Mathematics is at the core of understanding business and social sciences. Both disciplines make use of arithmetic, quantitative methods, statistics, linear regression and calculus as they seek to describe, predict and analyze the vast array of numerical data available in the fields. This research examines the application of math in these areas with a particular emphasis on math with regard to the supply and demand function.
Anyone selling a product or providing a service uses basic arithmetic to determine how much money they take in and how much money they pay out. When the expenses are less than the revenues, they make a profit. This simple accounting principle becomes more complex as the items associated with the various components increases in complexity. Revenues can be based on cash received, or they may be placed on accounts receivable. Expenses and cost of goods sold similar can be paid for directly, or registered as accounts payable. Inventory valuation comes into play, and methods of determining inventory (LIFO vs. FIFO) can have long-term effects on a business. Eventually, financial statements are prepared in order to provide a way of determining where the company stands and how the company is doing relative to other organizations.
There are two primary financial statements: the income statement and the balance sheet. The income statement identifies the companies revenues, then subtracts the expenses associated with producing that revenue. When the costs are less than the revenues, the company has a net income; otherwise, there is a net loss. Mathematics is used to calculate each of the items on the income statement, although it does not determine which items appear on the statement. That is left to the accountant and to accounting standards.
The balance sheet states the financial condition of the company at a specific point in time. It is called a balance sheet because of the accounting equation that i...