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Mr. Bean is a retired government employee who is good in baking. One day he decides to put up a bakery shop in their barangay. He renovates a portion of his house to serve as the area to produce bread. He purchases baking equipment and raw materials to produce five different types of bread. Mr. Bean also hires Jack to help him with the baking and, at the same time, to be in-charge of sales. Mr. Bean pays Jack on a weekly basis. Every day, Mr. Beans wife deposits the daily cash sales in their bank account at XY Savings Bank. With the help of accounting, what possible decisions or questions of Mr. Bean can accounting provide an answer to?

Example: Is my business earning? (profitability)​


Sagot :

Answer:

How much assets does the business own?

How much liabilities?

How to manage cash?

How much is the working capital?

Can the current assets cover the business' current liabilities?

What is the profitability ratio of the business to its cost?