# The Basic of Profit and Loss- Explained with Examples

In this post basic of Profit and loss are to be explained with examples. It is used to determine whether or not a transaction is profitable. Before we proceed to the profit and loss formula, we must first define the terms ‘selling price’ and ‘cost price.’

## What is Cost Price

The cost price of a product is the price at which it is purchased.

## What is Selling Price

The selling price of a product is the price at which it is sold.

## What is the basic of Profit

If the selling price is higher than the cost price, the difference is referred to as profit. . In other words, if a product is sold for a higher price than it was purchased for, a profit is made.

## What is the basic of Loss

If the selling price is less than the cost price, the difference is referred to as loss. In other words, if a product is sold for less than the price at which it was purchased, the transaction results in a loss.

## Profit and Loss Formula

When the selling and cost prices are known, the basic profit or loss can be calculated using formula:

**Profit = Selling price (S.P.) – Cost price (C.P.)**

**Loss = Cost price (C.P.) – Selling price (S.P.)**

#### You May Also Like:

What is Ratio in Math – Explained with ExamplesHow to Solve Distance Time Speed ProblemsFraction as Percentage

### Basic examples on Profit and Loss

**Let us calculate the profit in a transaction where a product is purchased for $20 and sold for $50. **

In this case, the cost price is $20 and the selling price is $50.

Profit is calculated as the difference between the selling price and the cost price.

According to Profit Formula:

**Profit = Selling price (S.P.) – Cost price (C.P.)**

P= 50 – 20 = 30.

Therefore, a profit of $30 is earned in the transaction.

**Let us calculate the loss if a product is purchased at $60 and sold at $40.**

In this case, the cost price is $60 and the selling price is $40.

As per Loss Formula:

**Loss = Cost price (C.P.) – Selling price (S.P.)**

Loss = 60 – 40 = 20.

Therefore, the loss incurred in the transaction is of $20.

## 2 Responses

[…] also be displayed on this post with examples in order explain the students mathematics topics i.e profit and loss […]

[…] you have not read this website’s post on profit & loss, then first you must learn the concept of profit and loss from this website in the category of […]