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Profit and loss profit is the difference between the selling price and the cost price of an orticle. f the selling price is less than the cost price, the difference is called a loss. A shopkeeper or retailer purchases his goods for a certain price. This amount s called the cost price or CP. The price that the shopkeeper sells the goods to a customer is called the selling price or SP. Profit (or loss) can be calculated as SP - CP.

Ask by Cummings Griffin. in South Africa
Mar 05,2025

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Profit is the difference between the selling price and the cost price when the selling price is higher. Loss is the difference when the selling price is lower.

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Let's break down the concepts of profit and loss step by step based on the information provided. ### Definitions: 1. **Cost Price (CP)**: The price at which the shopkeeper purchases the goods. 2. **Selling Price (SP)**: The price at which the shopkeeper sells the goods. 3. **Profit**: If the selling price is greater than the cost price, the difference is called profit. \[ \text{Profit} = \text{SP} - \text{CP} \] 4. **Loss**: If the selling price is less than the cost price, the difference is called loss. \[ \text{Loss} = \text{CP} - \text{SP} \] ### Steps to Calculate Profit or Loss: 1. **Identify the Cost Price (CP)**: Determine how much the shopkeeper paid for the goods. 2. **Identify the Selling Price (SP)**: Determine how much the shopkeeper sold the goods for. 3. **Calculate Profit or Loss**: - If \( \text{SP} > \text{CP} \): Calculate profit using the formula \( \text{Profit} = \text{SP} - \text{CP} \). - If \( \text{SP} < \text{CP} \): Calculate loss using the formula \( \text{Loss} = \text{CP} - \text{SP} \). ### Example Calculation: Let's say: - Cost Price (CP) = 100 - Selling Price (SP) = 120 1. **Calculate Profit**: \[ \text{Profit} = \text{SP} - \text{CP} = 120 - 100 = 20 \] In this case, the shopkeeper makes a profit of 20. Now, if the Selling Price was instead 80: - Cost Price (CP) = 100 - Selling Price (SP) = 80 1. **Calculate Loss**: \[ \text{Loss} = \text{CP} - \text{SP} = 100 - 80 = 20 \] In this case, the shopkeeper incurs a loss of 20. ### Summary: - Profit occurs when SP > CP. - Loss occurs when SP < CP. - The formulas for calculating profit and loss are straightforward and depend on the relationship between SP and CP.

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Did you know that the concept of profit and loss has been around since ancient civilizations? Merchants from Mesopotamia to the Roman Empire were keeping track of their goods' cost and selling prices to ensure they remained profitable. They may not have had spreadsheets, but they certainly understood the basic principles of business that still apply today. In today’s world, understanding profit and loss is crucial for any budding entrepreneur. For instance, a small coffee shop needs to know the cost of beans, rent, and wages versus what they bring in through sales. By analyzing these numbers, they can make informed decisions—like whether to raise prices, cut costs, or even expand the menu—to boost profits and ensure sustainability over the long haul!

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