Understanding Profit and Loss: A Simple Guide for 2023

What is Profit?

Profit is when you make more money than you spent to make something or sell something. Let's say that you sell lemonade for 10 INR (Indian Rupees) a cup, and it costs you 5 INR to make the lemonade. This means that your profit would be 5 INR for every cup of lemonade you sell.

What is Loss?

Loss is the exact opposite of profit. Loss is when you spend more money than you make from selling something. For Example, If the cost of making the lemonade was 15 INR and you sold it for 10 INR, you would have a loss of 5 INR for every cup of lemonade you sell.

It's important to keep track of your costs and your earnings so that you can make smart decisions about your expenses.

How to Calculate Profit and Loss

In this topic, we will explore how to calculate profit and loss, understand the relationship between cost and revenue, and other key terms related to profit and loss.

Terms to remember

Profit

When you make more money than you spent, its called making a profit.

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Profit or Gain = (S.P) - (C.P)

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Gain% = (Gain*100) / C.P

Loss

When you spend more money than you make, it's called Loss.

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Loss = (C.P) - (S.P)

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Loss% = (Loss*100) / C.P

Cost Price (C.P)

The amount of money you pay to buy something is called the cost price. There are two types of cost prices:

• Fixed cost: The fixed cost is constant, it doesn’t vary under any circumstances.
• Variable Cost: It could vary depending on the number of units and other factors.

Note: Gain or Loss is always calculated on Cost Price.

Formula 🤔🔢

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Cost Price = 100 / (100 + Gain %)* (S.P)

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Cost Price = 100 / (100-Loss %)* (S.P)

Selling Price (S.P)

The price at which a product is sold is called the Selling Price, usually denoted as SP. It is also sometimes called a sale price.

Formula 🤔🔢

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Selling Price = (100+ Gain %) /100 * (C.P)

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Selling Price = (100-Loss %) / 100 * (C.P)

Income

The money you earn from working or selling something.

Expenses

The money you spend to buy or make something.

Budget

A plan for how much money you will spend and earn.

Savings

Money that you don't spend, but keep for later.

Investment

Putting money into something to make more money later.

Profit and loss formulas

1. Profit or Gain = (S.P) - (C.P)
2. Loss = (C.P) - (S.P)
3. Gain% = (Gain*100) / C.P
4. Loss% = (Loss*100) / C.P
5. Selling Price = (100+ Gain %) /100 * (C.P)
6. Selling Price = (100-Loss %) / 100 * (C.P)
7. Cost Price = 100 / (100 + Gain %)* (S.P)
8. Cost Price = 100 / (100-Loss %)* (S.P)

Have you ever bought something and wondered how much money you could make if you sold it for a higher price? Or maybe you've sold something and wanted to know how much profit you've made. Understanding profit and loss is an important part of everyday life, and it can even be fun! In this article, we'll explore some real-life examples of how people can make money by buying and selling things.

1. If a child buys a pack of pencils for Rs. 50 and sells them to classmates for Rs. 10 each, they will make a profit of Rs. 50 if they sell all five pencils.
2. If Rahul buys a toy car for Rs. 200 and sells it for Rs. 250, he will make a profit of Rs. 50 with a gain percentage of 25%.
3. Suppose Maya buys a basketball for Rs. 300 and sells it for Rs. 200, she will experience a loss of Rs. 100.
4. If a child buys a pair of shoes for Rs. 500 and sells them for Rs. 600, they will make a profit of Rs. 100 with a gain percentage of 20%.
5. Suppose a child purchases a set of seeds for Rs. 60 and grows vegetables, they can sell each vegetable for Rs. 15, making a profit of Rs. 60 if all four vegetables are sold.

Saving money means keeping your money safe and spending it wisely. If you have more money left over, you can use it to make even more money. This is called increasing your profits. Here are some tips to help you save money and make more profits

1. Keep your money safe: Put your money in a safe place, like a piggy bank or a wallet.
2. Spend only on things you need: Only buy things that you really need, like food and clothes.
3. Look for good deals: Find the best price for things you want to buy.
4. Do a good job: When you work hard and do a good job, people might give you more money.
5. Share your things: If you have things you don't need, you can share them with others instead of buying new things. This can save you money and help you make friends.

Profit and Loss Question and Answers

1. By selling 33 meters of cloth, one gains the selling price of 11 meters. Find the gain percent. Choose:
2. The CP of 25 articles is equal to SP of 20 articles. Find the loss or gain percent. Choose:
3. An article is sold by X to Y at a loss of 20%, Y to Z at a gain of 15%, Z to W at a loss of 5% and W to V at a profit of 10%. If v had to pay Re 500, how much X paid for it? Choose:
4. A trader marks the SP of an object at a profit of 20%. Considering the demand of the object, he further increases the price by 10%. Find the final profit %. Choose:
5. A shopkeeper buys rice for Re 1600. He had to sell 1/4th at a loss of 20%. If he is to make an overall gain of 10%, what percentage of profit he needs to make out of the remaining  the stock of rice? Choose:
6. An uneducated retailer marks all his goods at 50% above the cost price and thinking that he will still make 25% profit, offers a discount of 25% on the marked price. What is his actual profit on  the sales? Choose: