## Counterfeit Accounting

Early one morning Hal, the owner of a hardware store, sells a mailbox for \$25 to Courtney that cost him \$20 wholesale. Courtney pays with a \$100 bill and Hal discovers he doesn’t have enough change. He runs to the jewelry shop next door, where Jack, the owner, gives him change in exchange for the \$100. Later that afternoon, Jack discovers the \$100 bill is a counterfeit and Hal pays him \$100 to make it right.

What was Hal’s total loss?

The total loss was \$95.
-\$20 = The wholesale cost of the mailbox
\$100 = The money from Jack
-\$75 = The change paid to Courtney
-\$100 = To pay Jack back
-\$20 + \$100 – \$75 – \$100 = -\$95

It’s easy to think Hal lost \$195 but that fails to account for the \$100 used to make the change, which came from Jack, not Hal. Jack paid \$100 in exchange for a worthless piece of paper, so the \$100 was initially Jack’s loss. Hal had made a \$5 profit until Jack’s discovery. If you guessed \$100, that’s arguably correct, but not making \$5 in profit isn’t a loss in the strictest sense of the word.

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1 Comment on "Counterfeit Accounting"

Superwhiz Maths Person (also neutral as to not offend those who have a complex of themselves and others) says
March 10, 2018 @ 20:44

Another reasoning flaw due to withholding information.

This is like one of those choose your own adventure books of the ’80s, where you can choose the ending. Here are some alternatives.

Hal, after paying Jack the \$100, went to see Courtney. Courtney fesses up and pays back Hal the \$100.

or;

Hal, after paying Jack the \$100, went to see Courtney. Courtney apologises and gives Hal his letterbox back.

or;

Hal, after paying Jack the \$100, went to see Courtney. Courtney denies the claim, and Hal calls the police. The police charge Courtney due to the counterfeit money, and Hal sues for damages. It costs Hal \$9200 in court costs and days off work, but the court makes Courtney responsible for the \$100, and the judge lets Courtney off on good behaviour.

or;

Hal, after paying Jack the \$100, went to see Courtney. Courtney denies the claim, and Hal calls the police. The police are corrupt and Courtney bribes them with 10 x \$100 bills, and they refuse to help Hal. Hal gets mad and yells at Courtney, and the police claim that Hal is being unreasonable and beat him up and arrest him, where he thereby loses his business due to bad false reports instigated by Courtney, when only Hal, Courtney and the arresting officers know the truth.

or;

Hal, after paying Jack the \$100, went to see Courtney. Courtney denies the claim, and Hal calls the police. The police are corrupt and Courtney bribes them with 10 x \$100 bills, and they refuse to help Hal. Hal gets mad and stalks Courtney and shoots him/her dead, which in turn places Hal behind bars for life.

or;

Hal, after paying Jack the \$100, went to see Courtney. Courtney is a prostitute who Hal has been seeing on the side for some time now, hiding it from his wife, and Courtney decides to give him a “freebie” to make up for it. Courtney’s going rate was \$100 per hour, so Hal spends an hour with her. Hal’s wife divorces him, and takes half of everything he owns.

or;

Hal, after paying Jack the \$100, went to see Courtney. Hal doesn’t mention anything to Courtney, but hands her a receipt, which he says she forgot. The receipt was in a white envelope, and coated with a polonium salt. Courtney, her friends and her family all fall very ill, and eventually die to to radiation poisoning, as Courtney was unaware that this was on the receipt, and never washed her hands before eating food, and she had a large luncheon later that afternoon.