(a) Explain the difference between between profitability and financial position.
Profitability measures the rate of return or profit or income earned by the business. An income statement is prepared to know the profitability of the business. Profitability is measured for a period of time example monthly, quarterly, semi annually or annually.
On the other hand, financial position measures what the business owns and what it owes at a particular point of time. Financial position is measured by the assets and liabilities and stockholder's equity as shown by the balance sheet at a particular point of time.
(a) Explain the difference between between profitability and financial position.
QUESTION 1 In class you learned that In order to measure profitability and financial position properly, accruals and deferrals need to be accounted for. (a) Explain the difference between between profitability and financial position. (b) Explain how accountants know if they're measuring profitability and financial position "properly". (c) Differentiate between accruals and deferrals and provide specific examples of each. .
(b) Explain how accountants know if they're measuring profitability and financial position "properly".
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