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Lesson 2: Some Basic Concepts
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Sales v/s Revenue
Revenue
Top Line
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Sales v/s Revenue
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Profits vs Income
$40 $10 $75
Revenue $75
Costs and Expenses $50 ($40 + $10)
Profits/Income $25 ($75 - $50)
Bottom Line
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Profits vs Income
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Costs vs Expenses
Cost Expenses
Money spent to make a product
Money spent to develop, sell, manage and account for it
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Profit vs Cash
• ‘Profit’ and ‘Cash’ are not the same thing.
• ‘Profit’ is what you earn from revenues, after meeting all expenses and costs.
• ‘Cash’ is something that you have in the bank or in hand and are not necessarily related to profits.
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© KayOne Education, 2015
Profit vs Cash
Sales $100,000 Costs and Expenses $75,000 Profit $25,000 Equipment purchased $ 10,000 Cash balance $15,000
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Summary
Some Basic Concepts
§ Sales and revenue mean the same thing. § Profits and income mean the same thing. § Costs are different from expenses. § Profits are different from cash.
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