1.Enrique runs a flower stall in the local shopping mall. The stall rents for $1,600 a month. Enrique buys the flowers at $2 a bunch and sells them for $3 a bunch. He'll be open seven days a week, eight hours a day, and plans to sell 100 bunches of flowers a day. He's hired Rosita to work three hours each of the five school days and eight hours each day on Saturday and Sunday. Enrique pays Rosita $6 an hour. He works at the stall whenever Rosita is not working. If Enrique didn't work at the flower stall, he'd make $10 an hour as a cook. How much accounting profit and how much economic profit does Enrique make a week

Enrique

a) Accounting profit = $114

b) Economic profit (loss) = ($136)

Explanation:

a) Data and Calculations:

Monthly Rent = $1,600

Cost price of flowers = $2 per bunch

Selling price of flowers = $3 per bunch

Operations are for 7 days (8 hours daily) = 56 hours

Quantity of flowers sold per day = 100 bunches

Quantity of flowers sold per week = 700 (100 * 7)

Employee hours = 5 * 3 + 2 * 8 = 31 hours

Hours worked by Enrique = 25 (56 - 31)

Employee wages = $186 ($6 * 31)

Opportunity cost: Enrique = 25 * $10 = $250 per week

Accounting profit:

Sales revenue ($3 * 700) = $2,100

Cost of sales ($2 * 700) =     1,400

Gross profit                            $700

Expenses:

Rent ($1,600/4) =          400

Employee wages =        186   586

Accounting profit =                $114

Economic profit:

Accounting profit      $114

Opportunity cost       250

Economic loss =       $136

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

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