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(b) Explain how accountants know if they're measuring profitability and financial position "properly".

(b) Explain how accountants know if they're measuring profitability and financial position "properly".

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Answer #1

1) Measuring profitability and financial position by Accountants :-

Profitability is measured in terms net profit earned after all expenses and duties and taxes payments and payment to compulsory finance charges like interest, dividends.

Financial position measured in terms of Capital Employed, Fixed Assets, Current Assets, Liquid Assets value as on date, also loan secured by property, unsecured assets repayment systems.

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