Theory:

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.