Soundtrack: In Flames - Colony
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Exactly. My terminology might not be correct, but my point is that their books can be perfectly balanced, and they can also be losing a shit-ton of money, as long as investors keep shoveling money in.
A loss is not an imbalance of debits and credits, but how much of those debits end up in expenses and the credits end up in revenue.
DR Expense $1,000 CR Cash $1,000With no other activity in a period, that is a $1,000 loss funded by cash.
DR Expense $1,000 CR Loan $1,000Is a loss funded by borrowings.
DR Sales Discounts $1,000 CR Sales Revenue $1,000Is 0 profit/expense as the sale was marked down to 0 (assuming no cost of sales).
Exactly. My terminology might not be correct, but my point is that their books can be perfectly balanced, and they can also be losing a shit-ton of money, as long as investors keep shoveling money in.
Yeah the terminology
is the opposite of everything discussed above.