Over the course of the year, we earned some money.

So this right here you could view as our income statement.

So they can see where the buisness is doing well, where it's not doing well, or maybe how rescorces should be allocated

And so your profit is 100.

On the cash basis it looks like you lost money again.

The customer pays you 200 for your services

Let's now account for the same series of events but instead of doing it on a cash basis

Give a better indication of what's actually going on in the buisness, and the way I did it in the first two videos, the first column over here

let's do it on an accrual basis.

So both cash and Accounts Receivables are assets.

So this kind of the cash income statement,

And so in month 4 we earned 100, and once again, 100 went away from our cash balance, so we still have 400.

Maybe as people, because especially in Israel, we're in a democracy.

When did Democracy come into existence?

Communism, capitalism...

There seems to be a problem with the main reactor.

And you didn't have to spend any expenses because you didn't do any accounting.

Nice college kid. Socialist.

Google is a company born of idealism.

But the Soviet Union had neither a capitalist system nor a democracy.

Individual freedom is the soul of democracy.

But, we can escape from this trap, these pincers, I think.

Soviet Union was Communist and it was totalitarian. Communism and democracy are not necessarily things that go against each other.

Do not forget that fascism, communism, capitalism or other isms are all monetary systems.

Before, revolutions used to have ideological names.

So hopefully this gives you a idea of why accrual gives a better picture of what's happening in a buisness.

You see, idealism detached from action is just a dream.

Communist, Nazi, fascist ...

Social 45 years of what?

We can do this.

So now it get's interesting, because you performed the catering that month and the catering you performed that month is worth 400.

It has been reported that 32 trillion of paper assets were printed by one government alone.

And in the end, there's better bargaining between the authorities and citizens, and democracies, capitalism everything else flourished.

And I think the getaway message from that would be that Islam, despite some of the skeptics in the West, has the potential in itself to create its own way to democracy, create its own way to liberalism, create its own way to freedom.

Then, I've discovered, with wonder, the brilliant ideas that founded the Athenian democracy.

And democracy was the political innovation which protected this freedom, because we were liberated from fear so that our minds in fact, whether they be despots or dogmas, could be the protagonists.

And this science is not a rich man's game.

He's a vegetarian.

So I'm gonna start of, we're gonna focus on month 2 and what I've done is I've rewritten some of this accrual income statement down here so it really looks like a statement so this right here is the income statement for month 2 on an accrual basis.

The Limits of Democracy

The constitution's gone.

In communism, the means of production are owned by the state.

(Laughter)

Read it from an African woman, the damage that we have done.

Why would I want to invest in this buisness that's losing 200 a month?