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 â€“Â It is basically the price at which a commodity or object is bought at. e.g.Â Shopkeeper buying Sugar from Farmer to sell in his grocery store. In its short form it is denoted as C.P.

Selling Price â€“ 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 â€“ If Cost Price is lesser than Selling Price, gain is made.

Loss â€“ 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 venderâ€™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%