The concept of “going concern” in accounting emphasizes that a business must persist into the future to retain its value. This principle signifies that present value already incorporates expectations of future value; thus, a business facing uncertainty about its future will inevitably diminish in present value. It highlights the interconnectedness of present and future values, suggesting that they cannot be regarded in isolation. All stocks traded on the stock market are priced based on their anticipated future value. In essence, we trade on a future that has yet to materialize. Consequently, determining how far into the future to evaluate is a critical factor in making investment decisions. Since individuals have varying skills and perspectives on forecasting the future, selecting an investment strategy must align with one’s attitude toward time. - Joseph’s “just my thoughts”
A bank trades collateral by holding debt called savings and selling bonds known as loans. Customer deposits are not bank money and must be returned to the customer as the bank’s debts. These debts lure customers; the bank lends money to them to recreate bonds with the customers’ debts. At this point, there is “collateral (mortgage)” to prevent the risk of bankruptcy between bonds and debts. In other words, banks do not possess the collateral; they merely govern it. The primary instrument of control is their bonds. In a way, banks tend not to be places where they make money with their own possessions, but rather conduct business as if it were their own with others’ collateral. Therefore, because banks need to know the value of secured collateral, the most accurate investigation of real estate and valuable gem information is key to banking. This is the similarity between a bank and a library that accumulates information.
- Joseph’s “just my thoughts”
Comments
Post a Comment