This document discusses concepts and formulas related to profit and loss calculations. It defines key terms like cost price, selling price, marked price, trade discount, cash discount, commission, and brokerage. It provides formulas to calculate profit, loss, cost price, selling price, and marked price. Examples are given to demonstrate calculating trade discount and cash discount, percentage of loss, and percentage of profit. The overall aim is to explain the basic concepts and calculations involved in determining profit and loss.

1. Profit and Loss
1 Concepts in Profit and Loss
2 Formulae of Profit and Loss

2. Introduction
⮚ The aim of every business is to earn profit.
⮚ Every trader tries to sell the goods at a price higher than their cost, so that he may
earn a profit.
⮚ Sometimes, however he may be forced to sell them at less than the cost, in which case
he suffers a loss.
⮚ Thus the excess of selling price over the cost price is profit, and the excess of cost price
over the selling price is loss.

3. 2.1. Concepts in Profit and Loss

4. 2.1. Concepts in Profit and Loss
1) Cost Price (C.P) :
When a person pays amount to purchase an article, transport charges, octroi charges etc.
Then the total amount paid is called as cost price.
2) Profit :
The excess of selling price over the cost price is known as profit. Profit is always calculated on
cost price. When a shopkeeper purchase an article for Rs.100 and sells the same article for
Rs125 then he earns a profit of rs.25.
3) Loss :
The excess of cost price over the selling price is known as Loss. Loss is always calculated on
cost price. When a shopkeeper has purchased a certain article from wholesaler or
manufacturer and if the price fall down. In such case the shopkeeper is forced to sell the
article at as price less than cost price.
4) Selling Price (S.P) :
Total amount realised by selling an article is called as selling price of that article. Selling
price includes profit or loss.

5. 2.1. Concepts in Profit and Loss
5) Marked Price (M.P) :
The printed price of an article or catalogue price for which the consumer gets the article is
called as Marked price. This price is also known as list price or Catalogue price.
6) Trade Discount :
Discount is a deduction for the sale value of goods allowed by the seller to the buyer. traders
who buy good in large quantities from manufacturers or wholesalers are generally given an
allowance on the list price of the goods. This is known as trade discount.
7) Cash Discount :
Cash Discount is a deduction allowed by a creditor to a debtor on the amount due from the
latter, if he settles the account within a specified time. This is a sort of incentive for the debtor
to pay early. The seller who has sold goods on credit thus gets back his money early so that
he can use it for further business. Sometimes,a buyer may get benefit of both discounts in
such a case.

6. 2.1. Concepts in Profit and Loss
8) Commission :
The remuneration paid by the manufacturer to the agent is called as commission. Commission
is always paid on selling price. The rate of commission is usually in the form of percentage of
the value of transaction. It may be uniform for the entire amount or it may vary after certain
amount of sale.
9) Brokerage :
In some transactions agents charge commission to the seller as well as to the buyer. They are
called as ‘brokers’ and the commission in such cases is termed as brokerage. The brokers work
in the field of purchasing and selling of shares, debentures, bonds, vehicles etc.

7. 2.2. Formulae in Profit and Loss
1) Profit = S.P.-C.P.
1) Loss = C.P.-S.P.
1) S.P = C.P.+Profit
4) S.P = C.P.-Loss
4) C.P = S.P. – Profit
4) C.P. = S.P. + Loss
4) S.P. = M.P. - Trade
Discount
4) Cash Price = S.P. - Cash Discount
9) M.P. =

8. 2.2. Formulae in Profit and Loss
Important Points to be Remembered :
1)Percentage of profit or loss is always calculated on C. P.
1)Commission or discount is always calculated on S. P.
1)Percentage of profit or loss does not depend on number of articles sold or purchased.

9. Example: 1) (Trade Discount and Cash Discount)
Rajesh Purchased a Calculator whose list price is Rs. 360. The trader allowed 10% Trade Discount
and 2% cash discount. How much net amount Rajesh has to pay?
Solution:
Exercises

10. Example: 2) (To Find Out Percentage of Loss)
A T. V. set costing Rs. 18,000 was sold for Rs. 15,500 after two years find the percentage of loss ?
Solution:
Exercises

11. Example: 3) (To Find Out Profit and Percentage of Profit)
A Flat costing Rs. 3,00,000 was sold for Rs. 3,30,000 after two years. Find the percentage of
profit ?
Solution:
Exercises

12. THANK YOU
MADE BY – GROUP 3
CLASS – 7C