To make profit is the basic aim of any business.
Cost Price: It is the price at which any article or unit or item is bought. It is abbreviated as CP.
Selling Price: It is the price at which any article or unit or item is sold. It is abbreviated as SP.
Profit: If Selling Price is greater than Cost Price then seller makes profit.
Profit = SP – CP
Loss: If Cost Price is greater than Selling Price then seller incurs loss.
Loss = CP – SP
Basic Formulas of Profit and Loss
One point is to be noted that loss or profit is always calculated with reference to CP.