The Money PagesWe Sold $40 of Lemonade. Did We Make $40?
Before splitting the money, the pretend stand needs to subtract its costs.
A pretend stand sells 20 drinks for $2 each. That's $40 from sales.
Can the owners split all $40? Not yet.
Cups, ingredients, and other costs add up to $28. Subtract those costs:
$40 − $28 = $12.
The $40 from sales is called revenue. The $12 left after costs is profit in this simple example.
The business might keep some profit for its next batch of supplies. It doesn't have to pay it all to the owners.
Lots of sales don't always mean lots of profit. If costs are higher than sales, the business loses money.
Money words
Revenue
Money a business gets from sales, before taking away costs.
Sales money is not all profit. Subtract costs first. The business may need to keep some of what is left.
