# Loss , profit and Discount Accounting

Overhead expenses like packaging, transportation etc. are always added to the cost price to get the total C.P and then profit percent or loss percent is calculated on this total cost price.

## Percentage of profit or loss is calculated on the cost price

Profit and loss A/c

The price at which a shopkeeper buys goods is called the cost price (C.P). The price at which he sells the goods is called the selling price (S.P). If he sells the goods at a price higher than C.P, he makes a profit or gain whereas if he sells the goods at a price lower than the C.P, he makes a loss.

This is one of the examples.

Problem

A shopkeeper bought a cupboard for rupees of 2000/ – and sold it for 2400. In this example, the cost price of the cupboard is rupees of 2000/ and it is selling price is rupees 2400/. Since the selling price is more than the cost price, the shopkeeper has made a profit, which is given by the formula:
Profit = S.P – C.P

Profit = 2400-2000= 400

Percentage of profit or loss is calculated on the cost price by the following formula.

Profit percent= profit x 100

Cost price

In the above example,

Profit percent= 400 x 100 = 20%

2000

Similarly, loss = C.P- S.P

Loss percent = loss x 100

Cost price

If C.P of article is 400 and S.P is 360 then,

Loss = 400 – 360 = rupees 40

Loss percent = 40 x 100 = 10%

400 1

Note

A) Profit or loss percent is always calculated on C.P and not on S.P.

B) Overhead expenses like packaging, transportation etc. are always added to the cost price to get the total C.P and then profit percent or loss percent is calculated on this total cost price.

C) When the C.P and the S.P are given for different number of articles, first of all find C.P and S.P of equal number of articles and then only calculated profit percent or loss percent.