3 ms·

An investment is an expenditure of money. What part of money set aside for expansion will not go to an expense? Where does it go?

hardwaresofton 10y ago
How I'm understanding is that these things happen at different times. 1. Business operates for X days (1 quarter, 1 year, whatever) 2. Business calculates it's profit (revenue - expenses) 3. Business now has a choice on what to do with it's profit. At t = 3, the profit is not an expense, though it will ultimately be used to benefit the company/cause (if it's a nonprofit). nonprofit organizations must decide what to do with profit, if they have generated more revenue than they have expenses. The difference between a nonprofit organization (from another org) is that the profit must go either back into the company, or into the cause. Arguably, the money that goes back into the company goes into the cause anyway, as it is in service of the cause. Maybe it's just a matter of semantics, I could see it being incorrect to call something "profit" that is never allowed to be spent on anything other than the company/cause. However, the strict definition of profit is pretty bare-bones, simply revenue - expenses, so I think it qualifies.
- jsprogrammer 10y ago
  A nonprofit with profit is a contradiction. I get that some may perform calculations with labels called profit, but that contradicts the underlying thesis of the organization (as you've admitted).
  - hardwaresofton 10y ago
    "nonprofit" is a bit of a misnomer -- if you don't take my word for it, please check other sources like investopedia or wikipedia I pasted investopedia already so here is wikipedia: https://en.wikipedia.org/wiki/Nonprofit_organization https://en.wikipedia.org/wiki/Nonprofit_organization Note "surplus revenues", and if you click that, wiki says they're basically the same as "profit" (because... surplus revenue is profit...)
    - jsprogrammer 10y ago
      A non-profit would probably need to pre-allocate revenue.

hardwaresofton 10y ago

How I'm understanding is that these things happen at different times. 1. Business operates for X days (1 quarter, 1 year, whatever) 2. Business calculates it's profit (revenue - expenses) 3. Business now has a choice on what to do with it's profit. At t = 3, the profit is not an expense, though it will ultimately be used to benefit the company/cause (if it's a nonprofit). nonprofit organizations must decide what to do with profit, if they have generated more revenue than they have expenses. The difference between a nonprofit organization (from another org) is that the profit must go either back into the company, or into the cause. Arguably, the money that goes back into the company goes into the cause anyway, as it is in service of the cause. Maybe it's just a matter of semantics, I could see it being incorrect to call something "profit" that is never allowed to be spent on anything other than the company/cause. However, the strict definition of profit is pretty bare-bones, simply revenue - expenses, so I think it qualifies.

jsprogrammer 10y ago
A nonprofit with profit is a contradiction. I get that some may perform calculations with labels called profit, but that contradicts the underlying thesis of the organization (as you've admitted).
- hardwaresofton 10y ago
  "nonprofit" is a bit of a misnomer -- if you don't take my word for it, please check other sources like investopedia or wikipedia I pasted investopedia already so here is wikipedia: https://en.wikipedia.org/wiki/Nonprofit_organization https://en.wikipedia.org/wiki/Nonprofit_organization Note "surplus revenues", and if you click that, wiki says they're basically the same as "profit" (because... surplus revenue is profit...)
  - jsprogrammer 10y ago
    A non-profit would probably need to pre-allocate revenue.