Profit and loss Formula, Definition, Examples | Class 3 - Orchids
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Money

Bill, Profit and Loss

What are the cost price and selling price?

Cost Price:

  • The amount at which a product is purchased or bought.

Selling Price:

  • The amount at which a product is sold.
  • It may be more than (>), equal to (=), or less than (<) the cost price of the product.

Example:

Richard buy a pen at ₹ 50. He sold this pen to his friend Manav at ₹ 40.

So here, Cost price of the pen for Richard = ₹ 50.

Selling price of the pen for Richard = ₹ 40.

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What is the Bill?

  • A slip of paper in which a shopkeeper notes down the requirements of a customer or buyer and calculates the total cost of items purchased is called a Bill.
  • A shopkeeper can keep track of the day sales.
  • The customer can come across and check the prices of items purchased and their total cost.
  • In case of any problem, the customer can change the item easily by showing the bills.

How to read a bill?

  • Name and address of the shop, phone number and date of purchase of items are mentioned on the bill.
  • Following columns mentioned:
    1. Item number
    2. Name of the item
    3. Quantity of the item
    4. Rate of each item
    5. Total amount of the item.
  • Shopkeeper enters the name of the item, rate, and quantity in the bill.
  • He calculates the amount for each item by multiplying the rate by quantity.
  • Finally, at the end, total cost of all items purchased is mentioned in the bill.
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  • From the above bill, we can find that Ronita purchased:
    • 2 kg Rice
      Rate of 1 kg Rice = ₹ 45.
      Cost of 2 kg Rice = 2 × 45 = ₹ 90
    • 1 kg oil
      Rate of 1 kg oil = ₹ 150
      Cost of 1 kg oil = ₹ 150
    • 1 kg Lentils = ₹ 90
      Rate of 1 kg lentils = ₹ 90
      Cost of 1 kg Lentils = ₹ 90
      So, the total cost of all items purchased by Ronita:
      = ₹ 90 + ₹ 150 + ₹ 90 = ₹ 330

Profit and Loss

  • Profit means gaining money after selling a product.
  • Loss is the opposite of profit. Loss means losing money after selling a product.
  • There are some terms related to profit and loss. These are Cost price (or production cost) and Selling Price.

Rules of Profit and Loss:

  • If the selling price is greater than the cost price, then it’s a profit.
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    Example:

    The shopkeeper bought a notebook for ₹ 20 and sell it for ₹ 25. How much profit has he gained?

    Answer:

    Cost Price = ₹ 25
    Selling Price = ₹ 20
    Since, 25 > 20
    So, Profit = ₹ 25 – ₹ 20 = ₹ 5
    Hence, the shopkeeper gained a profit of ₹ 5.

  • If the Selling price is less than then the cost price, then it’s a loss.
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Example:

Raju bought a cycle for ₹ 850 and sell it for ₹ 750 after one year. Find his overall profit or loss.

Answer:

Cost Price = ₹ 850
Selling Price = ₹ 750
Since, 750 < 850
So, loss = ₹ 850 – ₹ 750 = ₹ 100
Hence, the Raju has loss of ₹ 100.

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