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The analysis includes the effects of sanctions against Russia on Boris failed after the second election that brought economic decline in Russia and the current economic situation , finance Analysis and the structural problems that slow down economic growth
The Post-Soviet Union Russian Economy
A) Before 1991, Russia was known as one of the biggest republic with the name Russian Soviet Federative Socialist Republic (RSFSR) in the Soviet Union. However, in 1990-1991, Russia faced high inflation rate and the shortage of supply in all industries. At that time, the GDP of Russia also witnessed a decline of 17%, and retail prices soared up to 140%. Moreover, Russian political conditions were in bad shape. Consequently, the dissolution of the Soviet Union took place in 1991. In order to recover from the economic crises, Boris Yeltsin, the first President of Russia, implemented various measures for the economic growth of Russia, such as stabilisation policies and economic restructuring. These measures helped the Russian economy to focus on becoming a market-based economy market economy from a centrally planned economy. Boris Yeltsin, along with his advisors and an economist, Yegor Gaidar decided to implement measures for bringing up the Russian economy from inflation. The stabilisation measures adopted by them involved decreasing the government budget deficit, increasing government revenues, and controlling the supply of money by subsidizing credit provided to business persons. Moreover, Boris Yeltsin implemented policies for price control in the market, amended existing tax policies. He also took measures for increasing the privatisation in the country. Initially, the policies made by Boris Yeltsin failed to achieve its goals. The government then introduced monetary and fiscal policies, that helped in the implementation of the measures successfully and achievement of the goals and objectives. In the election of 1996, Boris Yeltsin was again elected as the President of Russia. However, after that, the economy began to witness another decline and Russia foreign exchange reserves decreased. By the year 1998, the currency showed a decline of 75%. As a result, the people of Russia turned against Boris, and the opposition towards him in the parliament was also high. In 2000, Vladimir Putin was elected as the President of Russia in 2000. He, along with Mikhail Kasyanov, the Prime Minister of Russia implemented initiatives and legislative measures to transform the Russian economy in a market-based economy. As a result, in 2007, the Gross Domestic Product (GDP) of Russia rose above $1 trillion. The domestic energy industry of Russia majorly contributed to the fast growth of the Russian economy. Oil exports were another factor that played a significant role in a drastic change in economic conditions of Russia. As the major contribution to the GDP of Russia came from its fossil fuels and natural resources, the impact of the global economic slowdown of 2007 was minimum. In addition, Russian trade with the United States, which is the source of the financial crisis of 2007, was very limited.
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Economics Assignment Questions
- Why the measures taken by Boris failed after the second election that brought an economic decline in Russia?
- Discuss the main reasons that increased inflation, leading to an economic crisis in Russia?
B) Dr. Allen Ronald of Cape Town, South Africa, has worked with animals for more than 25 years. He has been a racehorse groom, a boarding kennel manager, a veterinary technician, and a veterinarian. Dr. Allen Ronald started a sole proprietorship called Vet-to-Pet, a house call practice for dogs and cats. Dr. Allen Ronald visits pets in homes to provide basic veterinary services. He treats illnesses such as skin problems, allergies, ear and eye irritations, minor wounds, and abscesses. Vaccinations and lab screening tests are also administered. Dr. Allen Ronald considers his services to be a supplement to the care given by other veterinarians and is intended for those who have a hard time getting their pets to a clinic. Dr. Allen Ronald works independently and uses a van to make her house calls. He charges an initial fee, which covers her expenses traveling to the patient’s home. This fee varies depending on the distance Dr. Allen Ronald must travel. He also charges for the exam and any treatment, lab work, or medication required. He offers a sliding scale (lower, variable fees) for senior citizens on fixed incomes. He serves individuals with mobility limitations and works with seeing-eye and assistant/working dogs.
Accounting Applications: Instructions: Now that you have reviewed the case study above, answer the following questions on your own.
- What are the investments Dr. Allen Ronald has probably made in his business, and how would each affect the basic accounting equation?
- What assets might this business have? Liabilities?
- Identify and classify the accounts affected if Dr. Allen Ronald receives a cash payment for a visit.
- Identify and classify the accounts affected if Dr. Allen Ronald wrote a check to pay for new veterinary equipment to be used on the van.
C) ABC Pvt Ltd is a new small manufacturing firm for formals and casuals wears. The product range included shirts, T-Shirts (Full & Half sleeves), trousers and jeans.
As it is a newly introduced firm, the burden is on the Finance Manager to decide the accounting method for maintaining books of account.
By considering all the factors determining the cost, such as cost structure, condition of the market, type of consumer, area of distribution, the capacity of supply, product’s demand & supply, the manager has to decide and follow the Cost Accounting for maintaining factory A/c or Manufacturing A/c. Cost Accounting. It does not includes physical stock-taking, but it includes detailed & relevant cost figure of closing stock, raw material, work-in-progress and finished goods which helped the manager to find out the most suitable and accurate cost per unit. This also helped him to avoid – material wastages, use of obsolete machinery, poor planning.
He took control over the material, labour and overhead expenses, and started discussing day-to-day operations of the business, so he can take remedial actions. Moreover, the introduction of a cost reduction programme combined with operational research and value analysis leads to an improvement in economic as well as the financial condition of the firm.
Questions for Discussion
- How cost accounting helps the firm in determining the Selling Price?
- According to you, by adopting the Cost Accounting method, Can a firm prepare a Financial Statement?
- Which kind of operating policy decision can we take by using Cost Accounting Method?
- From the case, what are the benefits enjoyed by a firm, by adopting Cost Accounting?