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Profit and loss are the terms related to business transactions.

Key Concepts:

**1. Cost Price**:

The price at which a person buys a

**product**is called Cost Price (C.P) of that product.**2. Selling Price**:

The price at which a person sells a product is called the Selling Price (S.P) of that product.

**3. Profit**:

When selling price of a product is higher than the cost price, profit is achieved, which is equal to the difference in selling price and the cost price.

$\mathit{Profit}=S.P-C.P$

When $S.P\succ C.P$ [When the S.P is more than the C.P, then there is a profit.]

Important!

Another synonymous term is used for profit is gain.

**4. Loss**:

When selling price is less than the cost price, there is a loss in the transaction, which is equal to the difference of the cost price and selling price.

$\mathit{Loss}=C.P-S.P$

When $S.P\prec C.P$ [When the S.P is less than the C.P, then there is a loss]

Important!

It is to be noted that the profit or loss is always calculated on the cost price.