Senior High School

Business
Mathematics
Quarter 1 – Module 7:
Profit and Loss

Writer:
PATRICIA ANN M. QUIAMBAO
Special Science Teacher I - San Juan High School (Mexico)
Editors:
JANE P. VALENCIA, Ed.D. – EPS – Mathematics (CHAIRMAN)
CHARIZEL T. ARCILLA – SPST-I Malino National High School
JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)
 What I Need to Know

This will give you an idea of the skills or competencies you are expected to learn in the
module.

After going through this module, you are expected to:

• differentiate profit from loss; and
• illustrate how profit is obtained and how to avoid loss in a given transaction.

What I Know

This part includes an activity that aims to check what you already know about the
lesson to take. If you get all the answers correct (100%), you may decide to skip this module.
Direction: Choose the letter of the correct answer. Write the letter of your answer on a
separate sheet of paper. Show your solution.

1. Which of the following refers to the amount left of the selling price after removing all
the expenses and cost?
a. Loss
b. Profit
c. Cost of goods sold
d. Operating expenses

2. What is the other term for Cost?

a. Gross profit
b. Gross sales
c. Cost of goods sold
d. Operating expenses

3. It is the amount by which the goods are acquired together with the services rendered
for its resale.
a. Cost
b. Loss
c. Profit
d. Expense

4. Which of the following includes all other expenses incurred in running the business?
a. Gross profit
b. Gross sales
c. Cost of goods sold
d. Operating expenses
5. It happens when the amount of cost and other services exceeded the amount of sales.
a. Cost
b. Loss
c. Profit
d. Expense

2
 6. Operating expenses consist of the following:
a. administrative and selling expenses
b. transportation or services rendered
c. interest and other finance charges
d. cost of goods sold or cost of sales

7. What is the formula for Operating profit or loss?

a. Gross profit + Operating expenses
b. Gross profit – Operating expenses
c. Gross profit x Operating expenses
d. Gross profit / Operating expenses

8. Gross profit is also known as __________________.

a. Gross sales
b. Cost of sales
c. Other income
d. Gross margin

9. It is the operating profit including other income deducted by other expenses

a. Profit or loss
b. Operating profit/loss
c. Net profit/loss
d. Operating expenses

10. Which of the following refers to the total sales?

a. Profit
b. Gross profit
c. Gross sales
d. Cost of sales

11. What is the formula for the Gross profit?

a. Revenue subtracted to the cost of goods sold
b. Revenue multiplied by the cost of goods sold
c. Revenue divided by the cost of goods sold
d. Revenue added to the cost of goods sold

For items 12-15. Answer Profit or Loss

Anna bought a backpack for ₱650.00 She spent ₱115.00 for transportation in going to
the store to buy it. For the following independent cases, determine whether you earn a profit
or incurred a loss.

12. Anna sold her bag to her friend for ₱780.00 = ______________

13. Anna sold her bag to her friend for ₱665.00 = ______________

14. Anna sold her bag to her friend for ₱750.00 = ______________

15. Anna sold her bag to her friend for ₱850.00 = ______________

3
 Lesson

1 Profit and Loss

Buying items from our favorite sellers becomes a routine for us over the time. Have
you ever thought of how these items were sold from different companies? Or you yourself
ever want to have your own small business? Then this lesson will help you get a better
understanding on how to earn profit and avoid loss.

What’s In

In our daily life, we buy commodities from the vendors in the market which they buy
either directly from the manufacturers or through the wholesalers. For them to bring in
money and to avoid bankruptcy, they increase the selling price of their goods before selling it
to the public.

Let’s have a short review about your previous lessons by completing the table below.
Use a different sheet of paper for your solution and answer.

List Price Series NIP rate Net Invoice Price

a. ₱1,500.00 6%

b. ₱2,000.00 9%

c. ₱3,400.00 10.5%

d. ₱5,000.00 13.25%

e. ₱8,200.00 11.75%

f. ₱2,145.00 10% and 2.5%

g. ₱6,789.00 15% and 15%

h. ₱3,015.00 18%, 8%, and 3%

i. ₱4,650.00 20%, 10% and 7.75 %

j. ₱9,810.00 10%, 5.25%, and 2%

4
 What’s New

Profit and Loss Message Decoder!

Solve each problem and write the matching letter on the box above the correct answer then
complete the message.

1. Jackson purchased a toy car 2. Yuki bought a notebook set

at ₱2,625.00 and sold it at
₱4,038.00. How much is the
profit or loss?
for ₱440.00. She spent ₱18.00
for transportation fee. She
sold her notebook set to her
classmate for ₱450.00. How
much is the profit or loss?

E U

3. A small company earned 4. Haru Merchandising has a

₱210,000.00 in revenue by selling gross profit of ₱85,110.00 and
photo cards, and has ₱17,000.00 incurred an operating expense of
costs of goods sold. How much is ₱28,305.10. How much is the
the gross profit? operating profit?
R E

5. JK co. concluded its other

income, other expenses and
operating profit to ₱6,500.00,
₱2,090.00 and ₱13,550.00
respectively. How much is the net
profit?
F

How do you get a person to like you?

₱1,341 ₱1,413

Y
₱4,131 ₱8 (₱8) ₱193,000 ₱391,000 56,804.9 ₱17,690 ₱17,960

5
 What is It

Cost
- How much the seller buys the item is the cost of the item. It is termed cost of goods
sold or cost of sales.

Profit
- It refers to the amount left of the selling price after all costs and expenses had been
deducted. It is computed using the formula:

P/L = SP – CP, where, SP is the selling price

CP is the cost price, and
P/L is the profit or loss

Hence, Profit/Loss = Selling Price – Cost Price

In the problem 1 above, Jackson purchased a toy car at ₱ 2,625.00 (cost price) and
sold it at ₱ 4,038.00 (selling price). To get the profit or loss, we simply subtract the selling
price with the given cost price.

Solution 1:
= Selling price - Cost price
= ₱ 4,038.00 - ₱ 2,625.00
Profit = ₱ 1,413.00 Note: If the answer is negative,
it can be labeled as loss.

Loss
- Loss occurs when the cost and expenses exceed the selling price or sales.

In problem 2, Yuki bought a notebook set for ₱ 440.00. She spent ₱ 18.00 for
transportation fee (expense). She sold her notebook set to her classmate for ₱450.00. To get
the loss, we must add the cost and expenses then subtract it to the selling price. Therefore,
Profit/Loss = Selling Price - (Cost Price + Expense)

Solution 2:
= ₱ 450.00 - (₱ 440.00 + ₱ 18.00)
Loss = (₱ 8) Note: If the answer is positive, it
can be labeled as profit.

Gross Profit
- Also known as Gross Margin, it appears on a company's income statement and can be
calculated using this formula:

Gross Profit = Revenue (sales) - Cost of goods sold (cost of sale)

In problem 3, a small company earned ₱ 210,000.00 in revenue by selling photo cards,

and has ₱ 17,000.00 costs of goods sold.

Solution 3:
Gross Profit = Revenue - COGS
= ₱ 210,000.00 - ₱ 17,000.00
= ₱ 193,000.00
6
Operating Expenses
- refers to the expenses incurred to run the business. Expenses refer to operating
expenses (administrative and selling expenses) and financial expense (interest and
other finance charges) may appear on a company’s income statement.

Operating Profit/Loss
- refers to the profit from business operations that appear on a company’s income
statement. Thus,

Operating Profit/Loss = Gross Profit - Operating Expenses

In problem 4, Haru Merchandising has a gross profit of ₱ 85,110.00 and incurred an

operating expense of ₱ 28,305.10.

Solution 4:
Operating Profit/Loss = Gross Profit - Operating Expenses
= ₱ 85,110.00 - ₱ 28,305.10
= ₱ 56,804.90

Other Income includes interest income and other incidental income the firm earns like
rent income if it has a property that it rents out.

Other Expense includes interest expense or finance charges financial institutions

charge firms to their services.

Net Profit/Loss

- Net profit forms part of a business’ income statement. It is what is left after all the costs
of a business have been added up and taken from its sales revenue. As such,

Net Profit/Loss = (Operating Profit + Other Income) – Other Expenses

In problem 5, JK co. concluded its other income, other expenses and operating profit
to ₱6,500.00, ₱2,090.00 and ₱13,550.00 respectively.

Solution 5:
= (Operating Profit + Other Income) – Other Expenses
= (₱ 13,550.00 + ₱ 6,500.00) - ₱ 2,090.00
= ₱ 20,050 - ₱ 2,090.00
= ₱ 17,960.00

Income Statement for a Trading Firm

A trading or merchandising firm buys goods that it sells. The account used to report
the selling price of the merchandise is sales while gross sales refers to total sales.

An income statement is the financial statement that shows the results of operation,
that is, if it earns a profit or incurs a loss for a given period of time. Generally, a firm
prepares financial statement on a monthly basis. For tax purposes, it is prepared quarterly

7
and annually. It details the sales (revenue), the cost of sales (cost of goods sold), the operating
expenses, and other expense and/or other income, if any.

Below is a sample income statement of a trading firm.

8
 What’s More

Match the formula to the given problem then solve. Write your final answer on a
separate sheet of paper or notebook. Don’t forget to show your solutions.

1. Joven Merchandising has cost

of goods sold of ₱9,750.11.
The company earned a. Selling Price
₱58,660.04 in revenue. Less: (Cost Price + Expense)

Gross Profit = _______________

2. Akiko purchased a calculator

for ₱ 620.00. She paid ₱ 45.00
for delivery of the item. Akiko
e. (Operating Profit + Other Income)
sold the calculator for
Less: (Other Expense)
₱650.00.

Profit or Loss = ______________

3. Gon Trading co. incurred an

operating expense of
₱14,550.25 for the month d. Gross Profit
ended. The company has a Less: Operating Expense
gross profit of ₱39,100.00.

Operating Profit = ___________

4. Lucy bought a scarf for

₱1,330.75 and sold it at
₱1,500.00. c. Revenue
Less: Cost of goods sold
Profit/Loss = ________________

5. JB co.’s income statement has

₱4,130.00 other expenses,
₱8,990.00 other income, and
₱15,210.00 operating profit.
b. Selling Price
Net Profit = __________________ Less: Cost Price

9
 What I Have Learned

For the lesson summary, answer the following questions based on the discussion. Use
a separate sheet of paper for your answer.

1. What are the other terms for cost?

___________________________________________________________________________

___________________________________________________________________________

2. Differentiate profit from loss

___________________________________________________________________________

___________________________________________________________________________

3. How to avoid loss?

______________________________________________________________________________
____________________________________________________________
4. What is the other term for gross profit?
___________________________________________________________________________

___________________________________________________________________________

5. Define operating expense

___________________________________________________________________________
___________________________________________________________________________
6. Differentiate other income from other expense
___________________________________________________________________________
___________________________________________________________________________
7. Define net profit or loss
___________________________________________________________________________
___________________________________________________________________________
8. What is the purpose of income statement?
___________________________________________________________________________

10
 What I Can Do

Profit and Loss Message Decoder!

Solve each problem and write the matching letter on the box above the correct answer then
complete the message. Use a separate sheet of paper for your solution and answer.

1. Lalin’s flower shop has 2. Natsu Trading incurred an

₱3,450.00 costs of goods sold and operating expense of
revenue of ₱8,990.00. How much ₱107,790.00 and a gross
is the gross profit? profit of ₱460,021.80. How
much is the operating profit?

I V

3. Aki purchased a bag at 4. CK’s income statement has an

₱2,040.00 and sold it at operating profit of ₱67,410.00,
₱1,530.00. How much is the other expense of ₱12,000.00 and
profit or loss? other income of ₱9,022.00. How
much is the net profit?
M N

5. An item bought for ₱3,990.00

with ₱50.50 transportation fee
was sold to the market at
₱4,060.00. How much is the profit
or loss?

How do you say “I hate you” without hurting the person?

₱5,540
₱4,450 ₱5,405 352,231.8 53,521.8

(₱510) ₱510 ₱64,422 ₱64,242 (₱19.50) ₱19.50

11
 Assessment

Directions: Multiple Choice. Choose the letter of the best answer. Write the chosen letter on
a separate sheet of paper.

1. Given: Gross Profit – ₱85,630.00 Find: COGS

Revenue – ₱95,711.00

a. ₱ 10,081.00 c. ₱ 181,341.00
b. ₱ 10,801.00 d. ₱ 181,431.00

2. Given: Operating Profit – ₱2,999.00 Find: Gross Profit

Operating Expense – ₱1,025.00

a. ₱ 4,042.00 c. ₱ 1,974.00
b. ₱ 4,024.00 d. ₱ 1,794.00

3. Given: Operating Profit – ₱240,010.00 Find: Net Profit

Other Expense – ₱16,500.70

a. ₱ 223,509.30 c. ₱ 256,510.70
b. ₱ 232,509.30 d. ₱ 265,510.70

4. Given: Operating Profit – ₱16,990.00 Find: Net Profit

Other Income – ₱14,781.30

a. ₱ 2,208.70 c. ₱ 31.177.30
b. ₱ 2,207.80 d. ₱ 31,771.30

5. Given: Cost of Sales – ₱4,320.00 Find: Gross Profit

Sales – ₱36,720.00

a. ₱ 32,400.00 c. ₱ 41,040.00
b. ₱ 34,200.00 d. ₱ 41,400.00

6. Given: Operating Expense – ₱1,332.00 Find: Operating Profit

Gross Profit – ₱4,700.30

a. ₱ 6,032.00 c. ₱ 3,368.30
b. ₱ 6,320.00 d. ₱ 3,638.30

7. Given: Gross Profit – ₱12,200.00 Find: Cost of sales

Sales – ₱30,730.00

a. ₱ 42,390.00 c. ₱ 18,530.00
b. ₱ 42,930.00 d. ₱ 18,503.00

8. Given: Gross Profit – ₱29,070.72 Find: Operating profit

Operating expenses – ₱26,017.81

a. ₱ 3,052.91 c. ₱ 55,880.53
b. ₱ 3,502.91 d. ₱ 55,088.53

9. Given: Gross Profit – ₱65,450.00 Find: Revenue

COGS– ₱44,550.0

a. ₱ 101,000.00 c. ₱ 100,100.00
b. ₱ 110,000.00 d. ₱ 100,010.00
12
10. Given: Cost of sales – ₱5,035.47 Find: Sales
Gross Profit – ₱7,450.35

a. ₱ 2,414.88 c. ₱ 12,458.82
b. ₱ 2,441.88 d. ₱ 12,485.82

11. Given: Operating Expense – ₱9,249.56 Find: Gross Profit

Operating Profit – ₱11,493.14

a. ₱ 20,742.70 c. ₱ 2,243.58
b. ₱ 20,724.70 d. ₱ 2,234.5

12. Given: Operating Expense – ₱23,064.00 Find: Operating Profit

Gross Profit – ₱30,549.00

a. ₱ 53,631.00 c. ₱ 7,485.00
b. ₱ 53,613.00 d. ₱ 7,458.00

13. Given: Operating Profit – ₱22,440.00 Find: Net Profit

Other Expense – ₱933.87

a. ₱ 21,560.13 c. ₱ 23,337.87
b. ₱ 21,506.13 d. ₱ 23,373.87

14. Given: Gross Profit – ₱5,070.00 Find: COGS

Revenue – ₱7,500.00

a. ₱ 12,207.00 c. ₱ 2,403.00
b. ₱ 12,570.00 d. ₱ 2,430.00

15. Given: Operating Profit – ₱27,838.80 Find: Net Profit

Other Income – ₱14,245.00

a. ₱ 13,593.80 c. ₱ 42,830.80
b. ₱ 13,539.80 d. ₱ 42,083.80

13
 Additional Activities

Freshen Up!
Dylan purchased a suitcase for ₱6,590.00. He paid ₱250.00 for the delivery of
the item to his house and another ₱217.00 for the communication expense.
For the following independent cases, determine whether you earn a profit or
incurred a loss. Determine how much your profit or loss was. Use a separate sheet of
paper for your solution and answer.

1. Dylan sold the suitcase for ₱5,400.00 = ______________ _______________

2. Dylan sold the suitcase for ₱6,000.00 = ______________ _______________

3. Dylan sold the suitcase for ₱6,590.00 = ______________ _______________

4. Dylan sold the suitcase for ₱6,800.00 = ______________ _______________

5. Dylan sold the suitcase for ₱7,000.00 = ______________ _______________

How will Dylan avoid loss? Give 3 scenarios.

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

_____________________________________________________________________________________

________________________________________________________________

15
 15
What I Know What’s New
1. ₱1,413 Assessment
1. B 6. A 11. A 2. (₱8)
2. C 7. B 12. Profit 3. ₱193,000 1. A 6. C 11. A
3. A 8. D 13. Loss 4. ₱56,804.90 2. B 7. C 12. C
4. D 9. C 14. Loss 5. ₱17,960 3. A 8. A 13. B
5. B 10.C 15. Profit “Be 4. D 9. B 14. D
yourself” 5. A 10.D 15. D
What's More
1. E - ₱48,909.93
What’s In 2. A - (₱15) Additional Activities
3. B - ₱24,549.75 Freshen Up!
1. 94% - ₱1,1410
4. D - ₱169.25
2. 91% - ₱1,820
3. 89.5% - ₱3,043 5. C - ₱20,070 1. Loss - ₱1,657
4. 86.75% - ₱4,337.50 2. Loss – ₱1,057
5. 88.25% - ₱7,236.50 What I Can Do 3. Loss - ₱467
6. 87.75% - ₱1,882.24 1. ₱5,540 4. Loss - ₱257
7. 72.25% - ₱4,905.05 2. ₱352,231.80 5. Loss - ₱57
8. 73.18% - 2,206.38 3. (₱510)
9. 66.42% - 3,088.53 4. ₱64,422
10. 4.63% - ₱454.20 5. ₱19.50
“I love Monday”
Answer Key
 Development Team
Development Team of
of the
the Module
Module

Writer: PATRICIA ANN M. QUIAMBAO – SPST-I

SST-I San
SanJuan
JuanHigh
HighSchool
School(Mexico)
(Mexico)
Editor: JANE P. VALENCIA, Ed.D. – EPS – Mathematics
Reviewer: JANE P. VALENCIA, Ed.D. – EPS – Mathematics
CHARIZEL T. ARCILLA – SPST-I MalinoNational
SST-I Malino NationalHigh
HighSchool
School
JHOANNA S. MANALOTO – T-II San Juan High School (Mexico)
Illustrator: PATRICIA ANN M. QUIAMBAO – SPST-I
SST-I San
SanJuan
JuanHigh
HighSchool
School(Mexico)
(Mexico)
Layout Artist: PATRICIA ANN M. QUIAMBAO – SPST-I SanJuan
SST-I San JuanHigh
HighSchool
School(Mexico)
(Mexico)
Language Reviewer:

Management
Management Team
Team

ZENIA G. MOSTOLES, Ed.D., CESO V, Schools Division Superintendent

LEONARDO C. CANLAS, Ed.D., CESE. Asst. Schools Division Superintendent
ROWENA T. QUIAMBAO, CESE, Asst. Schools Division Superintendent
CELIA R. LACNALALE, Ph.D., CID Chief
JANE P. VALENCIA, Ed.D., Education Program Supervisor, Mathematics
JUNE E. CUNANAN, Education Program Supervisor/ Language Editor
RUBY M. JIMENEZ, Ph.D., Education Program Supervisor, LRMDS
0