Profit and loss Questions and Answers

1. What is a Profit or a Loss?

In a simple transaction of buying and selling a product, if some amount is gained, it's called a profit. If some amount is lost, it relates to the loss that happened in the transaction. It's essential to know about the cost price and selling price of the product to estimate the profit or loss. 

 Cost price: The amount we spend to buy a product is called the cost price (CP).

 Selling price: The amount at which a product is sold is called the selling price (SP).

For example, A man buys a pencil for £12 and then he sold that pencil for £15.

Here, CP = £12 and SP = £15.

1.1 Formulas for profit and loss:

Each good has a cost price and a selling price. Based on these values, we can calculate the profit or loss of a product.

1.2 Solved Examples on profit and loss:

For example - 

John bought a used bike for £200 and after some time he sold that bike for £160. Find the loss made by him?

Solution:

CP = £200 and SP = £160

Since CP > SP

Loss = CP - SP

       = £200 - £160

       = £40

Example - 

Daisy bought a painting for £100 and sold it for £170. Calculate the profit that she has made.

Solution:

CP = £100 and SP = £170

Since SP > CP

Profit = SP - CP

        = £170 - £100

        = £70

2. Calculating profit and loss percentages:

Profit and loss percentages are used to show the amount of profit or loss in terms of percentage. Calculating profit or loss in percentages makes it easier to compare with other profits and losses.

You can use the simple formulas mentioned below to figure out the profit and loss percentages:

2.1 Solved examples on profit and loss percentages

Example: Nicole bought a pair of shoes for £250 and then she sold them for £300. Calculate the percentage profit that she made.

Solution:

CP = £250, SP = £300

Since, SP > CP

Therefore, Profit = SP - CP

                       = £300 - £250

                       = £50

Now, Percentage Profit = (Profit/CP) ×100

                                = 50⁄250 × 100

                                = 20%

Example: Daniel bought a pack of 10 bottles for £2.5 and sold them at 70p per bottle.

Work out Daniel’s percentage profit.

Solution:

CP of 10 bottles = £2.5

SP of 10 bottles = 10 x 70p = 700p = £7

Since, SP > CP

Therefore, Profit = SP - CP

                       = £7 - £2.5

                       = £4.5

Now, Percentage Profit = (Profit/CP) ×100

                                = 4.5 ⁄ 2.5 × 100

                                = 180%

Example - Jenny bought a lunch box for £50 and she sold it for £25. Calculate the percentage loss that she made.

Solution:

CP = £50, SP = £25

Since, CP > SP,

Therefore, Loss = CP - SP

                      = £50 - £25

                      = £25

Now, Percentage loss = (Loss/CP)×100

                              = 25⁄50 × 100

                              = 50%