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This is not bullshit as other comments are saying. "Profit" in this sense is a means of personal cash flow. Once the shareholders (including the founders) have
by jaxn 10y ago
This is not bullshit as other comments are saying.
"Profit" in this sense is a means of personal cash flow. Once the shareholders (including the founders) have their personal cash flow needs taken care of, the focus shifts to long-term value creation.
Part of that is reducing tax expense.
- hackits 10y agoProfit is derived from subtracting expenses from your revenue. Wage for businesses is a expense, and so is accusation cost of assets. I would assume Net Profit is taking into account all liabilities/assets/expenses/revenue for all departments.
- jaxn 10y agoAssets are amortized and not a part of the net profit calculation.
- hackits 10y agoThanks jaxn, I don't do accounting thats why I said `assume`.
- jaxn 10y agoThere are two primary documents that make up a businesses financial statements. The P&L and the Balance Sheet. The P&L is the profit and loss. It is where the terms "top line" and "bottom line" come from. The top line is total revenue. The bottom line is net profit. The balance sheet shows the assets and liabilities. Basically, the P&L is how a company performed for a period of time (month, quarter, year, etc) and the balance sheet is what the company is worth at a specific point in time.
- hackits 10y agoJaxn, just curious what books would you recommend to read to get into accounting? Because of hacknews i've been introduced into double entry book keeping using ledger (that I found really really useful). Kind of want to expand on the knowledge base (Not with ledger).
- jaxn 10y agoUnfortunately I have no idea. I just hard to learn it from doing my own books. It is something that was very opaque until all of the sudden it clicked. Kinda like learning object oriented programming for the first time.