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Can a Firm Go Out of Business While Making an Accounting

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Can a firm go out of business while making an accounting profit. Think about a company that buys a lot of inventory, starts a factory running and then sells most of the product (at a price far above cost)to a customer who is slow in paying. Exactly why may the company fail?


Definitions:

Judgment

The cognitive process of evaluating situations or information to make reasoned decisions or form opinions.

Reflexes

Involuntary responses to a stimulus, which are automatic and without conscious thought.

Sensory Deprivation

A condition in which an individual receives little to no sensory input, often used therapeutically or in research to study the effects on the mind and body.

High Anxiety

A state of intense fear or apprehension that can affect one's ability to function in daily activities.

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