PROFIT & LOSS

Profit and loss

 

IMPORTANT FACTS

Cost Price:

The price, at which an ARTICLE is purchased, is called its cost price, abbreviated as C.P.

 

Selling Price:

The price, at which an article is sold, is called its selling prices, abbreviated as S.P.

 

Profit or Gain:

If S.P. is greater than C.P., the seller is said to have a profit or gain.

 

Loss:

If S.P. is less than C.P., the seller is said to have incurred a loss.

 

IMPORTANT FORMULAE

1. Gain = (S.P.) – (C.P.)
2. Loss = (C.P.) – (S.P.)
3. Loss or gain is always reckoned on C.P.
4. Gain Percentage: (Gain %)

Gain % =		Gain x 100
		C.P.

5. Loss Percentage: (Loss %)

Loss % =		Loss x 100
		C.P.

6. Selling Price: (S.P.)

SP =		(100 + Gain %)	x C.P
		100

7. Selling Price: (S.P.)

SP =		(100 – Loss %)	x C.P.
		100

8. Cost Price: (C.P.)

C.P. =		100	x S.P.
		(100 + Gain %)

9. Cost Price: (C.P.)

C.P. =		100	x S.P.
		(100 – Loss %)

10. If an article is sold at a gain of say 35%, then S.P. = 135% of C.P.
11. If an article is sold at a loss of say, 35% then S.P. = 65% of C.P.
12. When a person sells two similar items, one at a gain of say x%, and the other at a loss of x%, then the seller always incurs a loss given by:

Loss % =		Common Loss and Gain %		2	=		x		2	.
		10					10

13. If a trader professes to sell his goods at cost price, but uses false weights, then

Gain % =		Error	x 100	%.
		(True Value) – (Error)

 

Questions:

Level-I:

 

 

1.	Alfred buys an old scooter for Rs. 4700 and spends Rs. 800 on its repairs. If he sells the scooter for Rs. 5800, his gain percent is:
	A. 4 4 % 7 B. 5 5 % 11 C. 10% D. 12%

 

2.	The cost price of 20 articles is the same as the selling price of x articles. If the profit is 25%, then the value of xis:
	A. 15 B. 16 C. 18 D. 25

 

3.	If selling price is doubled, the profit triples. Find the profit percent.
	A. 66 2 3 B. 100 C. 105 1 3 D. 120

 

4.	In a certain store, the profit is 320% of the cost. If the cost increases by 25% but the selling price remains constant, approximately what percentage of the selling price is the profit?
	A. 30% B. 70% C. 100% D. 250%

 

 

5.	A vendor bought toffees at 6 for a rupee. How many for a rupee must he sell to gain 20%?
	A. 3 B. 4 C. 5 D. 6

 

6.	The percentage profit earned by selling an article for Rs. 1920 is equal to the percentage loss incurred by selling the same article for Rs. 1280. At what price should the article be sold to make 25% profit?
	A. Rs. 2000 B. Rs. 2200 C. Rs. 2400 D. Data inadequate

 

7.	A shopkeeper expects a gain of 22.5% on his cost price. If in a week, his sale was of Rs. 392, what was his profit?
	A. Rs. 18.20 B. Rs. 70 C. Rs. 72 D. Rs. 88.25

 

8.	A man buys a cycle for Rs. 1400 and sells it at a loss of 15%. What is the selling price of the cycle?
	A. Rs. 1090 B. Rs. 1160 C. Rs. 1190 D. Rs. 1202

 

9.	Sam purchased 20 dozens of toys at the rate of Rs. 375 per dozen. He sold each one of them at the rate of Rs. 33. What was his percentage profit?
	A. 3.5 B. 4.5 C. 5.6 D. 6.5

 

10.	Some articles were bought at 6 articles for Rs. 5 and sold at 5 articles for Rs. 6. Gain percent is:
	A. 30% B. 33 1 % 3 C. 35% D. 44%
11.	Level-II:     On selling 17 balls at Rs. 720, there is a loss equal to the cost price of 5 balls. The cost price of a ball is:
	A. Rs. 45 B. Rs. 50 C. Rs. 55 D. Rs. 60

 

 

12.	When a plot is sold for Rs. 18,700, the owner loses 15%. At what price must that plot be sold in order to gain 15%?
	A. Rs. 21,000 B. Rs. 22,500 C. Rs. 25,300 D. Rs. 25,800

 

13.	100 oranges are bought at the rate of Rs. 350 and sold at the rate of Rs. 48 per dozen. The percentage of profit or loss is:
	A. 14 2 % gain 7 B. 15% gain C. 14 2 % loss 7 D. 15 % loss

 

14.	A shopkeeper sells one transistor for Rs. 840 at a gain of 20% and another for Rs. 960 at a loss of 4%. His total gain or loss percent is:
	A. 5 15 % loss 17 B. 5 15 % gain 17 C. 6 2 % gain 3 D. None of these

 

 

15.	A trader mixes 26 kg of rice at Rs. 20 per kg with 30 kg of rice of other variety at Rs. 36 per kg and sells the mixture at Rs. 30 per kg. His profit percent is:
	A. No profit, no loss B. 5% C. 8% D. 10% E. None of these

 

16. A man buys an article for Rs. 27.50 and sells it for Rs 28.60. Find his gain percent
17. 1%
18. 2%
19. 3%
20. 4%

 

 

17. A TV is purchased at Rs. 5000 and sold at Rs. 4000, find the lost percent.
18. 10%
19. 20%
20. 25%
21. 28%

 

 

18. In terms of percentage profit, which among following the best transaction.
    1. P. 36, Profit 17
    2. P. 50, Profit 24
    3. P. 40, Profit 19
    4. P. 60, Profit 29

 

 

 

 

Answer:1 Option B

 

Explanation:

Cost Price (C.P.) = Rs. (4700 + 800) = Rs. 5500.

Selling Price (S.P.) = Rs. 5800.

Gain = (S.P.) – (C.P.) = Rs.(5800 – 5500) = Rs. 300.

Gain % =		300	x 100	%	= 5	5	%
		5500				11

 

Answer:2 Option B

 

Explanation:

Let C.P. of each article be Re. 1 C.P. of x articles = Rs. x.

S.P. of x articles = Rs. 20.

Profit = Rs. (20 – x).

		20 – x	x 100 = 25
		x

2000 – 100x = 25x

125x = 2000

x = 16.

 

 

Answer:3 Option B

 

Explanation:

Let C.P. be Rs. x and S.P. be Rs. y.

Then, 3(y – x) = (2y – x)    y = 2x.

Profit = Rs. (y – x) = Rs. (2x – x) = Rs. x.

Profit % =		x	x 100	% = 100%

 

 

Answer:4 Option B

 

Explanation:

Let C.P.= Rs. 100. Then, Profit = Rs. 320, S.P. = Rs. 420.

New C.P. = 125% of Rs. 100 = Rs. 125

New S.P. = Rs. 420.

Profit = Rs. (420 – 125) = Rs. 295.

Required percentage =		295	x 100	%	=	1475	% = 70% (approximately).
		420				21

 

 

Answer:5 Option C

 

Explanation:

C.P. of 6 toffees = Re. 1

S.P. of 6 toffees = 120% of Re. 1 = Rs.	6
	5

 

For Rs.	6	, toffees sold = 6.
	5

 

For Re. 1, toffees sold =		6 x	5		= 5.
			6

 

 

Answer:6 Option A   Explanation: Let C.P. be Rs. x. Then, 1920 – x x 100 = x – 1280 x 100 x x 1920 – x = x – 1280 2x = 3200 x = 1600  Required S.P. = 125% of Rs. 1600 = Rs. 125 x 1600 = Rs 2000. 100

 

 

Answer:7 Option C

 

Explanation:

C.P. = Rs.		100	x 392		= Rs.		1000	x 392		= Rs. 320
		122.5					1225

Profit = Rs. (392 – 320) = Rs. 72.

 

Answer:8 Option C

 

Explanation:

S.P. = 85% of Rs. 1400 = Rs.		85	x 1400		= Rs. 1190
		100

 

 

 

Answer:9 Option C

 

Explanation:

Cost Price of 1 toy = Rs.		375		= Rs. 31.25
		12

Selling Price of 1 toy = Rs. 33

So, Gain = Rs. (33 – 31.25) = Rs. 1.75

Profit % =		1.75	x 100	%	=	28	% = 5.6%
		31.25				5

 

 

 

Answer:10 Option D

 

Explanation:

Suppose, number of articles bought = L.C.M. of 6 and 5 = 30.

C.P. of 30 articles = Rs.		5	x 30		= Rs. 25.
		6

 

S.P. of 30 articles = Rs.		6	x 30		= Rs. 36.
		5

 

Gain % =		11	x 100	% = 44%.
		25

 

 

Answer:11 Option D

 

Explanation:

(C.P. of 17 balls) – (S.P. of 17 balls) = (C.P. of 5 balls)

C.P. of 12 balls = S.P. of 17 balls = Rs.720.

C.P. of 1 ball = Rs.		720		= Rs. 60.
		12

 

 

Answer:12 Option C

 

Explanation:

85 : 18700 = 115 : x

x =		18700 x 115		= 25300.
		85

Hence, S.P. = Rs. 25,300.

 

Answer:13 Option A

 

Explanation:

C.P. of 1 orange = Rs.		350		= Rs. 3.50
		100

 

S.P. of 1 orange = Rs.		48		= Rs. 4
		12

 

Gain% =		0.50	x 100	%	=	100	% = 14	2	%
		3.50				7		7

 

 

 

Answer:14 Option B

 

Explanation:

C.P. of 1st transistor = Rs.		100	x 840		= Rs. 700.
		120

 

C.P. of 2nd transistor = Rs.		100	x 960		= Rs. 1000
		96

So, total C.P. = Rs. (700 + 1000) = Rs. 1700.

Total S.P. = Rs. (840 + 960) = Rs. 1800.

Gain % =		100	x 100	%	= 5	15	%
		1700				17

 

 

 

Answer:15 Option B

 

Explanation:

C.P. of 56 kg rice = Rs. (26 x 20 + 30 x 36) = Rs. (520 + 1080) = Rs. 1600.

S.P. of 56 kg rice = Rs. (56 x 30) = Rs. 1680.

Gain =		80	x 100	% = 5%.
		1600

 

Answer:16 Option D

 

Explanation:

So we have C.P. = 27.50
S.P. = 28.60

Gain = 28.60 – 27.50 = Rs. 1.10

Gain%=(Gain/Cost∗100)%=(1.10/27.50∗100)%=4%

 

 

 

 

Answer:17 Option B

 

Explanation:

We know, C.P. = 5000
S.P. = 4000
Loss = 5000 – 4000 = 1000
Loss%=(Loss/Cost∗100)%=(1000/5000∗100)%=20%

 

 

Answer:18 Option D

 

Explanation:

Hint: Calculate profit percent as

Profit% = (profit/cost) * 100,

Profit and loss is a financial statement that summarizes a company’s revenues, expenses, and net income over a period of time. It is one of the three main financial statements, along with the balance sheet and the cash flow statement.

The income statement is divided into three main sections: revenues, expenses, and net income. Revenues are the total amount of Money that a company has earned from its sales of goods or Services. Expenses are the costs that a company has incurred in order to generate those revenues. Net income is the difference between revenues and expenses.

The income statement is a valuable tool for investors and analysts because it provides information about a company’s profitability. Profitability is a measure of a company’s ability to generate earnings from its operations. A company with a high profit margin is more profitable than a company with a low profit margin.

There are a number of different profitability ratios that can be used to measure a company’s profitability. Some of the most common profitability ratios include:

• Profit margin: This ratio is calculated by dividing net income by revenues. It measures the percentage of each dollar of revenue that a company keeps as profit.
• Gross margin: This ratio is calculated by dividing gross profit by revenues. It measures the percentage of each dollar of revenue that a company keeps after paying for the cost of goods sold.
• Operating margin: This ratio is calculated by dividing operating income by revenues. It measures the percentage of each dollar of revenue that a company keeps after paying for the cost of goods sold, operating expenses, and depreciation and amortization.
• Net margin: This ratio is calculated by dividing net income by revenues. It measures the percentage of each dollar of revenue that a company keeps after paying for all of its expenses.

The income statement is also a valuable tool for managers because it provides information about a company’s performance. Managers can use the income statement to track a company’s sales, expenses, and profitability over time. They can also use the income statement to compare a company’s performance to its competitors.

The income statement is one of the most important financial statements that a company prepares. It provides information about a company’s profitability and performance that is valuable to investors, analysts, and managers.

Balance sheet

The balance sheet is a financial statement that summarizes a company’s assets, liabilities, and Equity at a specific point in time. It is one of the three main financial statements, along with the income statement and the cash flow statement.

The balance sheet is divided into three main sections: assets, liabilities, and equity. Assets are the Resources that a company owns. Liabilities are the debts that a company owes. Equity is the difference between assets and liabilities.

The balance sheet is a valuable tool for investors and analysts because it provides information about a company’s financial position. Financial position is a measure of a company’s ability to meet its financial obligations. A company with a strong financial position is more likely to be able to meet its financial obligations than a company with a weak financial position.

There are a number of different financial ratios that can be used to measure a company’s financial position. Some of the most common financial ratios include:

• Current ratio: This ratio is calculated by dividing current assets by current liabilities. It measures a company’s ability to meet its short-term obligations.
• Quick ratio: This ratio is calculated by dividing quick assets by current liabilities. It measures a company’s ability to meet its short-term obligations without having to sell its inventory.
• Debt-to-equity ratio: This ratio is calculated by dividing total debt by total equity. It measures the amount of debt that a company has relative to its equity.
• Debt-to-assets ratio: This ratio is calculated by dividing total debt by total assets. It measures the amount of debt that a company has relative to its assets.
• Interest coverage ratio: This ratio is calculated by dividing earnings before interest and taxes (EBIT) by interest expense. It measures a company’s ability to pay its interest expenses.

The balance sheet is also a valuable tool for managers because it provides information about a company’s financial Health. Managers can use the balance sheet to track a company’s assets, liabilities, and equity over time. They can also use the balance sheet to compare a company’s financial health to its competitors.

The balance sheet is one of the most important financial statements that a company prepares. It provides information about a company’s financial position and financial health that is valuable to investors, analysts, and managers.

Cash flow statement

The cash flow statement is a financial statement that summarizes a company’s cash flows over a period of time. It is one of the three main financial statements, along with the income statement and the balance sheet.

The cash flow statement is divided into three main sections: operating activities, investing activities, and financing activities. Operating

Sure, here are some frequently asked questions and short answers about business:

1. What is a business?
   A business is an organization that provides goods or services to customers in exchange for money.

2. What are the different types of businesses?
   There are many different types of businesses, but some of the most common include sole proprietorships, partnerships, corporations, and limited liability companies.

3. How do businesses make money?
   Businesses make money by selling goods or services to customers. The difference between the amount of money a business brings in from sales and the amount of money it spends on expenses is called profit.

4. What are the different types of expenses?
   Some of the most common types of expenses include cost of goods sold, operating expenses, and Marketing expenses.

5. How do businesses manage their finances?
   Businesses manage their finances by tracking their income and expenses, and by making sure that they have enough money to cover their costs and make a profit.

6. What are the different types of financial statements?
   Some of the most common types of financial statements include the income statement, the balance sheet, and the cash flow statement.

7. How do businesses grow?
   Businesses grow by increasing their sales, expanding into new markets, or developing new products or services.

8. What are the challenges of running a business?
   Some of the challenges of running a business include managing finances, dealing with employees, and complying with regulations.

9. What are the benefits of owning a business?
   Some of the benefits of owning a business include being your own boss, having the potential to make a lot of money, and being able to control your own destiny.

10. What are the risks of owning a business?
    Some of the risks of owning a business include the potential to lose money, the potential for personal liability, and the potential for long hours and hard work.

I hope this helps!

Sure, here are some multiple choice questions about accounting without mentioning the topic profit and loss:

1. Which of the following is not a financial statement?
   (A) Income statement
   (B) Balance sheet
   (C) Statement of cash flows
   (D) Statement of profit and loss

2. The income statement reports a company’s:
   (A) Assets, liabilities, and equity
   (B) Revenues, expenses, and net income
   (C) Cash flows from operating, investing, and financing activities
   (D) None of the above

3. The balance sheet reports a company’s:
   (A) Assets, liabilities, and equity
   (B) Revenues, expenses, and net income
   (C) Cash flows from operating, investing, and financing activities
   (D) None of the above

4. The statement of cash flows reports a company’s:
   (A) Assets, liabilities, and equity
   (B) Revenues, expenses, and net income
   (C) Cash flows from operating, investing, and financing activities
   (D) None of the above

5. Which of the following is not an asset?
   (A) Cash
   (B) Accounts receivable
   (C) Inventory
   (D) Net income

6. Which of the following is not a liability?
   (A) Accounts payable
   (B) Notes payable
   (C) Accrued expenses
   (D) Net income

7. Which of the following is not an equity account?
   (A) Common stock
   (B) Retained earnings
   (C) Dividends
   (D) Net income

8. Which of the following is not a revenue account?
   (A) Sales
   (B) Service revenue
   (C) Interest revenue
   (D) Net income

9. Which of the following is not an expense account?
   (A) Cost of goods sold
   (B) Selling expenses
   (C) General and administrative expenses
   (D) Net income

10. Which of the following is not a financial ratio?
    (A) Current ratio
    (B) Quick ratio
    (C) Debt-to-equity ratio
    (D) Net income per share

I hope these questions were helpful!