Profit and loss problems are frequently asked problems in competitive exams. Profit and loss is the branch of basic mathematics which deals with the study of profit and loss made in a business transaction. The profit and loss account is fundamentally a summary of the trading transactions of a business and shows whether it has made a profit or loss during a particular period of account. Indeed, by deducting the total expenditure from total income the profit or loss of a business can be calculated. Along with the balance sheet, it is one of the key financial statements that make up a company's statutory accounts. Basically, this type of account shows the following information for a business:

**a) Sales revenue earned by business**

**b) Cost of sales that the business has incurred**

**c) Other operating costs incurred by the business**

**d) Profit/Loss earned by business.**

Profit and loss is mainly used in finance and business transactions. Some important profit and loss formulas are: Notations used in profit and loss: S.P. – Selling price C.P. – Cost price M.P. – Marked Price.

**Points to remember :**

* To find profit or loss when cost price and selling price are given.

(i). When Selling Price > Cost Price, There is a Profit and it is given by Selling Price - Cost Price.

(ii). When Selling Price < Cost Price, There is a Loss and it is given by Cost Price - Selling Price.

* The Profit or Loss is generally reckoned as so much per cent on the cost.

Gain or loss per cent

= ( Loss or Gain / CP )× 100

* C.P in terms of S.P and P%

C.P = [ (S.P *100)/(100+P%) ]

* C.P in terms of S.P and L%

C.P = [ (S.P *100)/(100-L%) ]

* S.P in terms of C.P and P%

S.P = [ C.P*(100+P%)/100 ]

* S.P in terms of C.P and L%

S.P = [ C.P*(100-L%)/100 ]