One of the basics in #accounting is preparing the #budget statement for the coming year. What are my Expenditures and what is my Income. Personal households, companies and #countries face this issue every year.
For personal households questions like; “Which part of my income do I have to put aside for my pension?”. “Can I make that so much desired trip to Costa Rica this year?” need to be answered.
Countries are facing problems alike. They don’t need to budget holidays, but they do need to budget much more important things like, Medicare, social security, defense department, interest, etc.
It can occur in a particular year that the income of a personal household doesn’t meet the expenditures. It can be part of a #long term budget scheme, were past or future income will fill the gap. If not, action needs to be taken to bring back the balance in expenditures and income to avoid a bankruptcy.
We all know that most of the countries run deficits each year. We all know they make Budget Statements as well.
So, if we take the US budget statement 2012, we can conclude that as of September 12, 2012
Income doesn’t cover Expenditures anymore. As of this week to the end of the year, or the coming 110 days, the gap of 1,3 trillion has to be borrowed to meet obligations.
I know, it is actually not that simple, linking this event to a specific date. But I like it, I do it with a lot of things, like; “How many days do I need to work each year to fulfill my taxes?” ”How many days do I have to work for that particular holiday?” It gives me a proper view on the value of money.