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Chapter 3: Problem 1

Define: a. profit b. loss

Short Answer

Expert verified
Profit is the financial gain made when revenue exceeds expenses, costs, and taxes. For instance, selling a product for $200 that cost $150 to make would net a profit of $50. On the other hand, a loss occurs when expenses, costs, and taxes exceed the revenue. Selling a product that cost $150 to make for $100 would result in a loss of $50.

Step by step solution

01

Define Profit

Profit is the financial benefit realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity. Simply, it's the money that is left after paying the costs of doing business. For example, if you sell a product for $200 that costs $150 to produce and sell, your profit would be $50.
02

Define Loss

A loss occurs when a company's expenses, costs, and taxes are more than its revenue. In other words, the company is not making enough money to cover its costs. For instance, if it cost $150 to produce and sell a product and you sold it for $100, you would have a loss of $50.

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