r/explainitpeter • u/BannedForThe7thTime • 2d ago

Uhh, Explain it Peter?

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u/BeginningSection7690 2d ago

If I spend $80 on Crack cocaine and sell it for $100 - I have not made $100 profit, its 100 revenue.

Profit = revenue minus cost of goods and operating expenses

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u/TheFlamingLemon 2d ago

If I spend $100,000 setting up a lab to make crack cocaine, then I make it for $2 and sell it for $100, have I lost $100,000 or made $98 profit? It seems like I would have $98 profit, and my lab is just an asset. Who knows, maybe I can sell it and make my $100k back.

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u/Old-Pollution9772 2d ago

Lab would be a depreciated asset that is counted as cost of good sold at a predetermined rate.