How much loss is incurred due to a counterfeit note?

26 viewed last edited 3 years ago
Vivekanand Vellanki

Alice visits a gift shop to buy a gift. The gift costs $7. Alice gives the shopkeeper (John) a $10 bill.

Since John does not have change, he asks his friend Tom for change. Tom gives him the required change; and John gives alice the gift and $3 in change.

Ten minutes after Alice leaves the shop, Tom comes to meet John and informs him that the $10 bill is a counterfeit.

How much loss did John make?

When we did this at a training session, there were all kinds of answers ranging from $0, $10, $13, $17 to $20. What do you think is the answer? And, why?


I think this is the right answer to the question.

Lets imagine it is not a fake note

Alice came to the John and buy the gift cost of $7. Alice pays $10.

John does not have change, he asks his friend Tom for change. Tom gives him the required change; and John gives Alice the gift and $3 in change.

Here you have to know:

Alice Has benefited $10 ($7 gift + $3 in change)

NOTE: If you think Alice benefited $17,or $20...  ($10 for counterfeit + $7 gift +?) is wrong.  Because Alice has only a gift plus $3 in change which is equal to the counterfeit note $10.  

John has his gift cost $7  (Tom has taken a fake note and paid for Alice gift as in change)

Tom has a note of  $10

After realizing that the note is counterfeit Tom has lost $10.

If Tom demands John then he has pay Tom $10

So, totally John is losing $10 ($7 for gift + $3 given to Alice in change  )

False Thinking: Most of the people think that the product has a values so, we have include that in the loss. But we have to realize that the product value is already add in the $10 ($7 product value + 3 change).


I obey with the answer $ 20

What ever the amount and materiel received by the Alice is the loss to the John

Alice gift cost  = $ 7

Alice payed bill = $ 10 ($7 for gift + $ 3 in change)


Due to the counterfeit John has to pay the $10 to the Tom, but the John already has $ 7 (remaining money in Tom change ), So John has to add extra 3 rupees.

John Shopkeeper loss = Alice gift cost $ 7 + Alice payed money $ 10 + The amount going to pay due to counterfeit  to Tom is 3 $

John Loss = $ 20  

Vivekanand Vellanki
That's what a lot of people thought too. But, $20 is incorrect
Ho, really It's interesting I will try one more time
Mahesh Godavarti


This is the amount Alice gained ($7 in good and $3 in cash) and the amount John lost.

The $3 John borrowed from Tom would be given back to him. So, that is a wash.

Vivekanand Vellanki
John borrowed $10 from Tom, not $3. What do you mean by "wash" - why isn't that John's loss?