Basic Concepts, Formulas, Tricks, Questions and Examples

Profit and loss are fundamental concepts that we often hear in everyday language. Whenever a transaction takes place, people often assess whether it resulted in a profit or loss. When we buy a product, we instinctively evaluate the profit or loss associated with the transaction.

It is very important to understand the key terms related to profit and loss, especially for candidates preparing for competitive exams. Questions on this topic are often asked in these exams, and a clear understanding of the concepts can make solving these questions easier; otherwise, they can be time-consuming. In this article, we cover the basic terms, formulas, concepts, tricks, questions, and examples related to profit and loss.

Profit and Loss for Bank Exams

Profit and Loss is one of the favorite topics of examiners which is usually asked in banking exams. Profit and Loss are asked in Preliminary and Mains exam with difference in difficulty level. Instead of doing it again and again, clear your concepts once and then practice profit and loss questions. Most of the candidates make mistake by directly jumping to short tricks instead of learning basic concepts so we will provide all the formulas of profit and loss and also try to make your concepts clear. Keep reading this article to see profit and loss questions and examples.

Profit and Loss: Basic Terms

Here we have given some basic formulas of profit and loss which will help you in solving the questions quickly.

cost price

The price at which an item is purchased is called its purchase price (CP)

selling price

The price at which the item is sold is called its selling price (SP)

Benefit

When the selling price is more than the purchasing price, it is called profit

Loss

When the selling price is less than the purchasing price it is called a loss

Marked price or list price (MP or LP) and discount

The marked price is the price that is marked on the product or that is quoted in a price list. It is the price at which the product is quoted or is to be sold. However, the seller may decide to offer a discount to the buyer and the actual selling price may differ from the marked price. Given that there is no discount, the marked price is the same as the selling price.
The amount of discount given will always be calculated on the marked price. It can be expressed as discount percentage = MP-SP/MP×100

Profit & Loss: Formula

• Profit/Profit = Selling price – Cost price
• Loss = Cost price – Selling price
• cost price = Selling price (no profit no loss)
• Profit Percentage = (Profit × 100)/(CP)
• loss percentage = (Loss × 100)/(CP)

Benefit and harm: tricks

Well, tricks are nothing but a way to reduce the steps to calculate the answer, if you know the basics then only you can understand the logic behind the tricks. So we have given some profit and loss tricks below which you can use while solving similar questions

1. Profit, P = SP – CP; SP>CP
2. Loss, L = CP – SP; CP>SP
3. P% = (P/CP) x 100
4. L% = (L/CP) x 100
5. Selling price = {(100 + P%)/100} x purchase price
6. Selling price = {(100 – L%)/100} x purchase price
7. CP = {100/(100 + P%)} x SP
8. CP = {100/(100 – L%)} x SP
9. Discount = MP – SP
10. SP = MP – discount
11. When two different items are sold at the same selling price, making a profit of x% on the first item and a loss of x% on the second item, then the total loss in the transaction will be (x/10)²%. (Note: There is always a loss in such questions.)
12. A merchant uses the wrong measurement and sells his goods at a profit/loss of x%. The total % profit/loss (g) is given by: (100+g)/(100+x)=(correct measurement)/(wrong measurement). (Note: If the merchant sells his goods at cost price, then x = 0.)
13. A trader uses y% less weight/length and sells his goods at a profit/loss of x%. The total % profit/loss is as follows [((y+x)/(100-y))×100],

Advantages and Disadvantages: Dishonest Dealer Concept

Dishonest trader and faulty weighing are important topics in profit and loss which are usually asked in all competitive exams. In this topic, we deal with such type of problems in which the shopkeeper sells the goods at cost price but still, he makes a profit on those goods. This can be possible only when he gives less quantity to the customer than the quantity indicated on the product. A dishonest trader shows that he is selling the product at cost price for the benefit of the customer but in this he has reduced its weight.
For example, if a shopkeeper sells a 1 liter milk packet at its cost price, but he gives only 800 ml of milk in that packet. In this case, he is giving 800 ml of milk to the customer and charging the customer the price of 1000 ml of milk. So, we can say that 800 ml of milk is the cost price and 1000 ml of milk is the selling price. So, he is getting a profit of 200 ml of milk by selling 800 ml of milk.

Percentage profit = ((Selling price – Purchase price)/(Cost price))×100
Percentage profit = ((1000-800)/800)×100 = 25%

Advantages and Disadvantages: Question