Key facts

  • Profit and loss percentages are calculated on cost price; discount is calculated on marked price, so the base must be fixed before solving.
  • Marked price, discount and selling price form a price chain: apply each percentage to its own current base, not by simple addition or subtraction.
  • Reverse profit-loss questions require rebuilding the original cost price from the final selling price;
  • An invoice-level trade discount recorded before or at supply is deducted before GST is calculated on the taxable value;
  • False-weight questions compare actual quantity cost with stated-quantity receipt, so profit can arise even when the price per stated unit appears unch...

Key Points at a Glance

  1. 1

    Profit and loss percentages are calculated on cost price; discount is calculated on marked price, so the base must be fixed before solving.

  2. 2

    Marked price, discount and selling price form a price chain: apply each percentage to its own current base, not by simple addition or subtraction.

  3. 3

    Reverse profit-loss questions require rebuilding the original cost price from the final selling price; subtracting the profit percent from selling price gives a wrong base.

  4. 4

    An invoice-level trade discount recorded before or at supply is deducted before GST is calculated on the taxable value; tax collected from the buyer is not itself the trader's profit unless the question says so.

  5. 5

    False-weight questions compare actual quantity cost with stated-quantity receipt, so profit can arise even when the price per stated unit appears unchanged.

  6. 6

    For multiple articles, decide whether cost prices or selling prices are equal; equal-cost and equal-selling-price cases have different net results.

  7. 7

    CET options often test base confusion, percentage-point confusion and premature rounding; write the price chain before choosing the answer.

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Core terms and percentage bases

Profit and loss questions begin with four labels: cost price, selling price, marked price and discount. Cost price is the amount paid to acquire an article or service. If the question mentions transport, packing, repair or loading expenses before sale, those expenses are added to cost price because they make the article ready for sale. Selling price is the amount actually received from the buyer. Marked price is the listed price before discount. Discount is the reduction allowed on marked price.

Profit is selling price minus cost price. Loss is cost price minus selling price. Profit percent is profit divided by cost price and multiplied by 100. Loss percent is loss divided by cost price and multiplied by 100. If a shopkeeper buys an item for Rs 800 and sells it for Rs 920, profit is Rs 120 and profit percent is 120/800 x 100 = 15 percent. If the same item is sold for Rs 720, loss is Rs 80 and loss percent is 10 percent.

Discount has a separate base. If marked price is Rs 1,000 and selling price is Rs 850, discount is Rs 150 and discount percent is 15 percent on marked price. The same Rs 850 selling price may still create profit or loss depending on cost price. CET questions often place all three prices in one stem to test whether the base has been identified before calculation.

Keep the first line of working simple: profit and loss use cost price; discount uses marked price.

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