Suppose you want to start a business. For that you adds the shop-rent, transport cost and others related expenditure with the buying price of commodities and fixes the actual cost price, in a short its called cost price. The actual price is called investmen and this investment is considered to be the buying price for determining profit and loss. The price selling the commodities is its selling price.
If selling price is more than its cost price, there will be a profit.
On the other hand, if the selling price is less than the cost price, there will be a loss.
We can write
Profit = Selling price - Cost price.
Loss = Cost price - Selling price.
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