Question

General definitions of profit and loss chapter

Answer 1

Cost price : The price originally paid in buying an article is called its Cost Price (C.P.), or outlay.

Selling Price : The price that is realised by selling an article is called its Selling Price (S.P.), or Turnover.

Turnover : It denotes the cash value of the sales and thus equivalent to selling price,

Profit or Loss : The difference between selling price (S.P.) and cost price (C.P.) gives profit or loss.

Gross Profit and Net Profit : Gross Profit and Net Profit are defined as follows:

Gross Profit = Total Sales - Direct Cost

Net Profit = Gross Profit -- Indirect Cost

Answer 2

Definition :-

1. Cost Price ( CP ) :

Price at which the seller brought the product.

2. Selling Price ( SP ) :

Price at which the seller sells the product to you or the customer.

3. Marked Price ( MP ) :

It is the price displayed on the product. ( Also, called MRP )

4. Profit ( P ) :

When SP > CP, seller makes a profit.

Formula:

• P = SP – CP
• P% = ( P / CP ) x 100

5. Loss ( L ) :

When SP < CP, seller suffers a loss.

Formula:

• L = CP – SP
• L% = ( P / CP ) x 100

6. Discounts ( D ) :

The concession given by the seller on the marked price ( MP ) of the product is called discount.