional education program completing the course can provide up to 45 hours of continuing education credits chartered retirement planning counselor program detailsas of 2023 the cost of the crpc training course is 1 350 applicants who are currently employed in the financial services industry may be eligible for a discount training is on an open enrollment basis meaning individuals may enroll and start at any time live online and on demand classes are offered candidates must pass the program s final examination within one year of enrolling and take the exam within six months of enrolling if unsuccessful additional test attempts will cost 100 each for more information see the college for financial planning s crpc informational page to enroll follow this link of the 200 or so certification that individuals may earn in financial services the toughest is said to be the chartered financial analyst designation from the cfa institute most of those who sit for the exam already have a degree and a background in finance accounting economics or business the three part exam tests knowledge of the fundamentals of investment tools asset valuation portfolio management and wealth planning crpc program course topics include once enrolled crpc candidates have access to the college s online student portal this contains written study materials streaming video lectures interactive quizzes and access to live classes when they are in session | |
how long does it take to obtain a crpc | most applicants can expect to spend between 90 and 135 hours on course related activities before sitting for the exam according to kaplan financial education classes can be taken online either live or on demand | |
what are the average income and job prospects for a crpc | the average base salary for a person with crpc certification is 72 000 according to payscale note that many people are already working in the field when they decide to go for crpc certification the college for financial planning says those professionals report a 9 increase in their earnings after acquiring certification | |
what are the various professional designations for financial professionals | there are more than 200 designations available to financial professionals but a few of the most common acronyms are enough for most of us | |
is a cfa better than a cfp | if you re headed for a career in the financial services industry which is better depends on where you want to go a chartered financial analyst cfa is skilled in investment analysis and portfolio management they often work at big investment firms mutual funds or hedge funds as they are qualified to research potential investments recommend them buy and sell them and manage them cfa certification is awarded by the cfa institute to those who pass three six hour exams renowned for their difficulty a certified financial planner cfp has an in depth knowledge of personal and family financial matters such as budgeting investing retirement planning and insurance the cfp is most often found working with individuals helping them create a long term financial plan and manage their money cfp certification is awarded by the cfp board based on a test that is taken in two sessions lasting three hours each it has 170 questions on a wide range of personal financial planning topics the bottom linethe crpc program was initially designed with the needs of baby boomers in mind that is the college of financial planning recognized the need for this generation to prepare for an increasingly complex set of concerns about retirement savings estate planning and taxes now it s gen x s turn to worry about retirement or if they re wise the generations represented by letters at the end of the alphabet might be wise to look down the road americans of whatever age may need some sound advice about retirement planning a financial advisor with a crpc designation has the right skill set |
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