Ed Ng Is a Friend of Yours from University

question 20

Essay

Ed Ng is a friend of yours from university.After finishing high school he decided to open his own human resources consulting business rather than working for a large bureaucratic organization.He recently opened his business,and has contracted his services to a number of local retailers.He is paid a monthly fee for his services.
He has just received his first set of financial statements from his accountant.He is quite upset.The statements show a cash balance of $7,200 at the end of the month,but a net income of only $1,000.He has written you a letter,asking you whether such a situation is possible,or whether he should find another accountant.
Please explain to Ed what happened.

---

Definitions:

Increasing Volume

This term refers to situations where the quantity of products or services being produced or sold is growing over time.

Decreasing Volume

A situation where the amount or quantity of something, such as product production or sales, is reducing over time.

North American Trend

Refers to prevailing patterns, movements, or inclinations within the North American market or cultural context.

Insourcing

Bringing previously outsourced operations back in-house, to gain better control over processes and potentially reduce costs.