Zakaria, a 19 year old student, is passionate about pancakes and lizards. His long cherished dream was realized when he dropped out of school and started his own restaurant, named Lizards & Pancakes. The small restaurant offers pancake meals in an aquarium full of lizards and dragons. From the start, Zakaria understood that he would not attract a lot of customers, but continued regardless. He devoted all his time in the one-man business and borrowed some money at the bank. Zakaria did not care that the accounting profit just amounted to 800 per month." First, present a simple income statement that shows how the monthly accounting profit of 800 could have been calculated. Use cost and revenue accounts from your financial management text book and base all values upon plausible data that you make up. (4 points) Second, explain why Zakaria keeps his one-man restaurant open despite the low accounting profit (6 points)! Do so by looking at his decision making from an economist's perspective. Motivate your answer by providing a simple income statement with the following main accounts: explicit revenues, implicit revenues, explicit costs, implicit costs and base the values upon plausible data you make up (2 points). For this last income statement also justify the values for the main accounts (4 points). Where necessary, make sub accounts to distinguish between certain costs or benefits (4 points). Zakaria, a 19 year old student, is passionate about pancakes and lizards. His long cherished dream was realized when he dropped out of school and started his own restaurant, named Lizards & Pancakes. The small restaurant offers pancake meals in an aquarium full of lizards and dragons. From the start, Zakaria understood that he would not attract a lot of customers, but continued regardless. He devoted all his time in the one-man business and borrowed some money at the bank. Zakaria did not care that the accounting profit just amounted to 800 per month." First, present a simple income statement that shows how the monthly accounting profit of 800 could have been calculated. Use cost and revenue accounts from your financial management text book and base all values upon plausible data that you make up. (4 points) Second, explain why Zakaria keeps his one-man restaurant open despite the low accounting profit (6 points)! Do so by looking at his decision making from an economist's perspective. Motivate your answer by providing a simple income statement with the following main accounts: explicit revenues, implicit revenues, explicit costs, implicit costs and base the values upon plausible data you make up (2 points). For this last income statement also justify the values for the main accounts (4 points). Where necessary, make sub accounts to distinguish between certain costs or benefits (4 points)
