Basics Of Profit And Loss

Profit and Loss is a topic that is definitely asked in every placement exam. While the questions are not too tricky, some require deeper understanding of concepts, but most of them are based on certain well-known formulas.

Common terms
o    Profit
o    Loss
o    Cost Price
o    Selling Price
o    Marked Price

Profit(P)
o    The amount gained after selling a product more than its cost price.

Loss(L)
o    The amount, the seller gets after selling the product less than its cost price, is mentioned as a loss.

Cost price
o    The price at which an article is purchased is called its cost price and denoted by cp.
o    For any person, the cost price is an amount or quantity which firstly releases from the pocket of that person.

Selling price
o    The price at which an article is sold is called its selling price, denoted by sp.
o    For any person, the selling price is an amount or quantity which comes to the pocket of that person.

Marked price
o    MRP of an article is known as marked price or labeled price or listed price and denoted by MP
o    Discount always carried on MRP (MP)
o    MRP is always 100 % in the case of a discount.

 Formula

 Profit or gain: if s.p (selling price ) is greater than c.p(cost price) then the seller is said to have a profit or gain i.e

Profit = s.p – c.p

Loss
o    If s.p is less than c.p the seller is said to have a loss. i.e

Loss = c.p – s.p

o    Profit and loss are always counted on c.p
o    C.p is always 100% in the case of profit and loss
o    For any transaction there are two persons involved one is called the buyer and the second one is called seller.