Profit & Loss Chapter Notes | Mathematics for Class 5 PDF Download

Introduction

Profit and loss are expressions utilized to determine whether a transaction is advantageous or not. These terms are commonly used in our everyday experiences. If the selling price surpasses the cost price, the gap between them is termed profit. Conversely, if the selling price is less than the cost price, the difference is known as a loss. The amount at which an item is bought is referred to as its cost price, while the amount at which it is sold is termed its selling price. This article will delve further into the concepts of profit and loss.

Profit and Loss Related Terms

Profit and loss are words we use to figure out if a deal is good or not. We hear these words a lot in our daily lives. If the selling price is more than the cost price, we call it a profit. If the selling price is less than the cost price, we call it a loss. The cost price is what we pay to buy something, and the selling price is what we get when we sell it. Let's learn more about profit and loss in this article.

Cost Price

The price at which an article is purchased is called its cost price. For example, if Neil bought an umbrella for Rs. 100, this is the cost price of the umbrella. It is abbreviated as C.P.

Selling Price

The amount at which something is sold is called its selling price. For instance, if Ramesh sells an umbrella for Rs100, then Rs.100 is the selling price of the umbrella. We often use the abbreviation S.P. to represent the selling price.

Profit

When, in a transaction, the selling price is greater than the cost price, it means we earn a profit. Using the above example, the profit that Neil earned is ₹2. It is calculated with the help of the formula: Profit = Selling price - Cost price. In the above example, the Cost price of the umbrella was ₹8 and the Selling price of the umbrella was ₹10, so the profit that he made can be calculated by using the formula: Profit = Selling price - Cost price. Substituting the values, we get, Profit = 10 - 8 = 2. Therefore, he makes a profit of ₹2.

Loss

When, in a transaction, the cost price is greater than the selling price, it means we incur a loss. For example, if a bag is bought for ₹20 and it is sold for ₹17, it means we incurred a loss of ₹3 in this transaction. Loss is calculated with the help of the formula: Loss = Cost price - Selling price. Taking the same example, the Cost price of the bag is ₹20 and the Selling price is ₹17, so the loss can be calculated with the formula: Loss = Cost price - Selling price. Substituting the values, we get, Loss = 20 - 17 = 3. Therefore, there is a loss of ₹3 in the transaction.

Marked Price

Tagged price is the amount the seller puts on the label of the item. It's the cost before a discount. When a discount is given on the tagged price, the reduced amount at which the item is sold is called the selling price.

Example: Sandra goes shopping at a store where everything is at a 50% discount. The price tag on a dress is ₹ 120. This means that the Tagged Price of the dress before the discount = ₹ 120.

Discount

To cope with the competition in business and boost the sale of goods, shopkeepers offer discounts to customers. The rebate or the offer given by the shopkeepers to lure the customers is called a discount. Discount is always calculated on the Marked price of the article.
Discount = Marked Price - Selling Price
Discount (%) = (Discount/Marked Price) × 100

If the marked price of an article is $600, and there is a 40% discount on it, this means that the customer can buy the article at the following price:

40% discount on marked price = (40/100) × 600
Discount ($)= 24000/100 = $240

Therefore, Selling Price = Marked Price - Discount ($) = $600 − $240 = $360

Profit and Loss Formulas

Now, let us learn the formulas for calculating profit and loss.

Profit Formula

When the selling price of an item is higher than its cost price, it means there is a gain in the transaction. The simple formula used to calculate the profit is: Profit = Selling Price - Cost Price.

Loss Formula

If the price at which something is sold is lower than what it cost, there is a loss in the deal. The simple formula for figuring out the loss is: Loss = Cost Price - Selling Price.

Let us use these formulas and find the profit or loss in a few scenarios.

Profit and Loss Percentage

The profit percentage (%) or loss percentage (%) is calculated with the help of the following formulas, which show that the profit or loss in a transaction is always calculated on its Cost Price:

Example: If the CP of a commodity = ₹800 and SP = ₹900, then let's find the profit (%).
Sol: Profit = SP - CP
= 900 − 800 = ₹100
Profit (%) = (Profit/CP) × 100
= (100/800) × 100
= 12.5%

Important Notes

Given below are some of the important notes related to profit and loss that we studied in this article. Have a look!

• Profit = SP - CP
• Loss = CP - SP
• Profit (%) = {Profit/CP} × 100
• Loss (%) = {Loss/CP} × 100
• Discount = Marked Price - Selling Price
• Discount (%) = (Discount/MP) × 100