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Lies, Damned Lies, and Cost Accounting by Reginald Tomas Lee

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CHAPTER 3

Profit has Little to do with Making Money

Everyone talks about profit, and we assume that profit and making money are synonymous. The question is: Are they? Making money represents the amount of money you generate. It is cash and timing based. How much money you make is determined by the net cash you bring in over a given time period. Determining how much cash you generated should be tied directly to when you spend and receive cash. You cannot talk about how much money you made this year by considering what you’re going to spend next year and what you received last year. This notion is critically important. If you want to know how much money you have or expect to have you must consider the cash that comes in and leaves during the time ...

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