Utility and the Lottery

This passage is taken almost exactly from the professor's lecture.

Logically, it makes no sense at all to play the lottery. You spend $1
to buy a ticket, and the chance of winning is so low it really is a
waste if money. But the downside (wasting a dollar) is defined and
relatively negligible.

So why do we play if the logical choice, based on statistics us that
we are wasting money? Because the choice to buy a lottery ticket is
made with our hearts, not our heads. Although the downside of the
lottery is defined as, at most, losing $1, the upside has unlimited
potential (what ever the total jackpot is for the date of the drawing).

So, the utility of playing the lottery, better thought of as "risk and
reward" is very small risk ($1), and very high reward.

But what if we changed the game? What if we had everyone write thier
name, address and phone number on the back of every ticket. We played
the lottery like normal and everyone with the winning numbers split
the prize (just like the current system). THEN we put all the other
tickets into a huge roll cage and drew one ticket.

The night after the lottery winner was chosen, whoevers name was
written on the back, the government hunted down and put in front of a
firing squad to be killed, in network TV.

Do you think that would change peoples view of the $1 lottery ticket
purchase?not the upside is the jackpot an the downside is the loss of
$1 AND the small chance your name will be drawn and you will be killed.

I bet the risk and reward would be viewed very differently by those
who chose to play the lottery. This defines Utility.

First Project Eyeopening Results

I see no reason to lie about my first project. It wasn’t pretty…

I described the project here and I came into the room with some decent confidence about my income statement and my journal entries. I left the room feeling pretty good about the journal entries and the T-Accounts. Here is the big problem, my Income Statement had the correct net income amount... not really a problem unless... (as in my case) I was all over the place to get to that number, just random coincidence, I guess.

Anyway, we went over the entire project in class, which took a while with so many people petitioning the professor to justify the way they labeled their accounts. When she specifically mentioned that the account names weren’t really that important as long as they were consistent from transaction to transaction. Though she was adamant that Inventory was not Supplies, as Inventory was directly involved in the creation of the final product, so I feel like that is important to remember.

All in all, it was an eye opening project, slapping me in the face with how much more information I need to learn before the first test next week. I don’t feel great about it at all. Thankfully we went over the project in class and got a chance to make changes prior to turning it in, pretty much ensuring a very good grade.

Sometimes doing a project, like this, and going over it in class to correct it definitely helps in learning and retention.

Financial Accounting First Project

So, this weekend was the first real test for me when it comes to the evening MBA program really grabbing at my time.

The first project is due today in Financial Accounting.  It is a Harvard Case Study, called the Chemalite, Inc Company.  We read a company description of the significant operating events that happened over the course of a year.

We are to do the Accrual Accounting journal entries for each transaction. Then do a "T-Account" for the Cash based transactions.  Finally, based on the information we have, we are to make an Income Statement and a Balance Sheet for the first year start-up company, Chemalite, Inc..

All in all, not incredibly difficult, just time consuming.  I feel I have a pretty good grasp on the dual journal entry concept, the T-Account creation, and the formation of an Income Statement.  I admittedly struggled with the creation of the Balance Sheet.  We will go over the project in class and then  turn it in.  It accounts for 15% of the final grade in Financial Accounting.  Lindsay was very supportive as I spent a solid hour and a half to two hours completing the Statement and T-Account portion of the project, as accurately as I could.  It too me an additional hour making the journal entries, I was pleased with the completion of the project and my beautiful girlfriends patience.

I will follow up tomorrow on how close to accurate my project turned out.