TNPSC – PROFIT AND LOSS

TNPSC – PROFIT AND LOSS

Profit and Loss:

This chapter helps you to understand the intricacies of business world and the computation of profit or loss arising out of business transactions.

Various concepts related to this topic are:-

Cost Price (CP): It is the price at which the item is procured by the seller.

Selling Price (SP): is the price at which the item is sold by the seller.

Profit: It is the excess of the selling price over cost price, i.e. profit = SP – CP

Loss: It is the excess of cost price over the selling price, i.e. Loss = CP – SP

Profit Percent: It is profit, expressed as a percentage of cost price, i.e.

Profit percent = (Profit/CP)100

Loss percent : It is loss, expressed as a percentage of cost price, i.e.

Loss percent = (Loss / CP) 100

Note:

It should be kept in mind, that both profit and loss percent are calculated on cost price.

Formulas to ascertain cost price or selling price when profit or loss percent are given-

In case Profit percent & CP is given,

Then SP = [(100 + Profit %)/100] CP

In case Loss percent & CP is given,

Then SP = [(100 – Loss %)/100] CP

Formulas to Remember:-

When selling price of an article is greater than the cost price:

=> Profit = Selling price – Cost price

=> Selling price = Cost price + Profit

=> Cost price = Selling price – Profit

=> Profit % = (Profit / Cost Price) 100

=> Profit = (Cost Price * Profit %) / 100

=> Selling Price = Cost price [(100 + Profit %) / 100]

=> Cost price = [100 / (100 + Profit %)] SP

When Selling price of an article is less than the cost price:

=> Loss = Cost price – Selling price

=> Selling price = Cost price – Loss

=> Cost price = Selling price + Loss

=> Loss % = (Loss / Cost Price) 100

=> Loss = (Cost Price * Loss %) / 100

=> Selling Price = Cost price [(100 + Loss %) / 100]

=> Cost price = [(100 * Selling Price) / (100 – Loss %)]