Accounting Theory Cga

Slide 1 ACCOUNTING THEORY & CONTEMORARY ISSUES (AT1) MODULE ONE Slide 2 ACCOUNTING UNDER IDEAL CONDITIONS Part 1 – Foundation items re the course Part 2 – Present value accounting under certainty Part 3 – Present value accounting under uncertainty Part 4 – Reserve recognition accounting Part 5 – Examination question examples Part 6 – Historical cost accounting Lecture by: Dr. A. L. Dartnell, FCGA Year 2009 – 2010 2 Slide 3 PART 1 Foundation Items re the Course Different Course Financial reporting is extremely important in our everyday life. You have heard of the many irregularities that have occurred in recent years which primarily involved financial reporting. Financial reporting is controlled by standards set so that the best disclosure will take place. To fully understand the importance and necessity for these standards, you need to appreciate that they are designed so as to trade off the conflicting interests of constituencies affected by them — usually investors and managers. Note carefully that Standard Setting bodies make these trade-offs through due process. That is, standards are set in consultation with major constituencies. Devices to achieve due process include representation of major constituencies on the standard setting boards, supermajority voting, exposure drafts, and public meetings. In other words, the issues and topics are well-vetted prior to their implementation. Thus the course deals with standard setting of accounting policies by which you are guided in your work as an accountant. Slide 4 Second, students often ask why they need an accounting theory course. We need to understand the thinking and action underlying the requirements for the standards we follow. All activities in life have a theoretical background. For example, how a chef prepares a meal in a restaurant. If the theory behind the meal is good, customers return. If not, they dine elsewhere. How you cut the lawn has a theory. You follow a theoretical plan for the actions you choose. So with accounting we have theories and to understand them is extremely important for the accountant. Why we do things the way we do. We do not want to follows principles which we do not understand. and Slide 5 Third, students ask why the course writer refers so much to shares, the stock market, financing and related matters. If you consider any undertaking it has finance involved. So the writer refers a great deal to shares and the market. 3 Financial institutions are throughout the world. For example, besides banks in all countries, there are many large stock exchanges, even in Socialist countries like China. Further, smaller businesses and organizations, such as, not-for- profit entities, obtain financing from banks and credit unions, as well as other sources of money, such as, donations from the public. Thus, stocks, bonds, financial institution loans, and other financing, are the life blood of our economic activity. Without these sources of funds our economy as we know it would not survive. Thus, it is important to you as an accountant to be fully aware of the financial activity we encounter day by day and we must provide good financial information for those who have invested or loaned their money for organizations to exist for our economic benefit. Slide 6 Objective To sum up: †¢ The Course revolves around setting of standards for release of information for investors and creditors. †¢ Standards can be set by various regulatory bodies – CICA, Securities Commissions, Stock Exchanges, and other groups. †¢ Our objective is to provide the best information possible for the readers of the reports. Slide 7 Standards in the Future As you know, financial reporting for publicly-traded firms in Canada will be in accordance with International Accounting Board (IASB) standards from 2011 on. This course includes coverage of IASB standards, in the textbook, the modules, the assignments, and review material. We do have a number which are in accord with IASB standards but the task is expected to be completed by 2011. While the current edition of the textbook has few references to Canadian standards, coverage of current Canadian standards is included in the modules, as well as, the review and assignment material. Coverage of certain United States standards is also included where these differ significantly from, or are in advance of, IASB standards. All of this material is examinable unless specifically marked to the contrary. 4 In this course, material relating to specific accounting standards is largely (but not completely) at a conceptual level. Fortunately, at this level, most standards in Canada, the United States, and internationally are broadly similar, thereby reducing the amount of detail you will have to learn. However, there are some important differences, particularly with respect to current value accounting, and these will be emphasized where appropriate. It would seem that from 2011, current Canadian standards will no longer be relevant or examinable. Future versions of this course will include only IASB and relevant United States standards. Slide 8 History and Research There is an interesting rundown on the history of accounting and research in the first 15 pages of the text. Go over them to get some background for the course. Topic 1. 2 of the module notes relates to recent developments in financial accounting. It gives an excellent account leading up to the current recession and also the effect on fair value accounting which we will be dealing with in the course. Read it carefully. It is level 2 and you should know it in a general manner. Slide 9 Information Asymmetry – an important topic The aim of the course is to deal with information economics. The theme relates to the fact that some parties have an information advantage over others in business transactions. If one party is better informed than the other(s), then it is referred to as information asymmetry. We will deal with these topics later but for the moment, information asymmetry comes in two forms: Adverse selection and Moral hazard. Slide 10 †¢ Adverse selection relates to the possession of greater information by one party over the other. †¢ Adverse selection in the securities market stems from insider trading and selective release of inside information, which is releasing only the information the manager decides to release. Bad news may be withheld from public consumption. †¢ Full disclosure is the antidote. 5 Slide 11 Moral hazard relates to shirking on the part of managers, or any situation where a person cannot be observed by the employing party. For example, a trustee for a bond issue could shirk if not carrying out his/her duties as they should be. †¢ For the manager (employee) participation in the fruits of the operations, for example, profit sharing is an antidote. Slide 12 Present Value Accounting †¢ An English economics professor named Hicks sai d the way to determine the real change in economics of the firm is to take the difference between net assets at the beginning of the period and at the end of the period and that would be your profit. That would be market value. †¢ If the net assets have increased, your wealth has increased and you have made a profit. If they have decreased, you have suffered a loss and your wealth had decreased. Your welloffness has changed Slide 13 †¢ How do we measure this well-offness of the firm? The present value system is probably the best way of measuring the change in the value of the assets and comes closer to the valuation of the market value than do other systems. In real terms – what is it worth today and what will it be worth in the future. We want to start with present value accounting. It is theoretical, no doubt not fully attainable, but a target at which we can shoot. While a full presentation of present value accounting would be difficult for a organization it can be considered from an ideal situation point of view. Slide 14 Current Value Accounting However, before moving ahead, on page 4 of the text the term current value accounting is used. This is a general term used to refer to departures from our currently used historical cost accounting. It is designed to increase relevance of financial information. Present value accounting (also called value-in-use) is a departure from historical cost. The other departure is fair value accounting (also called exit value or opportunity cost). Fair value is the amount the firm could sell an asset for or the cost to dispose of a liability, that is, market value. An implication of valuing assets and liabilities at opportunity cost is that management’s success is 6 then evaluated by its ability to generate more profits from retaining assets and liabilities and using them in the business rather than by selling them. Slide 15 It should be noted that under ideal conditions, present value and market value are equal. This module concentrates on present value accounting, since this is the fundamental basis on which market values are determined. However, when ideal conditions do not hold, the present value of an asset or liability may differ from its market value. It should also be noted that for many assets market value is not readily available. Think of steamships, what is their value? The fast ferries were a perfect example when the BC Government endeavoured to sell these vessels a few years ago. There was no market level for their sale price. Also, intangibles, and power plants, are other examples. Markets for these types of items are â€Å"incomplete†. Slide 16 Present Value Calculations and Limitations First, you have done present value calculations but to refresh your memory there are two examples in the appendix. However, if you have difficulty make sure you can under present value, future value, and annuities. The financial institutions and leasing firm use present value calculations extensively. Present Value Limitations It is difficult to precisely relate the present value system to the market value. Why? There must be ideal conditions: a definite and perfect knowledge held by all. Ideal conditions would include: †¢ a definite cash flow situation a definite discount rate – what we would term a riskless rate. †¢ a definite time period. In making our statements we want to give the best picture possible. Question is – is it a reality for us to give present value figures for all our assets and liabilities? Some – not all. To repeat – in many ways ideal conditions are a theoretical target at w hich to aim. Present value accounting is an example of the more general concept of fair value accounting, where the fair value of an asset or liability is its exit price, that is, the amount the firm could sell it for (asset) or the cost to dispose of it (liability). As noted above. ) Under ideal conditions, present value and market value are the same. However, when ideal conditions do not 7 hold, the present value of an asset or liability to a prospective purchaser may substitute for market value when, as is often the case, a market value does not exist. Slide 17 Relevance and Reliability We want to make our statements as relevant as possible and as reliable as possible. Relevance To be relevant statements must give users information on future cash flows, which show what the assets are worth in the future, that is, Predictive value. Reliability To be reliable financial statements and information should be precise and as free from bias as possible. If the present value is the same as the market value then they are relevant. If the data are correct and unbiased then they are reliable. This is our aim. Slide 18 Generally relevance and reliability work against each other. With present value you get more relevance but you lose some reliability because of unknowns such as future cash flows, the discount rate, etc. With historical cost you get reliability as transactions past are the basis of the statements, but you lose some relevance as the historical cost statements become dated. Relevant financial information gives investors information about the firm's future economic prospects. Reliable financial information faithfully represents without error and bias what it is intended to represent. Be sure you understand why, except under ideal conditions, relevance and reliability must be traded off. This is the main purpose of this topic. While the text concentrates on the relevance and reliability trade-off of historical cost accounting, there are different tradeoffs for other bases of accounting. For example, cash basis accounting represents the trading off of a lot of relevance in order to attain high reliability. Conversely, current value accounting represents the trading off of a lot of reliability in order to attain high relevance. Historical cost accounting can then be thought of as a compromise between these two extremes. Increasing both relevance and reliability is extremely difficult to do. (Can you think of a financial accounting product that does this? ) The text suggests that the reporting of supplementary information (such as RRA) enables increased relevance while retaining the reliability of historical cost in the financial statements proper. 8 Slide 19 Dividend Irrelevancy †¢ Theoretical concept – if conditions are certain, i. . , if cash flows, discount rates and time periods are certain then the present value will equate to market value. Income is not a determining factor. †¢ Dividend irrelevancy is the situation where it is presumed whether or not dividends are paid to the shareholders or profit retained where it earns the same return. There is one basic rate i n the economy. It is irrelevant whether dividends are paid or retained in the company for reinvestment. Slide 20 Arbitrage †¢ What is it? If the market gets out of equilibrium under ideal conditions â€Å"Arbitrage† will bring it back into equilibrium. Briefly arbitrage is buying in one market and selling in another for a higher price, thus, making a profit. Slide 21 Example: If I buy a share for $60. 00 in the Toronto market and can sell it for $61. 00 in the New York market, above commissions and foreign exchange, I can make a dollar per share. This possibility exists because there is imperfect information. If there is no arbitrage possibility then the market is working well. If, however, there is a rectifiable difference between the two markets and information asymmetry exists, then there is a problem. Arbitrage is a means to bring the two into equilibrium. Slide 22 †¢ How does arbitrage work in our ideal situation to bring the markets back into equilibrium? †¢ What happens from an economic theory point of view? If I buy in the Toronto market share price will rise and sell in the New York market share price will fall. The supply/demand relationship will erase differences which exist. This is an important economic principle. Demand will increase in the Toronto market increasing price and supply will increase in the New York market, decreasing price, bringing them into equilibrium. 9 Slide 23 Keep your Handout available PART 2 Present Value Under Certainty Major topics Comment on Present Value Example Description and Required What is the Answer Steps – year zero Balance sheet Steps – end of first year Slide 24 Present Value Under Certainty (con’t) Income statement – first year Balance sheet – first year Steps – end of second year Income statement – second year Balance sheet second year Summary of present value under certainty Slide 25 Comment on Present Value Present value accounting – you will find this different than historical cost accounting. For example, the point in the historical cost operating cycle at which we recognize revenue is the point of sale. Note carefully – in present value accounting under ideal conditions, the present value of all future revenues (net of costs) is recognized when productive capacity is acquired (for example, plant and equipment is valued at the present value of its future net cash receipts at date of acquisition – that is, when you commence to operate). Then, income for the year is simply the accretion of discount (profit) on the opening present value. That is, under ideal conditions, it is not necessary to wait until the realization of revenue is probable, since, by definition, all future revenues are reliably known. While the text addresses this in terms of asset valuation it is also revenue recognition. The opposite side of the same coin. Another interesting point is that even if the firm pays out all of its profits as dividends, there will be cash-on-hand equal to accumulated amortization. This illustrates the point you 10 learned in accounting courses that â€Å"amortization† retains â€Å"assets† in the business. The amount is not paid out. Slide 26 Example Description of Question Let’s look at a theoretical, ideal situation. Jane bought a fixed asset and operates under ideal conditions with certainty. She anticipates it will bring cash flows of $300 at the end of the first year and $400 at the end of the second year, with a salvage value of $100 at the end of the second year. The interest rate is 9%. Jane takes out a bank loan of $150 at 8%, and she issues a bond to I. Save for $120, with a coupon rate of 10%. Make provision for $100 in the cash account for working capital. The current yield in the market for a similar security is 9%. Interest is payable at the each year-end, at the rate of 9% At the end of the second year the loan will be paid and the bond will mature. Dividends of $20 will be paid at each year-end. Slide 27 After receiving the loan and the bond money, the balance of the assets are financed by common shares. There will be $100 additional subscription for common shares at the end of the second year. Required Prepare a balance sheet at year zero, and income and balance sheets for years one and two. It is generally wise to prepare a balance sheet at year zero. It prevents mistakes later. Slide 28 Answer: First of first year – steps 11 1. Obtain the present value of the asset by discounting cash flows and salvage. 2. Financing – present value of the principal and interest of the loan and the bond. 3. Make provision for the $100 in the cash account. . Deduct the p. v. of the loan and the bond from the capital asset to arrive at the shareholders' equity. Jane's Company Balance Sheet As at January 1st, x1 Assets: Cash $100. 00 Capital Asset – 300/1. 09 + 400/1. 188 + 100/1. 188 696. 11 Total assets $796. 11 Note: the interest rate is 9%. Liabilities and Shareholders' Equity Loan: 12/1. 09 + (12. 00 + 150. 00)/1. 188 $147. 37 Bond: 12/1. 09 + (12 +120)/1. 188 122. 12 Shareholders' Equity $796. 11 – (147. 37 + 122. 12)* 526. 62 Total liabilities and shareholders' equity $796. 11 *Proceeds from the loan and the bond are deducted from the total assets to obtain shareholders’ equity. Slide 29 First Year Results – End of First year: 5. Set up income statement. You need sales, interest on the cash balance, amortization for the year, (present value of second year deducted from original present value) and interest expense, which is, the discount rate times the original present value of the loan and the bond. 6. Set up your balance sheet for the first year. 7. Next is the cash and that which is actually paid out – interest and dividends 8. Determine the remaining balance of your capital asset – from the income statement. 9. Obtain your liabilities for the loan and the bond. This is the remaining amount for the second year, discounted. 0. Obtain retained earnings – net income for the year less dividends. 12 Jane's Company Income Statement For the Year Ending December 31, x1 Sales $300. 00 Interest $100. 00 x 0. 09 9. 00 309. 00 Less: Amortization $696. 11 – 458. 71 = $237. 40 400/1. 09 + 100/1. 09 = $458. 71 Interest expense:* Loan $147. 37 x 0. 09 = 13. 25 Bond 122. 12 x 0. 09 = 10. 98 261. 63 Net income $ 47. 37 *Note: interest is at the going rate in the economy. Jane's Company Balance Sheet As of December 31, x1 Assets Cash $100. 00 + 300. 00 + 9. 00 – ($12. 00 interest on bond, $365. 00 $12. 00 interest on the loan and $20 dividend) Capital asset $696. 1 Accumulated amortization 237. 40 458. 71 $823. 71 Liabilities and Shareholders' Equity Loan outstanding p. v. at end of year one – (12 + 150)/1. 09 $148. 62 Bonds outstanding p. v. at end of year one – (12 + 120)/1. 09 121. 10 Shareholders' equity – as shown above 526. 62 Retained earnings: Net income $47. 37 Less Dividends 20. 00 27. 37 Total liabilities and shareholders' equity $823. 71 13 Slide 30 Second Year Results – End of Year Two: 11. Set up your second year's income statement 12. In addition to your cash flow you should show your interest received on the bank balance of $32. 85 (made up of $365. 00 x 0. 09) 13. Less amortization – balance left in the capital account is salvage value of $100. 00 14. Obtain interest expense – the discount rate of 0. 09 times the carrying value of the loan and the bond in year 2 15. Set up the balance sheet 16. Cash account will be the carryover of $365. 00 from the previous year plus the sales of $400 and the interest on the cash account of $32. 85 plus the additional $100. 00 put into shareholders' equity. Deductions will be the actual paid out interest on the loan and the payoff of the loan ($162) and payment of the interest and the maturity of the bond ($132. 00) and the deduction of the dividend ($20. 0). Total in the cash account should be $583. 85 17. The capital asset will be $100. 00. You deduct the salvage from the carrying value of the capital asset in the second year ($458. 71 – 358. 71 = $100. 00) 18. Set up the liabilities and the shareholders' equity – show zero for the loan and the bond as they have been paid off Sli de 31 19. Shareholders' equity will be the original balance plus $100. 00, plus retained earnings from the previous year plus the addition of net income for year two and the deduction of the dividends in year two. Net Income will be $49. 86 and Total assets $683. 85. Jane's Company Income Statement For the Year Ending December 31, x2 Sales $400. 00 Interest on cash in bank ($365. 00 x 0. 09) 32. 85 $432. 85 Less: Amortization $458. 71 – $100. 00 = $358. 71 Interest expense: Loan $148. 62 X 0. 09 = 13. 38 Bond 121. 10 x 0. 09 = 10. 90 382. 99 Net Income $ 49. 86 14 Jane's Company Balance Sheet As at December 31, x2 Assets Cash $583. 85 Change: ($400 + 365 + 32. 85 + 100) – (12 + 150 + 12 + 120 + 20) Capital Asset: $458. 71 – 358. 71 100. 00 Total assets $683. 85 Liabilities and Shareholders' Equity Loan outstanding $ 0 Bonds outstanding 0 Shareholders' equity 526. 62 Additional subscription 100. 00 Retained earnings: Previous balance $ 27. 37 Net income 49. 86 $77. 23 Less: Dividends 20. 00 57. 23 Total liabilities and shareholders' equity $683. 85 That is a rundown on ideal conditions under certainty. Under ideal conditions everything, i. e. , cash flows, discounts, and other estimates, would happen as given. 15 Slide 32 PART 3 Follow the Handout – Page 15 Present Value Under Uncertainty Major Topics †¢ Present Value under Uncertainty – what is it? †¢ Example †¢ Description and Required †¢ Answer †¢ Steps – year zero †¢ Balance sheet Slide 33 Topics (con’t) †¢ Income statement – year 1 †¢ Balance sheet – end of year 1 Present value income statement – year 1 †¢ Income statement – year 2 †¢ Balance sheet – year 2 †¢ Summary of present value re Accounting Material †¢ A typical short answer exam question Slide 34 Present Value Under Uncertainty In this part we want to inject some uncertainty into the cash flows We are still under ideal circumstances and the theoretical aspect of things, thus, everything remains the same apart from revenues. Jane has a new company, that started operations on January 1, x1 Assume cash flows could be $250 for each of two years if the economy is good and $120 a year for each of two years if the economy is poor. There is a 50% chance there will be a good year each year and a 50% chance there will be a poor year. These are called states of nature. 16 To set the company up Jane makes a loan of $200 and finances the balance by common shares. The loan will be paid off at the end of two years. Loan rate 9%. We will make certain assumptions: – the discount rate is 8% – the states of nature and probabilities are publicly known and observable. – cash flows are given but uncertain as to which result will occur. Slide 35 Balance Sheet at Time 0: 1. Determine the capital asset – $329. 91 2. Determine the p. v. of the loan and shareholders' equity. P. V. = 0. 5(250)+ 0. 5 (120)+ 0. 5(250) + 0. 5(120) 1. 08 1. 08 1. 1664 1. 1664 = 0. 5(231. 48) + 0. 5(111. 11) + 0. 5(214. 33) + 0. 5(102. 88) = 115. 74 + 55. 56 + 107. 17 + 51. 44 = $329. 91 Jane's Company Balance Sheet As at January 1st, x1 Capital Asset $329. 91 Loan $203. 55 ______ Shareholders' equity 126. 36 $329. 91 $329. 91 Loan $18. 00/1. 08 + (18 + 200)/1. 1664 = $203. 55; common shares $329. 91 – 203. 55 = $126. 36 Time 1 Slide 36 First Year Results Assume there is a GOOD economy for time 1. 3. For the income statement determine sales $250. 00 4. Determine amortization – need the p. v. s of January 1st, x2 5. Charge interest on loan outstanding 6. Determine net income – $75. 10 17 Jane's Company Income Statement For the year ending December 31, x1 Sales $250. 00 Amortization $329. 91 – 171. 30* = $158. 61 Interest 203. 55 x 0. 08 = 16. 29 174. 90 Net Income $ 75. 10 * This figure can be taken from the first year above – $115. 74 + 55. 5 6 = $171. 30 Slide 37 7. For the balance sheet determine cash – sales revenue less interest paid 8. Deduct amortization to obtain p. v. of capital 9. Calculate p. v. of the loan 10. Include in statement the common shares and retained earnings. Jane's Company Balance Sheet As at December 31, x1 Assets Liabilities and Shareholders' Equity Cash $250. 00 – 18. 00 $232. 00 Loan $201. 84* Capital asset $329. 91 Amortization 158. 61 171. 30 Shareholders' equity 126. 36 ______ Retained earnings 75. 10 $403. 30 $403. 30 * Loan – $218. 00/1. 08 = $201. 84 Slide 38 Lets look at the present value statement: 11. Need accretion of discount – multiply the common shares by discount rate 12. Add revision of cash flows by deducting expected cash flows from actual cash flows. Present value Income Statement Jane’s Company Income Statement for the year ending December 31, x1 8 Accretion of discount $126. 36 x 0. 08 (rounded) $10. 10 Actual cash flows in year 1 $250. 00 Expected cash flows (0. 5 x 250 + 0. 5 x 120) 185. 00 65. 00 Net Income $75. 10 Abnormal earnings One thing you should be aware of is the abnormal earnings. The abnormal earnings in this instance are $65. 00. They indicate the difference between the expected value o f earnings and their actual realization. This is an important concept that will come up again when you study investor reaction to firms’ reported earnings in later Modules. For example, investors seem to respond strongly to unexpected earnings. You have probably seen the major effect on share price when a firm reports earnings higher or lower than the market had expected. The Present Value Income Statement above and also the illustration in Example 2. 2 (see pages 30 to 33) show how reported earnings can consist of an expected and an unexpected component. Slide 39 Now consider Year Two – Assume it is a poor year, that is, $120. 00 revenue Steps 1. Sales 2. Interest received on cash account 3. Interest paid on loan 4. Amortization – no salvage 5. Income for the year will be a loss of $(48. 90) Jane's Company Income Statement For the year ending December 31, x2 Sales $120. 00 Interest 18. 56 $138. 56 Amortization $171. 30* – 0 = $171. 30 Interest 201. 84 x 0. 08 = 16. 16 ** 187. 46 Net Income $(48. 90) * This figures can be taken from the first year above: $115. 74 + 55. 56 = $171. 30 ** rounded up 19 Slide 40 For the Balance Sheet: Steps 1. Determine Cash 2. Calculate Capital Assets to zero 3. Extinguish Loan 4. Show Shareholders’ Equity 5. Determine Retained Earnings Jane's Company Balance Sheet As at December 31, x2 Assets Liabilities and Shareholders' Equity Cash $152. 56* Loan $ 0** Capital asset $171. 30 Amortization 171. 0 0 Shareholders' equity 126. 36 ______ Retained earnings 26. 20*** $152. 56 $152. 56 * Cash $232 + 120 + 18. 56 – (18 + 200) = $152. 56 **Loan extinguished *** Retained Earnings $75. 10 + (-$48. 90) = $26. 20 Slide 41 Summary: Application of Present Value to Accounting Material These ideal, present value statements are relevant and reliable – dividends are irrelevant and expected cash flows have been assumed to include all possible events. – They are relevant because the values in the statements are based on all future cash flows. – They are reliable because the values reflect for sure future cash flows. Arbitrage assures the market value as time passes. How easy is it to apply present value material to accounting material? 20 In some cases it is easy and in some cases more difficult, for example, it is easy, with a bond, a mortgage, a loan, etc. P. V. can hold in the case of a bond which is purchased at face value and held to maturity. If it is purchased at other than its face value a premium or discount occurs. This will be covered in Module 5. P. V. can be partially successful in non-contractual cases such as the lower-of-cost or market or (fair value). On the lower side it is marked to market but not on the upside. In some cases it has been difficult. However, more is being added as time passes. A typical short examination question: Question: What is the change in the present value of an asset over time? Answer: It is the amortization of the asset. 21 Slide 42 PART 4 Follow the Handout – Page 21 Reserve Recognition Accounting What is Reserve Recognition Accounting? In this part we want to deal with an attempt by the Financial Accounting Standards Board in the United States to implement present value accounting material in the oil and gas company reports, for American companies, domestically, and their international subsidiaries. This was released under SFAS 69. It should be noted that this was supplemental material to the financial statements. Some Canadian companies have adhered to RRA because their parent companies in the U. S. have had to follow it in that country. Canada does not require it. However, Canada has implemented a standard of its own referred to below. Among the items was the requirement of an estimate of the present value of future receipts from a company's proved oil and gas reserves. What is its purpose? To give some idea of the discounted cash flows which an investor might expect the company to experience. As you know historical cost becomes obsolete very quickly and irrelevant in a short time. This attempt was to try to add to it so people would get some idea of the future expectations from the reserves and future cash flows. Oil and gas companies do not operate under conditions of certainty nor do any companies. This new consideration relates to present value under uncertainty. As noted earlier, recognizing revenue by the process of proved reserves indicates an early recognition of revenue in the operating cycle. Other companies, for example, recognize revenue at point of sale, or when they ship product to a distributor. Early recognition adds to the relevance aspect of revenue recognition but reduces the reliability because there are estimates being made which may not prove to be the outcome. It is suggested that you carefully read the comments on revenue recognition in the module notes under the heading of Reserve Recognition Accounting. Slide 43 Standardized Measure Theoretical and Practical RRA 22 Lets use the information of from a former year of Renaissance Energy: You have similar information in your text for Suncor Energy Inc. , page 36. What is the standardized measure? Standardized Measure is the expected discounted net cash flows from proved reserves in the ground to which the oil company has claim. Standardized Measure Millions Future cash inflows $8,822 Future production and development costs (3,603) Future Income Taxes (1,361) Future Net Cash Flows $3,858 10% annual discount for estimated timing of cash flows (1,148) Standardized measure of discounted net cash flows $2,710 Let’s assume $20 a barrel at the time – that would be approximately 441,000,000 bbls. Points: 1. Total proved reserves are the first line. 2. Development and production costs will be deducted 3. Deduct income taxes 4. Discount at 10% 5. Discounted net cash flows. Changes in the Measure during year Millions Standardized measure – beginning of year $3,704 Less: Sales less royalties and production costs (598) $3,106 Add: Accretion of discount (expected profit) 529 Abnormal earnings: Net present value of additional reserves added – Extensions, discoveries and improved recovery 577 Purchase of reserves in place 100 677 Development costs incurred 288 Unexpected items – changes in value of previous year Net change in prices, net of royalties and production costs (2,647) Change in future development costs (4) Revision of quantity estimates 249 23 Net change in income tax 1,157 Change in timing and other items (645) (1,890) Standard measure – future value of discounted net cash flows $2,710 Note: this could be considered similar to your book value. Another Note: Under the global aspect you deduct your costs from the cash inflows, leaving standardized measure of $2,710 Million. However, when you come to the reconciliation statement above you add in purchase costs, development costs and extension costs. At that stage you are adding to the value of your proved reserves because you have increased your proved reserves. You have acquired new reserves. It is a different aspect of the accounting operation. Accretion of Discount: this is the expected net income for the year. Under ideal conditions your anticipated net income at the first of the year and the actual would be the same. In real world conditions you do get differences. We want to look at the loss or gain for the year. Note with RRA additional reserves can result in anticipated revenue. Net Loss from Proved Oil and Gas Reserves Sales $598 Development costs incurred in the year (288) Amortization expense – (Decline from $3, 704 to $2,710)* (994) Net loss $ (684) See change statement above. Present Value Format: Expected net income – accretion of discount $529 Abnormal earnings: Additional reserves proved during the year $ 677 Unexpected items – changes in value (1,890)* (1,213) Net loss $(684) *This is the total of the unexpected items in the change statement above. Note carefully that amortization takes the difference between the two years and unexpected items takes only in the items shown. Amortization is used in the Income Statement and unexpected items are used in the present value income statement. Slide 44 An Examination question: 24 Students often find it difficult to connect the theoretical aspect to the practical output by gas and oil companies. Following is actual information taken from Exxon, an oil and gas company in the U. S. This will connect the practical to the theoretical aspect of the RRA process. Exxon Corporation – 1993 – supplemental information (millions) Shown in the annual report under change in net cash flows: 1993 Millions Value of reserves added during the year due to extensions, discoveries, improved recovery and net purchases less costs. $ 527 Changes in value of previous – year reserves due to: Sales and transfer of oil and gas produced (6,975) Development costs incurred during the year 2,947 Net change in prices , lifting and development costs (10,229) Revision of previous reserve estimates 1,137 Accretion of discount 2,817 Net change in income tax 4,499 Total change in standard measure during the year $(5,277) Comparison of Theoretical and Practical models Now to make a comparison with our theoretical model the various items below are numbered 1, 2 or 3 indicating the category within which they fall. . Accretion of discount 2. Development and other costs 3. Changes in estimates. Millions Value of reserves added during the year due to extensions, discoveries, improved recovery and net purchases less costs $ 527 (2) Changes in value of previous – year reserves due to: Sales and transfer of oil and gas produced (6,975) (sales) Development costs incurred during the year 2,947 (2) Net change in prices, lifting and development costs (10,229) (3) Revision of previous reserve estimates 1,137 (3) Accretion of discount 2,817 (1) Net change in income tax 4,499 (3) Total change in standard measure during the year $(5,277) Question: 25 Prepare the supplemental information of net income from proved oil and gas reserves in the â€Å"sales less amortization format† and the present value format: Exxon Corporation Income Statement for the year ending December 31st, 1993 Millions RRA Sales in year $6,975 Development costs incurred in year (2,947) Amortization expense (5,277) Net loss ($1,249) The present value statement would be the following: Accretion of discount $2,817 Abnormal earnings: Additional reserves proved 527 Changes in estimates – unexpected items – as shown below (4,593) Net loss ($1,249) Changes in estimates made up of: Net change in prices – $(10,229) Revision of estimates – 1,137 Net change – income tax – 4,499 $( 4,593) Slide 45 Summary The Exxon financial statements contained a comment that the corporation believed the standardized measure was not meaningful and may be misleading. It appeared management thought it lacked reliability and the reserve quantities would be as useful without the remainder of the calculations. The major problems with RRA: – Many estimates must be made how sound are they? Because conditions are not ideal, RRA estimates are compromised and revisions must be made. Example, future oil and gas prices fluctuate significantly. – Changing interest rates – Information on the states of nature is changing – very complex – probabilities are difficult to determine. – How does one determine complete cash flows? 26 Gulf oil was quite comfortable with the physical data but not the dollar amounts. They and other Canadian companies have dropped the process. RRA was an American requirement but CICA under Section 4580 did require physical data for Canadian companies. That Section has been suspended. While RRA was a good attempt to gain present value information – it gained some relevance but lost reliability. RRA is closer to market value than is historical cost but investors have not shown a particular interest in it. Canadian Requirement Similar to SFAS 69 As noted above, more recently the Canadian Securities Administrators have issued their own RRA standard. It is National Instrument 51-101. This is supported by all securities commissions in 13 provinces and territories. It goes beyond SFAS 69 in certain ways: Briefly: †¢ The definition of proved reserves is tightened. NI 52-101 states that proved reserves are those with at least 90% probability of recovery. SFAS 69 states only â€Å"reasonable recovery. † †¢ Probable reserves must be reported. These are additional reserves such that there is as greater than 50% probability that the sum of proved plus probable will be recovered.. †¢ Two present value estimates of future cash flows from reserves are required – based on yearend prices and costs (as in SFAS 69) based on forecasted prices and costs. †¢ Discounting is required at several different discount rates, ranging from 0% to 20%. SFAS requires only 10%. The Canadian requirements go beyond those of SFAS 69 but it will be noted that the same problems of reliability still exist. A further point which should be noted is that if a firm reports under SFAS 69, they can apply for exemption from NI 51-101 It should be noted that Canadian firms can apply for exemption from NI 51-101 if they report under SFAS 69. Most large Canadian oil and gas companies have secured this exemption. Consequently, despite the Canadian standard, RRA as per SFAS 69 remains as an important disclosure standard in Canada. For example, Canadian Natural Resources Limited, with shares traded on the Toronto and New York stock exchanges, has been granted an exemption from National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (â€Å"NI 51-101†), which prescribes the standards for the preparation and disclosure of reserves and related information for companies listed in Canada. This exemption allows the Company to substitute United States Securities and Exchange Commission (â€Å"SEC†) requirements for certain disclosures required under NI 51-101. 27 Slide 46 PART 5 Follow the Handout at page 27 Examination Question Examples Examination Question 1: On January 1, 2006, XYZ Ltd. , a hypothetical oil and gas firm, purchased a producing oil well with a life of 15 years. Operations were started immediately. The management calculated that future net cash flows from the well would be $1,500,000. The discount rate was 10% which was the company's expected return on investments. During 2006 cash sales were recorded (net of production costs) of $600,000. The company also paid dividends for the year of $50,000. a) Prepare the income statement for the year ending December 31, 2006 using RRA accounting. Prepare the balance sheet as at December 31, 2006, using RRA accounting. Answer: We first need our amortization so we take the beginning total of $1,500,000 and take a similar approach to our change statement under our first example – Renaissance Energy. We deduct sales and add accretion of discount, to arrive at amortization. PV beginning $1,500,000 Less: Sales 600,000 900,000 Accretion of discount 150,000 10% of $1,500,000 PV end 1,050,000 Amortization $ 450,000 XYZ Limited Income Statement for the year ended December 31st, 2006 Net sales $ 600,000 Amortization 450,000 Net Income $ 150,000 28 XYZ Limited Balance Sheet s at December 31st, 2006 Cash $600,000 – 50,000 $ 550,000 Shareholders' equity $1,500,000 Retained earnings: Reserves 1,050,000 $150,000 – 50,000 100,000 $1,600,000 $1,600,000 b) Question: summarize the perceived weaknesses of RRA accounting Answer: Three weaknesses are: 1. The discount rate of 10% might not reflect the expected return for the fir m. 2. RRA involves making a large number of assumptions and estimates and it may not bear any relationship to the net revenue to be received in the future. 3. Conditions in the oil and gas industry may change rapidly possibly making frequent changes in estimates. ) Question: Why does SFAS 69 require all firms to use 10% rather than letting firms select their own rate of return? Answer: The use of a single rate for all firms was to improve comparability. Slide 47 Continue to follow the Handout A Second Example: This one is particularly difficult. ABC Company (hypothetical) operates under ideal conditions. On January 1, 2001, it purchased a capital asset with a useful life of three years at which time it would be totally used and have no value. It will generate a cash flow of $3,993, on December 31st, 2003, at the end of its 3 year life. The purchase is financed partly by common shares and partly by a non-interest bearing note which matures on December 31, 2003, with a maturity value of $1,500. The interest rate in the economy is 10%. The shares and the note thus both have to receive a return. Required: a) Prepare an income statement and balance sheet for December 31, 2001. 29 b) Prepare an income statement and balance sheet for December 31, 2002. c) Prepare an income statement and balance sheet for December 31, 2003 d) Calculate the expected net income for the second year Answer Consider this as an investment of $3,000 and you are earning 10%, so income for the first year is $300, the second $330 and the third $363, totalling $993. 00. In other words if you left your earnings in the firm that is what you would have. However, you have borrowed money and it has to earn 10%, so it will reduce your income by the cost of the borrowed money at 10%. Capital Asset each year: PV (Jan. 1/2001) = $3,993/1. 103 = $3,000. 00 PV (Jan. 1/2002) = $3,993/(1. 21) = $3,300. 00 PV (Jan. 1/2003) = $3,993/(1. 10) = $3,630. 00 PV (Dec. 31/2003) = $3,993/1. 00 = $3,993. 00 Note: As the earnings remain the capital asset increases. Non-interest bearing note: Interest Expense Present Value and Discount Amortization Carrying Value of Note Jan. 1, 2001 – $1,126. 97 Dec. 31, 2001 $112. 70 1,239. 67 Dec. 31, 2002 123. 97 1,363. 64 Dec. 31, 2003 136. 36 1,500. 00 $373. 03 Book Value each year Accretion of Discount or Expected Income at 10% $3,000. 00 – $1,126. 97 = $1,873. 03 – $187. 30 $3,300. 00 – 1,239. 67 = $2,060. 33 – $206. 03 $3,630. 00 – 1,363. 64 = $2,272. 36 $227. 24 $3,993. 00 – 1,500. 00 = $2,493. 00 Total $620. 57 30 Some rounding may be needed. Slide48 To answer the parts: a) ABC Company Income Statement Year Ended December 31, 2001 Sales revenues $ 0 Amortization of capital assets 300. 00 Interest expense 112. 70 Net income $187. 30 This is unusual as there is shown income which has been earned but not received and the income statement is based on the amortization of capital assets and the loan. ABC Company Balance Sheet as at December 31, 2001 Capital asset $3,000. 00 Notes payable $1,239. 67 Add: amortization 300. 00 Shareholders’ Equity Common Shares $3,000 – 1,126. 97 1,873. 03 Retained earnings 187. 30 Total assets $3,300. 00 $3,300. 00 b) ABC Company Income Statement Year Ended December 31, 2002 Sales revenues $ 0 Amortization of capital assets 330. 0 Interest expense 123. 97 Net income $206. 03 31 ABC Company Balance Sheet as at December 31, 2002 Capital asset $3,000. 00 Notes payable $1,363. 64 Add: amortization 630. 00 Shareholders’ Equity: Common Shares 1,873. 03 Retained earnings * 393. 33 Total assets $3,630. 00 $3,630. 00 †¢ $187. 30 + $206. 03 Slide 49 c) ABC Company Inco me Statement Year Ended December 31, 2003 Sales revenues $3,993. 00 Less: Amortization $3,630. 00 Interest 136. 36 3,766. 36 Net income $ 226. 64 ABC Company Balance Sheet as at December 31, 2003 Cash $3,993 – 1,500 = $2,493. 00 Notes payable $ 0 Capital asset $3,630. 0 Shareholders’ Equity Less: Common Shares 1,873. 03 Amortization 3,630. 00 0 Retained earnings 619. 97 Total assets $2,493. 00 $2,493. 00 d) What you have to do to get the expected net income (the accretion of discount) it must be taken from the above balance sheet/and table that is the end of the first year: Net book value January 1, 2002 – $3,300. 00 – $1,239. 67 = $2,060. 33 Expected net income – 10% of $2,060. 33 = $206. 03 Note very carefully the book value and how it is obtained. 32 Slide 50 PART 6 Historical Cost Accounting Topics †¢ Why present value accounting †¢ Major problems with historical cost Examples Amortization Full cost versus successful efforts †¢ C onclusion Want to Consider Historical Cost Accounting but first make some comments about Present Value Accounting. Slide 51 Why Present Value Accounting? Why do we want present value accounting? What are some of the shortcomings of historical cost accounting? †¢ First, present value accounting is a balance sheet approach to accounting, also †¢ Referred to as the measurement approach. †¢ Increases and decreases in assets and liabilities are recognized, that is, measured, as they occur. †¢ Future cash flows are discounted and capitalized on the balance sheet. Income then is essentially the net change in present values for the period. †¢ Changes, whether realized or not, are recognized in the balance sheet. Slide 52 Historical Cost Accounting – Major Problems Comments Historical cost accounting is an income statement approach. It is referred to as an â€Å"information† approach to decision usefulness. In this situation unrealized increases or decr eases are not recognized in the balance sheet and net income lags behind real economic performance. 33 Thus, under this approach the accountant waits until there is actual validation of changes by increased sales or cash flows. This comes down to a matching of revenues and costs used to earn those revenues. First, it may make more sense than we give it credit for, and, second, it is firmly in place and may be difficult to replace. Then, how do we improve it? Slide 53 Major problems: 1. It does not equate in large measure with present value accounting – in some cases it does and many others it does not. 2. As it does not present complete relevant and reliable statements, there must be a tradeoff between the two. They tend to be opposites. Historical cost is more reliable than relevant. There as often different bases used for measurement and thus a problem arises. See page 42 of your text, 3. With historical cost there is a recognition lag of revenue. In other words, the revenue may be recognized over several periods. The revenue is recognized only when transactions take place. See page 42 of the text. This is the timing of revenue recognition lags behind changes in real economic value. On the other hand current value accounting has little recognition lag as changes in economic value are recognized as they occur, for example, recognizing revenue when proved reserves are recognized under oil and gas accounting. Do not overlook the fact, however, that RRA is supplemental accounting and appears separately in the financial statements. Note: carefully there is little matching of costs and revenues under current value accounting. Current value accounting really tells you how the value has changed of the assets and liabilities. Under historical cost the accountant waits until there is objective evidence before recognizing revenue. Thus, historical cost tends to be reliable while current value tends to be more relevant. See page 43 of the text. 4. We are faced with the fact that it is difficult to solve many problems within the historical cost system itself, thus, it is necessary to look for other ways to solve some issues, say to, present value accounting. There is accrual accounting is available to aid historical costing but matching of costs and revenues requires estimates, which can be difficult. Thus, historical cost does have it problems. See page 43 of the text. Some examples of problems Slide 54 Amortization: †¢ It is necessary to amortize the wearing out of assets to meet the matching principle. But historical cost rules do not direct how much should be amortized each year. †¢ It just states that the method to be used should be consistent with the time pattern 34 of expiration of the asset. †¢ A variety of methods are in use – straight-line, declining balance, double digit, etc. , which complicates matters between companies. †¢ If there were the requirement of present value for valuation pur poses, there would be only one method. Slide 55 Full Cost vs Successful Efforts in Oil and Gas Under full cost all drilled gas and oil well holes – both dry holes and successful efforts in drilling are capitalized. Thus some of the expenses for dry holes are deferred rather than written off. The concept is that they are all part of the development process. It is contended the costs match the revenue as it is earned. Under successful efforts dry drill hole costs are expensed immediately as it is thought they should not be part of the capitalization process. It is contended only successful efforts really match with the revenue of future years. Under historical cost CICA allows both methods; getting different income figures; under present value there would be one method. Slide 56 Conclusion: We conclude under historical cost that, â€Å"net income does not exist as a well-defined economic concept. † It is an artificial figure. See page 45 of the text. The matching principle under historical cost allows for different ways to be followed, as indicated above, as well as many other situations, e. g. , inventories Accounting challenge – Our quest for the balance of the course will be how can we improve historical cost statements if, as we concluded, we cannot have full present value statements. Slide 57 Appendix Present value annuities – one of the most used processes in the mathematics of finance. Its purpose is to discount a series of equal payments over a series of equal periods. Present value annuities with even payments Example: Assume you will receive $60 a year for four years for a dividend payment. The accepted discount rate (or the yield you would expect) is 10%. What is the present value (or value today) of these four cash flows, discounted at 10%? 35 P. V. = ? Formula P. V = R[1 – (1 + i)-n ] / i i = 10% P. V. 60[ 1 – (1 – 1. 10)-4/0. 10 n = 4 P. V = 60 (3. 16987) (can be obtained from the P. V. table. ) R = 60 P. V. = $190. 19 Second example: Present value annuity with uneven payments. Assume there are unequal payments over five years: Year 1, $60; Year 2, $40; Year 3, $50; Year 4, $35 and Year 5, $45. P. V. = ? i = 10% n = 5 R = as shown Formula: PV. = CF/(1. 10) + CF(1. 10)2 + CF/(1. 10)3, etc. P. V. = 60/ (1. 10) + 40/(1. 10)2 + 50/(1. 10)3 + 35/(1. 10)4 + 45/(1. 10)5 P. V. = $54. 55 + 33. 06 + 37. 57 + 23. 91 + 27. 93 P. V. = $177.

Pride and Prejudice Response Paper

Our honorable instructor, Professor Tang assigned us to read three novels in our National Day Vacation: Hills like White Elephants by Ernest Hemingway, Pride and Prejudice by Jane Austen, and A Woman On a Roof by Doris Lessing. Of these three, I favored Pride and Prejudice most, as apparently, neither the simple story of the sun-bathing woman in A Woman On a Roof was easier enough for me to understand its â€Å"representative of modern women figures†, nor the ugly face of the man who persuaded his girlfriend to take a â€Å"perfectly simple† abortion in Hills Like White Elephant interested enough for me.So though I was actually a fan of the novel Pride and Prejudice, with a more than five times novel reading experiences, and a more than ten times movie audience experiences ( Pride and Prejudice starred Keira Knightley and Matthew Macfadyen), I picked up this novel and read it in my vacation. I presume that Pride and Prejudice was a most comical one of Jane Austen†™s novels. People around me regarded this novel as a love story, yet to me, the novel is an illusion of the environment, the society at those years. Elizabeth, or Lizzie, the heroine and Mr.Darcy, the haughty hero, a literary idol of girls like me, are the exceptions of the gender relationships at that time. In my humble opinion, the relationship between Jane, the second heroine in this novel and Mr. Bingley was a real picture that showed the characteristics of the relationship in that federal era. They loved each other and were deeply enchanted with each other from the bottom of their heart. Yet Mr. Bingley was too shy and too worrying, he set too many obstacles for himself, while Jane was a typically conservative lady, she was bounded by the old manner and so-called â€Å"courtesy†.They hardly missed the chance to marry each other. When it comes to my favourite character—Lizzie, I must confess that she was the bravest heroine in all books I have read. At first she refused Mr. Darcy’s propose, but at last she changed her mind and was totally fell in love with him. This change represents her iron inner self and her unique personality, and that’s why she was so charming. Many writers these days like to use Lizzie as an example to stress the feminism, for she dared to chase what she care.I think she was also a successful example for all of our girls, as now we are so young, and we have the chance to chase our dream. Chaucer once said that we soon believe what we desire. That is also the unique way of Lizzie in Pride and Prejudice. All in all, Pride and Prejudice represent the climax of Jane Austen’s writing career. Also, the clues and the characters in this novel was filled with vividness, so that they are so real to our reality. That’s why I regard this novel as a real classic. Pride and Prejudice Response Paper Our honorable instructor, Professor Tang assigned us to read three novels in our National Day Vacation: Hills like White Elephants by Ernest Hemingway, Pride and Prejudice by Jane Austen, and A Woman On a Roof by Doris Lessing. Of these three, I favored Pride and Prejudice most, as apparently, neither the simple story of the sun-bathing woman in A Woman On a Roof was easier enough for me to understand its â€Å"representative of modern women figures†, nor the ugly face of the man who persuaded his girlfriend to take a â€Å"perfectly simple† abortion in Hills Like White Elephant interested enough for me.So though I was actually a fan of the novel Pride and Prejudice, with a more than five times novel reading experiences, and a more than ten times movie audience experiences ( Pride and Prejudice starred Keira Knightley and Matthew Macfadyen), I picked up this novel and read it in my vacation. I presume that Pride and Prejudice was a most comical one of Jane Austen†™s novels. People around me regarded this novel as a love story, yet to me, the novel is an illusion of the environment, the society at those years. Elizabeth, or Lizzie, the heroine and Mr.Darcy, the haughty hero, a literary idol of girls like me, are the exceptions of the gender relationships at that time. In my humble opinion, the relationship between Jane, the second heroine in this novel and Mr. Bingley was a real picture that showed the characteristics of the relationship in that federal era. They loved each other and were deeply enchanted with each other from the bottom of their heart. Yet Mr. Bingley was too shy and too worrying, he set too many obstacles for himself, while Jane was a typically conservative lady, she was bounded by the old manner and so-called â€Å"courtesy†.They hardly missed the chance to marry each other. When it comes to my favourite character—Lizzie, I must confess that she was the bravest heroine in all books I have read. At first she refused Mr. Darcy’s propose, but at last she changed her mind and was totally fell in love with him. This change represents her iron inner self and her unique personality, and that’s why she was so charming. Many writers these days like to use Lizzie as an example to stress the feminism, for she dared to chase what she care.I think she was also a successful example for all of our girls, as now we are so young, and we have the chance to chase our dream. Chaucer once said that we soon believe what we desire. That is also the unique way of Lizzie in Pride and Prejudice. All in all, Pride and Prejudice represent the climax of Jane Austen’s writing career. Also, the clues and the characters in this novel was filled with vividness, so that they are so real to our reality. That’s why I regard this novel as a real classic.

Ministering to Mormons

Reflecting on I Love Mormons: A New Way to Share Christ with Latter-day Saints Most people associate the Mormon faith with the church that is based in Salt Lake City, Utah. However, Mormonism has its roots in New York State, where Joseph Smith founded the Church of Latter-Day Saints during the nineteenth century, when he was allegedly visited by an angel that he called â€Å"Moroni.† The principles upon which he based this church underwent many changes as the founders of the faith traveled westward, so many that people might question whether it is the same faith or not.   It is not unusual, however, for a young faith to undergo many changes: it can be argued that Christianity experienced many of the same dynamics in it beginnings as it moved from its country and culture of origin and spread across the world.   David Rowe’s text suggest that individuals who would preach Christianity to Mormons should approach Mormonism as less of a cult and more of a culture and will less zeal than love, Section 1: Overview of Mormon Theology According to its founders, the Mormon faith is based on the teachings of the descendents of ancient holy men and the faithful who came to this continent even before the birth of Christ.   The original teachings of the church were supposed to have been translated from golden plates that the angel Moroni, which were given to Joseph Smith. Some of those early teachings have fallen into disuse or have changed completely. For example, while Smith might have included polygamy and believed in a priesthood open to only a chosen few, polygamy is now discouraged, if not openly condemned by the church and the priesthood has been open to men of all races (Rowe 2005).   Other tenets have been added or subtracted from the faith or have altered in some way as the Mormon faith seeks to solidify itself. While the Mormons consider themselves to be a Christian faith, a number of beliefs and practices set them apart from other Christian denominations.   Some of these beliefs and practices include: Baptism of the dead Eternal marriage, known as a â€Å"celestial marriage† performed in the temple The belief in four sacred texts: the Holy Bible, the Doctrine and Covenants, the Pearl of Great Price, and The Book of Mormon, and Teaching that God, the Father and Jesus Christ, the son, are of separate earthly bodies (Rowe, 2005). The Mormon Church also places a lot of emphasis on the family and on gender roles.   The church emphasizes the woman’s role in staying home and caring for the children, while men typically take on leadership roles–although these things are not absolute.   In addition, church members are intended to follow the law of chastity and to abstain from certain food, drinks, and substances. Church members are expected to proselytize.   All male members of the church are expected to perform a mission, which begins at 19 years of age and lasts two years.   Although women are not forbidden from going on missions, the requirements for women are different in terms of serving during a mission.   Finally, the LDS Church tends to believe that the individual can receive revelations from God, particularly in personal matters.   There are many precepts of this complex faith that are not covered by this paper; however, the ones that are listed represent some of their more important beliefs. The Mormon faith does not have a single, monolithic form.   Rather, it is comprised of splinter groups.   Given the statement   in Rowe (2005) that Mormonism â€Å"may stand as an indictment to Protestants because they arose to compensate for some perceived failure in the Christian movement† that encouraged him to start â€Å"a single ‘true Church’ that he believed would unify all members and spell an end to denominational schism,† this fact is interesting and interesting one (pp. 18-19). In general, the term â€Å"Mormon† is most accurately applied to the individuals who followed Smith’s teachings and settled in Utah; however, the church elders prefer that it be known by the more accurate name of â€Å"Church of Jesus Christ of Latter-Day Saints† (Rowe, 2005). Section 2: â€Å"Wisely and Gently† Kraft (1998) reminds the reader that God apparently wants people to be respectful of other cultures and that He gave such directions through the Holy Bible.   In 1 Corinthians 9:19-22, Kraft states, God’s purpose is indicated through Paul’s words about living like a Jew when among the Jews and living like a Gentile when among the Gentiles, and so being â€Å"all things to all men, that [he might] save some of them by whatever means are possible† (p. 384). Kraft discusses the various levels of culture, which is the manner in which people live their lives.   People are products of their culture, which determines the manner in which they view the world and the pressure for the individual to conform within that worldview is strong (Kraft, 1998).   In addition, Kraft reminds the reader that Jesus worked not by attacking people or their cultures, but by working with people within their cultures to effect change. Overall, Mormonism has a number of good principles behind it and yet its worshipers have been widely persecuted for their faith.  Ã‚   Today’s Mormons tend to be â€Å"thin-skinned, hypersensitive, and virtually expecting to be attacked† for their beliefs (Rowe, 2005, p. 49).   Whether or not the individual talking with a Mormon agrees with the positions of that person’s faith, Rowe states that they are deserving of respect. This position is particularly important, since Mormons typically have a certainty in the truth as preached by their prophet and the awareness of their nature as what Rowe (2005) calls â€Å"an exodus community† (pp. 48-49), both of which cause them to close the doors to communication more readily than individuals in other faiths.   Despite the apparent wisdom behind this statement of affairs, however, it appears to contradict the author’s assertion that Utah’s admittance to the Union ended the â€Å"us against them† mentality that existed between Mormons and the United States government at the time (p. 47). Section 3: Proselytizing Rowe (2005) constantly reminds the reader that the Mormons have their own culture.   For this reason, Christians are to treat them as they might adherents to Islamic, Hindu, or Buddhist cultures, as well as any other non-Christian cultures.   Rowe (2005) describes the Mormon Church as being â€Å"Christianesque† in that it is â€Å"linked to statements and images from the Bible† (p. 42).   However, some of the teachings are not Christian in nature, such as Joseph Smith’s vision of separate beings for God the Father and Jesus Christ. Because this teaching is so different from that held by other Christians, it is important to be prepared with gentle teachings about its error, as well as other errors held by the Mormon Church.   It is doubly important because the worldview of Mormonism is compulsive in its teachings, just as is the case in many Muslim cultures (Duin, 2006, p. 2).   Because it is not possible for Mormons to examine their faith for themselves, other Christians should be able to help them do so. According to Coleman (1993) Jesus was able to start with a small group of disciples because â€Å"it did not matter how small the group was to start with so long as they reproduced and taught their disciples to reproduce (p. 102).   It was a strategy that, as stated earlier, depended on assimilation to achieve results.   One thing to share, then, would be that Christ died for everyone on the Cross, not just for a significant few.   He accepted and cared for all faiths and races (Coleman, 1993). Rowe (2005) suggests trying to bring the two value systems into perspectives by working with the person being instructed to put the message of the Gospel into words according to each faith and then using that as a basis for discussion (p. 65).   Final, it would seem important to understand the Mormon teaching of two Beings known as God in the Mormon Church, and how it relates to or differs from the traditional Christian teaching of monotheism.   By understanding these differences and by being able to speak in a learned and intelligent manner to another individual from a Mormon perspective. References Coleman, R. E. (1993).   The master’s plan.   Perspectives on the World Christian Movement (3rd ed.), Ralph D. Winter and Stephen C. Hawthorne (eds.).   Pasadena, CA: William Carey. Duin, J. (2003).   The Washington Times.   New World Communications, Inc. Kraft, C. H. (1998). Culture, worldview, and contextualization. Rowe, D. (2005). I Love Mormons: A New Way to Share Christ with Latter-day Saints. Grand Rapids, MI: Baker Books.

Behavior Modification related to Old Habit Change and New Habit Research Paper

Behavior Modification related to Old Habit Change and New Habit formation as related to Martial Arts - Research Paper Example Boxing, Kray maga, kungfu, kick boxing, tae Kwon Do and Karate are the examples of this style. (Rousseau) 4 b.Grappling or Ground Fighting Styles; This technique involves the act of hand to hand physical involvement with the combat in which the participant try to gain advantage with clinching, holding, locking, and leverage. (Centre) This technique is used in the martial art styles of Brazilian Jiu Jitsu,Russian Sambo, Shoot fighting and Wrestling. 4 c.Throwing or Takedown Styles; in this technique of martial art the participants begin the fight in the standing position. Hence, once the fight begins the throwing and takedown styles amidst the fight determining the victor. The art includes the styles of Aikido, Judo, Hapkido and Shuai Jiao. 4 d.Weapons Based Styles; this style has primary focus on weapons. It includes the arts of Iaido, Kali and Kendo. 4 e.Low Impact or Meditative Styles; This style encompasses the breathing techniques, fitness, and the spiritual side of things. It in cludes Baguazhang, Tai Chi and Chi Gong based styles. 4 f.MMA- A Hybrid Sports Style; In each style of martial art there are adaptations from other styles of the art. This styles includes an essence of various style and is propagated as a sport style of martial arts that allows for grappling, stand up fighting, takedowns/ throws, and submissions. ... Hence, the same perception with advancement is adhered in modern times that are martial art in recent times is practiced for the sake of self defense, physical fitness, sport and law enforcement preparations etc. (Jason M. Winkle) 5 4.Benefits of Martial art in Human development: thus, it can be stated that physical grooming is a mere part of the benefits of Martial Art. Other than the fitness benefits, muscular strength, flexibility and capacity development in an individual the art also retain certain features that adds to the element of spirituality in an individual. A boost to psycho social variables eliminating the negative factors is the impact of this art on human psychology and mental health, endorsed by Weiser, Kutz, Kutz, and Weiser (1995). (Jason M. Winkle) 5 5.Spirituality in Martial arts; 6 6.Dimensions of the Power of Martial Arts; 6 The dimensions of the power of martial arts vary from spiritual evolution to physical vigor. The selection of the domain of power is the ch oice of an individual. Hitherto, the features to be adopted in each of the domain are discipline, desire, openness and focus. Although the origin n of the art is all marked by spiritual entities, yet the path to be chosen is primarily the choice of the learner. The word â€Å"Do† (as in Judo, Aikido, and Tae Kwon Do) means â€Å"way† or the path you choose to walk. In other words, logically a human entity comprises of spirit, mind and body. The three components are intimately related as the spirit controls mind which controls the body. Hence, the action of an individual is the consent of the three elements altogether. Therefore, martial art has the potential to groom all the three factors but it is the choice of the learner to select a prime area of focus for practicing the

Assignment Essay Example | Topics and Well Written Essays - 1250 words - 15

Assignment - Essay Example However, they have to learn that they cannot have a perfect plan (Honig, 265). They have to keep trying in order to succeed in the life of business. The secret of effectiveness in any field lies within one’s ability to keep trying until he or she meets success. The timid cannot be a leader or a manager for the sake of argument because he or she has to call the shots, and without confidence they cannot do their jobs. The company named as Apple became the status symbol of innovation in recent years, and the secret lied in the culture of the company. The late CEO of the organization, Steve Jobs introduced the flatter organizational structure for the first in the era of tall organizations with the setup of command and control. The featured corporate leader always believed in the power of innovation, and he struggled thoroughly in order to construct the organization that valued innovative thinking. The company innovated at a product level by introducing newness at an organizational one first. The company brought second order change, and the first order followed the regime on its own. The innovation at an organizational level gave the employees freedom to think creatively and the managers at the company stayed available for their employees so that they can share their thoughts in a free environment (Young and Simon, 168). The company stated openly that it considers its human resources as the most vit al assets of all. The company focused on development of an urge to become better in the employees, and it paid off the Apple in the long run, but the chain of innovation broke recently because the leadership changed, and they tried to undo the development of Jobs that they do not understand and comprehend. The new leadership changed the organization, and destroyed it beyond recognition, and as a result, the turnover rates grew in all

Evolution Essay Example | Topics and Well Written Essays - 1000 words - 1

Evolution - Essay Example This paper will critically reflect upon adaptation, which is one of the aspects of evolutionary theory. Furthermore, it will discuss whether the aspect can be studied in real time or not and are the microorganisms used within it with a rapid generation time. In the last part of the paper, the concept of antibiotic resistance will be addressed and its links to differences in bacterial genomes. Evolutionary theory is a theory of changes in organic design through contingent selection and controlled random mutations. The evolutionary theory was published by Charles Darwin. Evolution is the binding force of all biological research. The principle of randomness, the genetic principle and the principle of self-replication are some basic principles of evolutionary theory (McGrath, 2005, pp. 227).  Since its inspection, evolutionary theory has been popular among ordinary audience and scientists. The evolutionary theory itself is negated by some of its aspects ,however, some of them are very astonishing. This paper will critically reflect upon adaptation, which is one of the aspects of evolutionary theory. Furthermore, it will discuss whether the aspect can be studied in real time or not and are the microorganisms used within it with a rapid generation time. In the last part of the paper, the concept of antibiotic resistance will be addressed and its links to differences in bacterial genomes. Every aspects of the form and behaviour of organisms are influenced by evolution.  Amongst them, the most prominent are the specific physical and behavioural adaptations that are the outcomes of natural selection (Walsh, 2007, pp. 281). Fitness is increased by these adaptations through aid of activities, like attracting mates, avoiding predators and finding food. The adaptations take place within a population or species. The process that makes organisms better suited to their habitat is referred

Effect of Titles and Subtitles of HIPAA on the IT Organization Essay

Effect of Titles and Subtitles of HIPAA on the IT Organization - Essay Example The process of utilization of health of patient is described by HIPPA in detailed. It is important for the medical institutions to make certain that the privacy of the person much be kept confidential. This form of step mostly complete by modifying how much PHI (protected health information is utilized. Basically Protected Health information is referred as the demographics, diagnoses and different treatments of the patient. On the other hand, the complete form of details and information can only be communicate with the staff directly in the patient care, relevant entities and other insurance organizations (Wiener & Gilliland, 2011).   On 14th April 2003, the HIPPA law came into force. The aim of this law is to save the privacy of the information related to the health of the patient by forming the minimum federal standards of how the health care providers may disclose this form of details (Thompson et al., 2011). Whereas the privacy of patient is sheltered from other form of parties, numerous health related professionals have criticized that barriers to access to information imposed by HIPAA potential risk can put the superiority and appropriateness and suitability of patient care. There are many intrinsic negative effects as HIPAA and other builds due to their susceptibility to misunderstanding (Thompson et al., 2011). The right to obtain record of copies of medical records is given to the patients by HIPAA so patient can recognize faults and appeal different form of corrections. On the other hand, the medical information of patients is also protected by HIPAA, and make certain that the medical information of one patient is not utilized by any other patient, other parties like marketing companies, other insurance companies and for the purpose of financial purposes. Moreover, refined from of technologies are also taken part in the HIPAA implementation and also

Financial accounting College Assignment Example | Topics and Well Written Essays - 750 words

Financial accounting College - Assignment Example Such grants can be shown either individually or under a sub-heading which is a heading and is general in nature like "Other income"; or else, they are subtracted in accounting the connected expense. In the afterthought to paragraph 9 of IAS 18, sales of Real estate is stated as: "Revenue is normally recognized when legal title passes to the buyer. However, in some jurisdictions the equitable interest in a property may vest in the buyer before legal title passes and therefore the risks and rewards of ownership have been transferred at that stage. In such cases, provided that the seller has no further substantial acts to complete under the contract, it may be appropriate to recognize revenue". At the present time, real estate creators understand IFRSs otherwise and record revenue for the sale of the estates at different times. Some real estate creators document revenue only after they have passed on the finished unit to the buyer, while others record revenue in advance, as construction progresses, by indication to the stage of completion of the real estate for sale. This explanation p This explanation proposes to standardize accounting pattern amongst real estate creators for sales of units, like apartments or houses, 'off plan', that is prior to construction being completed. As of now, real estate creators adopt the option of either to record the revenue only after they have actually handed over the finished unit to the buyer or before, as construction progresses, by referring to the stage of finishing construction of the development. The understanding suggests that revenue should be entered as construction builds up only if the creator is rendering construction services, and not only selling goods (for example completed real estate units). It also suggests features that suggest that the vendor is giving construction services. The accounting treatment would not have been different even if there was rent guarantee on only some of the flats. Issue 3: It is essential that particulars of all monies received either as advance or otherwise are identified and properly recorded so that collections on or before the due date becomes easier. Also if refund takes place then the company has to record it as and when it takes place. Such refund

Reflective Account of Environmental Assessment Essay

Reflective Account of Environmental Assessment - Essay Example environmental management system (EMS), environmental impact assessment, environmental statement, carbon accounting, and carbon management in buildings, environmental economic appraisal and strategic environment management. All these activities aim at securing the environment. The environmental management system (EMS) is a kind of tool and program that is used in managing the impacts of the activities on the environment at large. EMS provides an effective approach and structure of planning and implementing measures of protection of the environment. An EMS ensures that environmental management are integrated in an organizations day to day activities, short term goals and in long term planning of the organizations objectives (Melnyk, Robert and Roger, 2003). For an organization to be able to come up with an EMS, it should first access and analyze the impact it has on the environment, it should come up with goals of reducing impacts on the environment and come up with a strategy of achieving the goals and objectives that have been set. For the development of an effective EMS, commitment and support should be evident from the top level management to the staff as well (Sroufe, 2003). The environmental policy of the organization should be firstly considered when coming up with an EMS. The policy ensures that the activities of EMS are in line with the objectives of the organization. An environmental audit should be taken before coming up with an EMS to help in identifying the impacts of the organizations activities on the environment. The target and objectives of an organization should also be considered when developing an EMS because it will guide the organization on how to achieve it. The staff and the community surrounding the environment should be committed before, during and after the establishment or developing of the EMS. The operations and procedures also need to be compatible with the objectives of the EMS. The monitoring of the performance of the organization

From slavery to freedom Essay Example for Free

From slavery to freedom Essay Ironically, Fredrick Douglas all but snatched the Emancipation Proclamation from Abraham Lincolns hands to make of its flat rhetoric a sharpened call for freedom and equality. Douglass had never regarded the ending of slavery as enough, either for himself or for his people; it had to be the beginning of an embrace of the black individuals fullness as a person, a beginning that would point straight toward an end, within quick reach. â€Å"For Douglass, each gain in the struggle, and the Emancipation Proclamation decidedly was one of the greatest, simply meant that America must move on to the next gain. † (Mcfeely, 1991) Douglasss commitment to abolitionism, black elevation, and womens rights outstripped his commitment to other social reforms. His major social reform passions black liberation and womens liberation underscored his egalitarian humanism. The logic and motivation for his social reform odyssey derived essentially from his quest for morality, order, and progress. Even though his interrelated social reform enthusiasms were integral to his vision of a moral, orderly, and progressive civilization, he nonetheless evinced a keen sense of the need for priorities among them. (Martin, 1984) In retelling his journey from slavery to freedom in the middle of the decade, less than a year after the Cleveland emigration convention, Douglass was responding implicitly to the arguments of Delany and other pro-immigration supporters that in the foreseeable future blacks would remain slaves, or de facto slaves, in the United States arguments that would appear to have gained added currency with the passage of the Kansas-Nebraska Act in 1854. Central to Douglasss continued hopefulness about blacks prospects in the United States, despite such obviously negative developments, was a renewed commitment following his 1851 break with Garrison to the informing ideals of the nations original revolutionary documents. In many ways during this period, Frederick Douglass became the prototypical American success: a peerless self-made man and symbol of success; a fearless and tireless spokesman; a thoroughgoing humanist. The most striking and enduring aspect of Douglasss heroic legacy in his day its classic, even archetypical aura has persisted down to the present. Although often viewed and used differently by others, the heroic and legendary Douglass clearly personifies the American success ethic. The key to his eminently evocative essence is twofold. Douglass’s influence had a far reaching affect. In April 1855, Uriah Boston, a prominent figure in the black community of Poughkeepsie, New York, wrote a letter to Douglass in reference to his newspaper. Boston expressed concern over the increasingly separatist tone of prominent black abolitionists like William J. Wilson and James McCune Smith. Responding to pieces they had written in the black press, Boston criticized the two for â€Å"urging the colored people to preserve their identity with the African race. † He feared that any claim of distinct national identity on the part of black people might lend credence to â€Å"the propriety and necessity of African colonization†Ã¢â‚¬â€the dreaded scheme of the American Colonization Society. For Boston, blacks could never constitute a nation within the nation. â€Å"You cannot mix nationalities,† he wrote. â€Å"No man is a proper citizen of one certain country while he claims at the same time to be a citizen of any other country. †

The Practical Use of Research

The Practical Use of Research The term Research is an often misused term. Its usage in everyday language is very different from the strict scientific meaning. The Oxford Dictionary of Current English defines it as the study of materials and sources in other to establish facts and reach new conclusions. The term Research is a multi-faceted concept that has attracted numerous views. It is both a process and an outcome. But no matter the dimension, it should lead to understanding of an outcome. Research refers to empirical data collection in the pursuit of scientific endeavour usually in the form of an experiment, survey or evaluation (Australian Psychological Society, Code of Ethics). According to Osuala (2005), Research is simply the process of arriving at dependable solutions to problems through the planned and systematic collection, analysis and interpretation of data. Research is a most important tool for advancing knowledge, for promoting progress, and for enabling man to relate more effectively to his environment, to accomplish his purposes, and to resolve his conflicts. Another school of thought defines research as the process of investigation, an examination of a subject from different points of view. It is not just a trip to the library to pick up a stock of materials, or picking the first hits from a computer search, but the hunt for the truth. It is also getting to know a subject by reading up on it, reflecting , playing with the ideas, choosing the area that interest you and following up on them. In other wards it is a way you educate yourself (Denscombe, 1998). Creswell (2003) identifies research as the systematic process of collecting and analyzing information to increase our understanding of the phenomenon under study. It is therefore the function of the researcher to contribute to the understanding of the phenomenon and to communicate that understanding to others. From the above definitions of the concept and from my own judgment, I can state from a broad sense of the word that research include the gathering of empirical data, information and facts for the advancement of knowledge. It also involves a dedicated system of scientific methodology that can be used by researchers to arrive at the right conclusion. The three definitions above are not entirely different from my point of view because Denscombe, 1998, seem to explain that research involves an in depth inquiry about a subject to make an informed judgment. Creswell, 2003, agrees with me that data or information obtained and process leads to an increase in knowledge of the subject. However, research is not only about the pursuit of scientific endeavours as stated by the Australian Psychological Society, Code of Ethics, (2001), but a social event as well. The limitation of scientific method must, however, be thoroughly understood. For example, science cannot deal directly with values. It can define some of the issues involved in making value-judgments, but the judgment themselves are outside the scope of science. Research is a tool for studying social events and learning about them and their interconnections so that general causal laws can be discovered, explained and documented. Knowledge of events and social laws allows society to c ontrol events and to predict their occurrence and outcomes. Research is oriented towards the discovery of the relationships that exist among the phenomena of the world in which we live. It is devoted to finding conditions under which a certain phenomenon occurs and the conditions under which it does not occur in what might appear to be similar circumstances. From the above discussions research is a series of linked activities. According to Atkinson and Bouma (1995) research processes has three main phases. These are phase one: Essential first steps Selecting, narrowing and formulating the problem to be studied. Selecting the research design. Designing and devising measures for variables. Setting up tables for analysis. Selecting a sample. Phase two: Data collection Collecting evidence or data about the research question. Summarizing and organizing data. Phase three: Analysis and interpretation of data. This involves Relating data to the research questions and hypothesis. Drawing conclusions Assessing the limitations of the study. Solution to the problem in the form of recommendation Making suggestions for further research. What Research is not Research does not include what is already known, but is reserved for activities designed to discover facts and relationships that will make knowledge more effective. Attempts to classify types of research pose a difficult problem (Best and Khan, 1993). This is because various textbooks suggest different systems of classification. These are classifications by: purpose of research; Method used in the research; and paradigm of the study. Research can be classified into two broad categories namely scientific or experimental research and social science research. For the purpose of my study I wish to explain research under social science. Social science research, irrespective of its type and nature, entails a degree of measurement. This involves categorizing and assigning values to concepts, and is diverse in nature and levels of operation. It is also a very useful procedure because it serves to ensure high quality in research. Diversity in research reflects diversity in the parameters that guide it. More precisely, it means diversity in the Ontology and epistemology that underlie the methodology, which in turn guide the research. Simply, methodologies produce different research designs, because they follow in their theoretical structure different ontological and epistemological prescriptions. Critique of my definition of research Concerns with the definition of research in my opinion may be raised by what I referred to as gathering of empirical data, information and facts for the advancement of knowledge, hence a critique of my definition. Flaws or weaknesses in my definition. There has been considerable interest in recent years in the role of philosophical assumptions and paradigms in doing research. During the 1970s and 1980s prominent concerns were raised about the limits of quantitative data and methods often associated with positivism, the prevailing paradigm. Positivism assumes an objective world which scientific methods can more or less readily represent and measure, and it seeks to predict and explain causal relations among key variables. However, critics argued that positivistic methods strip context from meanings in the process of developing quantified measures of phenomena (Guba and Lincoln, 1994: 106). The issue therefore of empirical approach to research has been justified by its success in measuring quantitative research. However, in more recent years, scientists have been challenged to explain phenomena that defy measurement and their inability to quantitatively measure some phenomena and the dissatisfaction with the results of measurement of other phenomena which have led to an intense search for other approaches to study human phenomena. This interest has led to an acceptance of qualitative research approach which does not need empirical data to discover knowledge. One cannot help but to stuck by the success of qualitative research methods in the marketplace of academic ideas (Atkinson, 1995, p. 117). The background of using qualitative methods to study human phenomena is rooted in the social sciences. This tradition came about because aspects of human science were unable to be described fully using quantitative research methods. More recently, the practice of qualitative rese arch has expanded to clinical settings because empirical approaches have proven to be of limited service in answering some of the challenges and pressing clinical questions, especially where human subjectivity and interpretation are involved (Thorne, 1997, p. 28). However, the use of qualitative research has its own flaws as well. It is unable to study relationships between variables with the degree of accuracy that is required to establish social trends. Empirical scientists who support the Cartesian framework believe that if objective measurement cannot be assigned to a phenomenon, then the importance and thus the existence of the phenomenon may be in question. Many contemporary scientists and philosophers question the value of this system, particularly in situations that include humans and their interactions with other humans. Data quality is very important for the research purpose and if care is not taken often, critics think the nature of data collection could lead to the production of large amounts of useless information. Empirical data should not be the approach of investigating social actions to interpret and understand the actors reasons for social actions, but to subject their action into reality. Information and facts Others may say that what may be a piece of information to one researcher may be irrelevant to another. Therefore how do we determine relevant information or facts for research? Quantitative research methodology has its weaknesses, among other things for the way in which it perceives reality, validity and the methods it uses as well as the relationship it establishes with the researched. Qualitative research methodology has been criticized, among other things for not being able to cope with demands related to reliability, objectivity, representativeness and the value of collected data. Advancement of Knowledge; Again, critiques think that in research people may omit evidence that may not agree with their opinion and could produce inadequate information which does not represent the facts. In other words, beliefs may be established on insufficient evidence. Therefore improper conclusions or inferences owing to personal prejudices may be drawn. The common response to these criticisms is that, these concepts are strengths and not weaknesses of my definition. With the underlying terms or concepts that I have used in my definition, let me consider the following; Empiricism. Empirism goes back to the writings of the seventeenth and eighteenth centuries, and is directly associated with the work of Francis Bacon (1651-1626), John Locke (1632-1704) and David Hume (1711-1776). Empiricism supports the view that knowledge come through experience mediated through the senses and insight can only be achieved through pure experiences. Empiricism assigns a high value to experience and gives primacy to facts. Hence, observation and experience offer the basis of knowledge. For Hughes, (1990), opinions are reflections of our impressions of reality. In a more radical form, empiricism argues that only things that can be verified empirically exist. What cannot be verified does not exist; truths that are not based on experience are meaningless. Quality of data. Often, data collection is essential for a reliable and valid research. Data collection entails decisions and action regarding the collection of the information required to address the research question. Data processing entails grouping, presentation, analysis and the interpretations of the findings. Examine and compare data after which data should be conceptualized and analyzed qualitatively or quantitatively. Empirical data are generally relevant for analysis. Research Information here refers to any relevant material that is useful for and during the study. They may include key informants, study groups, events and methods of data collection and assistants. Ways of Gaining / advancing Knowledge The means by which man seeks knowledge to his problems can be classified under broad categories; tenacity, authority, and science. The Method of Tenacity; under this situation people hold firmly to the truth, that they know to be true because they hold firmly to it, because they have always known it to be true. Frequent repetition of such truths seems to enhance their validity. People also infer new knowledge from propositions that may be false. The Method of Authority; this method establishes belief. If the Bible says so, it is so. If a mother says it, it is true. Life could not, in fact, go on without the method of authority (Osuala, 2005). The Method of Science; Francis Bacon (1561-1626) planted the seeds of acquiring modern scientific knowledge. He suggested that conclusion should be based on observed facts. The triangulation of both inductive and deductive reasoning gave birth to the scientific method. This method has self-correction aspects which it is believed no other method of attaining knowledge has. There are built-in checks all along the way of this method. These checks are so conceived and used that they control and verify the scientists activities and conclusions to the end of attaining dependable knowledge outside himself. A scientist does not accept a statement as true even though the evidence at first looks promising. Dependable knowledge is attained through science because science ultimately appeals to evidence; propositions are subjected to an empirical test. Conclusion: From the above discussions research in my opinion is a process by which we come to know what we want to know. It is a series of linked activities but should not be seen as a set of rigid steps to be followed. The obvious function of research is to add to existing store of knowledge and sometimes remove inappropriate or inapplicable theory. The three definitions and my personal own on research all go to add to further clarify the meaning of research as being purposive in the solution of a given problem, demands logical and objective approach, involves gathering data from primary and secondary sources. It also demands accurate and adequate knowledge about what already exist and how others have tackled it.