Name: Grade & Section:

Lesson 1

Profit or Loss for a Business

MELC: Identify where there is a profit or loss for a business;

(CS_EP11/12ENTREP-0a-i-22)
Objectives: 1. Defne Income and expense
2. Discuss the computation of profit and loss
3.Identify where there is a profit and loss

Let’s Explore and Discover

People are not familiar the difference between income and profits, or expenses , and
losses. Do you know what is the difference? Let’s find out.
You want to start up a burger stall, before you start selling you need to purchase
materials for your small business.

Unlocking Difficulties
Expenses:
Recurrent – Happening many
Burger Bread – ₱25.00
times.
Burger Patties – ₱25.00
Financial Period -is a period of
time that covers certain Cheese - ₱50.00
accounting functions,which can
be either a calendar or fiscal Total ₱100.00
year, but also a week, month, or
quarter, etc. You spent a total of ₱100.00 on all the materials for
your burger business. You have sold 5 pcs of burger
Purchasing Price - the amount
today and sell it for ₱30.00 each. How much is your
of money that is paid for profit?
something.

Selling Price - The price at Profit = Income – Expenses

which something is sold.

We knew that your income is ₱150.00, and we knew that your

expenses are ₱100.00. Since we already knew the amount of income and expenses we can
calculate it using the profit equation in figure.

Profit = ₱150.00(income) - ₱100.00(expenses)

Profit = ₱50.00

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Income is money (or some equivalent value) that an individual or business receives,
usually in exchange for providing a goods or service.

Example:
When you cut hair in a salon and a client pays for it.

Service income the money a business receives for services rendered, while sales is the
money received for selling goods/stock.

Expenses refer to all the money the business has to pay so that it is possible for the
business to carry on doing business with customers and generate an income.

Example:
Paying wages to workers, paying the water and electricity, paying telephone and rent.
These are of a recurrent nature and in many cases differ from month to month.
If we render services, we need equipment to be able to do it.

Purchases is when you buy goods/stock in order to sell it in a trading business.

In the case of a trading/merchandising business:

The difference between the purchasing price (the price we pay when we buy goods) and
the selling price (the price we receive when we sell goods) is the profit or loss.

Take a look at the following examples:

When you sell the fruits and vegetables fom your crop, the money the business
receives when selling the goods, is income earned by the business and is called sales.

Gross profit is the difference between the selling and purchase price.

We, however, have to take other income and expenses of the business into account when
calculating the final profit or loss, called the net profit or net loss.

Profits and losses

The difference between income and expenses is profit or loss. Profit is normally only
worked out at the end of a financial period.

The formula to calculate profit for a service business:

Profit = Income – Expenses

Loss Income less expenses when expenses are higher than income.

Profit Income less expenses when income is higher than expenses

income > expenses = Profit

income < expenses = Loss

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 Example 1 A Example 2 A
Selling Price : ₱500.00 Selling Price : ₱500.00
Purchasing Price : ₱380.00 Purchasing Price : ₱580.00

Formula: Formula:

Selling Price – Purchasing price Selling Price – Purchasing price

= ₱500.00 – ₱380.00 = ₱500.00 – ₱580.00
= ₱ 20.00 (Profit) = ₱20.00 (Loss)

Example 1 B Example 2 B
Selling Price : ₱500.00 Selling Price : ₱500.00
Purchasing Price : ₱380.00 Purchasing Price : ₱580.00
Expense (Transportation) : ₱20.00 Expense (Transportation) : ₱20.00

Formula: Formula:
Selling Price – (Purchasing+ Expenses) (Purchasing+ Expenses) - Selling Price
= ₱500.00 – (₱380.00+₱20.00) = (₱580.00+₱20.00) - ₱500.00
= ₱100.00 (profit) = ₱100.00 (Loss)

(Source: “Entrepreneurship 10,”Open Educational Resources Commons, last modified

October 15,2020, https://www.oercommons.org/)

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 C
Let’s Practice

Directions: Read each statement carefully.write I if it state income and E if it state

expense.Write your answer in the space provided before each number.

_______ 1. Selling of your crop.

_______ 2. Rendered bookkeeping service at Manalo reality.
________ 3. Purchased equipment for your salon business.
________4. Buying supplies for your office.

________5. Rented space for your new business.

Directions: Unscramble the letters of each statement to get a clue and write your
answer on the space provided.

1. The difference between the income and expenses is __________ or loss.

ITROPF
2. Buying of ___________ is called Material Costs.
NEMTUIPQ
3. ___________ is when you buy goods in order to sell it in a trading business.
RHASPCSEU
4. Profit is normally only worked out at the end of a ___________ period.
CANFNAILI
5. Service income is a money a business receives for ________ rendered.
VCEESSIR

How profit and loss affect in your everyday life?

____________________________________________________________________

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 Let’s Do More

Directions: Find the profit or loss in the worksheet below. Write the answer at
the corresponding box.

Purchasing Price Selling Price Profit Loss

1 ₱ 1,500.00 ₱ 1,850.00 ₱ ₱ -
2 ₱ 1,735.00 ₱ ₱ 1000.00 ₱ -
3 ₱ 2,225.00 ₱ 2,130.00 ₱ ₱ -
4 ₱ ₱ 2,300.00 ₱ - ₱ 200.00
5 ₱ 2,800.00 ₱ ₱ 250.00 ₱ -

Directions: Analyze the question and write the answer only at the corresponding
space.

1. A Cellphone case was bought for ₱ 350.00 and old at a loss of ₱700.00.
Find the selling price.₱ _____________

2. A second hand laptop was sold for ₱10,000.00 at a loss of ₱520.00.

Find the purchase price of the laptop.₱_________________

3. Francine sold her cellphone for ₱ 25,000 at a profit of ₱ 1,737. 00

Find the purchase price of cellphone.₱______________

4. Marie bought a music system for ₱ 6,375.00 and spent ₱ 75.00 on

its transportation she sold it for ₱6,400.00. Find her profit or loss. ₱_________

5. Andrei bought ballpen at ₱120 a dozen. He sold it for ₱15 each.

What is his profit?₱ ________________

Why is profit important in the business ?

_______________________________________________________________

Why business need income?

________________________________________________________________

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 Let’s Sum It Up

Activity
Directions: Fill in the blanks to complete the statement.Choose your answer from the
words inside the box.

Loss Profit Purchased price Sale price Selling price

The amount paid for a product or commodity to purchase is known as ___________

while .The amount for which the product is sold is called ____________. It is also called a
_____________.The amount the seller incurs after selling the product less than its price, is
called as a _________ . ___________ the amount gained by selling a product with more
than its purchased price.

Let’s Assess
Directions: Read and analyse the problem. Write your answer at the space provided
before each number.

______ 1.Which of the following statement emphasizing income.

A. Rented office Space
B. Buying of equipment
C. Selling goods or stocks
D. Paying salary for employee
______ 2. Which of the following refers to the money that a business receives in exchange
for providing a goods or service.
A) Cost B) Income C) loss D) Profit

_______ 3. Which of the following refers to the money received for selling goods.
A) Gross profit B)Income C) Profit D) Sales

_______ 4. Which of the following refer to all the money the business has to pay so that
can generate an income.
A) Expenses B) Income C) Loss D) Sales

_______ 5. Which of the following refers to buying of goods/stock in order to sell it.
A) Loss B) Net Income C) Purchases D) Sales

________6. Andrei purchased 30 kg of rice at the rate of ₱15.50 per kg and another 30 kg
rice at a certain rate. He mixed the two and sold the entire quantity at the rate
of ₱20.00 per kg How much is his over all profit?
A) ₱200.00 B)₱ 250.00 C) ₱270.00 D) ₱300.00
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________ 7. By selling a shirt for ₱485.00,Francine loses ₱35.00. For how much should
Francine sell it to gain ₱80.00?
A) ₱40.00 B)₱ 500.00 C) ₱600.00 D) ₱700.00

________ 8.You sold your laptop at a loss of ₱3,000.00. If you had sold it for ₱8,000.00.
Find the cost price .
A) ₱10,000.00 B)₱ 11,000.00 C) ₱16,00.00 D) ₱17,000.00

_________ 9. A shopkeeper purchased 120 pieces of facemask at the rate of ₱5.00 each. He
spent an amount of ₱50.00 on transport and packaging. He fixed the labeled
price of each for only ₱15.00.How much profit earned by him?
A) ₱1,150.00 B)₱ 1,350.00 C) ₱1,400.00 D) ₱1,700.00

_________ 10. By selling 23 meters of cloth, Renald loses an amount equal to the selling
price of 3 meters. Purchased price per meter is ₱35.00. Find his gain or loss.
A) ₱105.00 B)₱ 110.00 C) ₱120.00 D) ₱140.00

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