Are you not aware of what is profit and loss? Are you finding it difficult to understand the concept? Do you feel that you cannot apply it in questions?
Then this blog is your answer!!
What is Profit and Loss?
Profit and loss are used to identify whether a deal is profitable or not. We use these terms often in our daily lives. If the selling price is greater than the cost price, then the difference between the selling price and cost price is called profit. If the selling price is less than the cost price, then the difference between the cost price and the selling price is called loss. The price at which a product is purchased is called its cost price. The price at which a product is sold is called its selling price.
When a person buys an article for a certain price and then sells it for a different price, he either makes a profit or incurs a loss.
There are various terms that are related with process of making a transaction.
When, in a transaction, the selling price is greater than the cost price, it means we earn a profit.
When, in a transaction, the cost price is greater than the selling price, it means we incur a loss.
Marked price is the price set by the seller on the label of the article. It is a price at which the seller offers a discount. After the discount is applied on the marked price, it is sold at a reduced price known as the selling price.
To cope with the competition in business in the market and enhance the sale of goods, shopkeepers often offer discounts to customers. The rebate or the offer given by the shopkeepers to the customers is called a discount. Discount is always calculated on the marked price of the product.
Discount = Marked Price - Selling Price
If the selling price of an article is greater than its cost price, then there is a gain in the transaction. The basic formula used for calculating the profit is:
Profit = Selling Price – Cost Price.
If the selling price of an article is lesser than the cost price, then there is a loss in the transaction. The basic formula used for calculating the loss is:
Loss = Cost Price – Selling Price
In most of the government competitive examinations, questions on profit and loss are frequently asked with different kinds of variations where using basic formulas can help you to solve all kinds of tough questions. Such questions can get you easy marks provided you understand the concept thoroughly and apply it wisely. At the best SSC coaching in Jaipur, Clear Vision Classes, students can learn about the application of such concepts and take as many mock tests to comprehend the requirements of the examination.