At closing time a shop has Rs 8,000 in the cash box
At closing time a shop has Rs 8,000 in the cash box. The owner says the day made a profit of Rs 8,000. His son says that is not the profit. Who is right?
Who do you think is right? Pick one.
The answer: The son is right
Why
The owner is looking at a real number, and it is the number that matters most for paying tomorrow's bills — cash in hand is not nothing. But money taken in and money earned are different things. Out of that 8,000 he has to replace the stock he sold, or the shelves are emptier than they were this morning. Then rent, electricity, the helper's wages, and whatever he paid to bring the goods in. What remains after all of that is profit; the rest was only passing through his hands. Picture a bucket under a tap with a hole in it — the water that flowed in is not what you have. Test: sell twice as much at less than cost and the cash box looks wonderful while the business dies. The son is right: takings minus every cost is profit, and confusing the two is how a busy shop goes quietly broke.
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