Basic concepts, formulas, tips, questions and examples


Profit and loss: Profit and loss are the basic terms we use in our common language. When a person makes a transaction, he checks whether it was profitable or not. In our daily life, when we buy a product, we check the loss or gain on it. There are several terms used in Profit and Loss which should be perfectly clear to aspirants. In all competitions, questions are asked on the topic of profit and loss. If the concept is clear, the questions in this section can be answered easily, otherwise it will take a long time. In this article, we have discussed basic profit and loss terms, formulas, concepts, tips, questions, and examples.

Profit & Loss: Banking Reviews

Profit & Loss is one of the examiner’s favorite topics that is commonly asked in banking exams. Profit & Loss is requested in the preliminaries as well as in the main exam with a difference in the level of difficulty. Instead of starting over and over again, clarify your concepts once and then practice the profit and loss questions. Most candidates make a mistake by jumping straight to the short tips instead of learning the basics. So we will provide all profit and loss formulas and also try to clarify your concepts. Keep reading this article to check profit and loss questions and examples.

Profit and loss: basic terms

Here we have provided some of the basic profit and loss formulas below which will help you to solve the questions quickly.

cost price

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

Sale price

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


When the selling price is higher than the cost price, it is called profit.


When the selling price is lower than the cost price then we speak of loss.

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

The marked price is the price indicated on the product or indicated in the price list. This is the price at which the product is quoted or intended to be sold. However, the seller may decide to grant discounts to the buyer and the actual sale price may be different from the displayed price. Since there is no discount, the marked price is the same as the sale price.
The amount of the discount granted will always be calculated on the marked price. This can be expressed as percentage discount = MP-SP/MP×100

Loss of profit: formulas

  • Profit/Gain = Sale price – Cost price
  • Loss = Cost price – Sale price
  • Cost price = Selling price (No profit No loss)
  • win percentage = (Gain × 100)/(CP)
  • Loss percentage = (Loss × 100)/(CP)

Gains and losses: tips

Well, the hints are nothing but a way to reduce the steps to calculate the answer, if you know the basics, only you can understand the logic behind the hints. So we have provided some profit and loss tips below that you can use while solving similar types of 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. SP = {(100 + P%)/100} x CP
  6. PS = {(100 – L%)/100} x CP
  7. PC = {100/(100 + P%)} x SP
  8. CP = {100/(100 – L%)} x PS
  9. Discount = MP – SP
  10. SP = MP -Discount
  11. When two different items are sold at the same sale price obtaining a gain of x% on the first and a loss of x% on the second, then the overall loss in % of the transaction is given by (x/10)²% . (Note: in such matters there is always a loss.)
  12. A trader uses faulty measurements and sells his goods with a gain/loss of x%. The overall % gain/loss (g) is given by (100+g)/(100+x)=(True measurement)/(Incorrect measurement). (Note: if the trader sells his goods at cost, then x = 0.)
  13. A merchant uses y% less weight/length and sells his goods with a gain/loss of x%. The overall win/loss percentage is given by [((y+x)/(100-y))×100]%

Profit & Loss: Concept of dishonest dealership

Dishonest dealers and faulty weights are a big topic in the profit and loss generally asked for in all contests. In this topic, we come across such type of problems where the trader sells the items at cost, but he still makes a profit on those items. This can only be possible if he gives less quantity to the customer than indicated on the product. A dishonest trader shows that he sells the product at cost price in the welfare of the customer but in that he has reduced his weight.
For example, if the trader sells a 1 liter packet of milk at its cost price but only gives 800 ml of milk in this packet. In this case, he gives 800 ml of milk to a customer and charges 1000 ml of milk to the customer. Therefore, we can say that 800ml is the cost price and 1000ml is the selling price. Thus, he makes a profit of 200 ml of milk on the sale of 800 ml of milk.

Profit percentage = ((Sale price – Cost price)/(Cost price))×100
Profit percentage = ((1000-800)/800)×100 = 25%

Profits and losses: questions

Q1. What will be the single discount equivalent to two successive discounts of 25% and 24%?
(a) 46%
(b) 43%
(c) 40%
(d) 33%
(e) 49%

Q2. I bought 16 pencils at the price of Rs 9 per dozen and sold them all at the price of Rs 12 per dozen. What is the overall profit percentage of this trade??

Q3. A seller marks up an item by 160% above its cost price. After that, he allows two successive discounts of 20% and 25% and yet he gets 56% profit on it. If the marked price of the item is Rs 520, find its selling price
(a) Rs 320
(b) Rs 312
(c) Rs 240
(d) Rs 324
(e) Rs 230

Profit and Loss: Basic Concepts, Formulas, Tips, Questions and Example_60.1

Q4. A milkman buys milk. If he sells it at Rs 5 per litre, he loses Rs 300, but when he sells it at Rs 6 per litre, he earns Rs 250. How much milk did he buy?
(a) 550 liters
(b) 300 liters
(c) 250 liters
(d) 800 liters
(e) 650 liters

Q5. A trader sells two items for Rs. 4,800 each, neither losing nor winning in total. If he sold one of the items with a gain of 20%, the other is sold with a loss of what percentage?

Profit and Loss: Basic Concepts, Formulas, Tips, Questions and Example_70.1

Profit and Loss: Basic Concepts, Formulas, Tips, Questions and Example_80.1

Q6. How many kg of tea worth Rs. 25 per kg should be mixed with 30 kg of tea worth Rs. 30 per kg so that by selling the mixed variety at Rs. 30 per kg there should be a gain by 10%?
(a) 30 kilograms
(b) 32kg
(c) 36kg
(d) 42kg
(e) 34kg

Profit and Loss: Basic Concepts, Formulas, Tips, Questions and Example_90.1

Q7. The price of a product after getting a 10% discount is 9,450 rupees, which includes a 5% tax on the sales price. Find the marked price of the product (in Rs)?
(a) 8500
(b) 9000
(c) 10000
(d) 9500
(e) 10500

Q8. A merchant, instead of selling an item at 10% profit, marks the item up 30% above the cost price and gives a 10% discount. In this process, he gets Rs. 56 more profit. Find the cost price of the item.
(a) rupees. 400
(b) rupees. 1000
(c) rupees. 800
(d) rupees. 600
(e) rupees. 500

Profit and Loss: Basic Concepts, Formulas, Tips, Questions and Example_100.1

Q9. A person buys four bicycles with a 20% discount on the price indicated on each bicycle. If the sum of the discount offered and the profit obtained on the 4 bicycles is 2560, find the difference between the marked price and the cost price on one bicycle.
(a) 520
(b) 640
(c) 1220
(d) 880
(e) 690

Q10. Veer buy an item for Rs. 480. He sold it with a loss of 12% and got money and from that money he buys an item again and sold it with a profit of 25%. What was the percentage of profit he got from this transaction?
(a) 16%
(b) 12%
(c) 10%
(d) 14%
(e) 20%

Profit and Loss: Basic Concepts, Formulas, Tips, Questions and Example_110.1

Profits and Losses: Formulas, Concepts, Tips, Questions & Example in Hindi

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Profit and Loss: Basic Concepts, Formulas, Tips, Questions and Example_130.1

FAQ: profit and loss

Q.1 What is the income statement?
Ans Profit and Loss is used in mathematics to determine the market price of a commodity and understand how profitable a business is

Q.2 What is the cost price and the sale price as a result?
Answer The price at which any product is bought is called the cost price and the price at which any product is sold is called the selling price.

Q.3 What is the rebate formula in the income statement?
Answer The formula to calculate the discount is Marked Price – Sale Price.

Q.4 What is the formula of CP and SP?
Answer The formula of CP and SP is CP = {100/(100 + P%)} x SP and SP = MP -Discount

Q.5 How do you calculate profit or loss?
Ans Profit can be calculated by deducting the cost price from the selling price while the loss can be calculated by deducting the selling price from the cost price.

Q.6 What is the profit and loss percentage formula?
Answer The profit and loss percentage formula is P% = (P/CP) x 100 and L% = (L/CP) x 100

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