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[–] 3 points 3 months ago (2 children)

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 $1,000

With no other activity in a period, that is a $1,000 loss funded by cash.

DR Expense $1,000
CR Loan $1,000

Is a loss funded by borrowings.

DR Sales Discounts $1,000
CR Sales Revenue $1,000

Is 0 profit/expense as the sale was marked down to 0 (assuming no cost of sales).

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  • [–] 3 points 3 months ago (1 child)

    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.

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