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Case Overview

Branellec, Christa Dolatre, Patricia Morco, Rachelle Orilla, Alyssa Talens, Joria

Why would Rosario or anyone else go into business?


Mainstream point of view: Profit

Multistream point of view: Purpose

She may feel a great sense of accomplishment.

She has a feeling of greater security, freedom, and independence. It would give flexible working schedules. It would foster leadership skills. She was fully encouraged by her family and friends. She wants to gain more knowledge, skills, and experiences.

She wants to obtain power and prestige. She has the determination, the courage, and the capital. The business would serve as their form of livelihood. Rosario wants an improved lifestyle. She has the opportunity to provide new goods and services to the people as an entrepreneur.



How will accounting meet the information needs of business owners like Rosario?

Accounting will easily identify the status and financial standing of the business. Accounting also helps in classifying and organizing the data or information that will help in the planning, controlling, and decision-making process of the business.

It also identifies problems or opportunities to improve and keep track of business transactions. Accounting keeps track of the flow of the money inside the business like the inputs and outputs that would aid in managing and controlling the business.

It truthfully evaluates the performance of the business.

How well did Rosario Dress Shop perform during the year?
S Rosario earned a good amount of profit, which satisfied

her. Unfortunately, her profit for the year did not meet with her goals because of the liabilities that she has to pay and the incapability to expand her business.

What are the factors to be considered in assessing the equity of a business owner like Rosario?

S There should be a higher value of assets and revenues,

that reflects to the net income of the business, than the liabilities that may result to the net loss of the business.

What identifies a strong financial position of any company?


Fairly-valued and relatively liquid assets as well as a smaller amount of liabilities in comparison to the owner's equity equal a strong financial position. A company has a strong financial position when every input or output is stated, identified, classified, and organized.
A company has a strong financial position when assets, revenues, profits, and the net income is widely visible and when all liabilities are paid.

A business that has a high amount of equity is considered financially stable and thus a better investment option to avoid bankruptcy. The business should be generating a positive cash flow. All information should also be presented to shareholders in the balance sheet confirming every input and output in the business that shows financial stability.