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Profit and Loss Questions and Answers
Concept of Profit and Loss
Profit and Loss Questions and basic concepts used are given here on this page. When a person conducts business, if he or she earns a certain amount of money after the transaction, it is called a profit. While, if he or she loses a certain amount of money, it is referred to as a loss. Profit and loss are the amounts of money when someone earns or loses money during a business transaction. The money paid over the original cost is loss, while the amount of money earned over the original cost is refered as a profit in a business transaction.
Basic concept used in Profit and Loss
- Cost Price – It is basically the price at which a commodity or object is bought at. e.g. Shopkeeper buying Sugar from Farmer to sell in his grocery store. In its short form it is denoted as C.P.
- Selling Price – The price at which the commodity is sold at. e.g. Shopkeeper selling sugar to his customer. In its short form is denoted as S.P.
- Gain or Profit – If Cost Price is lesser than Selling Price, gain is made.
- Loss – If Cost price is greater than the Selling price, Loss is incurred.
Rules
- If an item is sold at a profit of 25%, then its selling price = 125% of the Cost Price.
- If an item is sold at a loss of 25%, then its selling price is 75% of the Cost Price.
- When two similar items are sold by a person, one at the profit of a%, and the other at a loss of a%, then the vender’s faces a loss which is given by:
Loss% = \left ( \frac{a}{10}\right )^{2} - If a vender wants to sell his items at cost price and uses incorrect weights, then
Gain% = \frac{Error}{True\: value – Error }x100%