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Commercial Arithmetic

Basic Definitions

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Percentage

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Profit and Loss

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 Profit = Selling Price (S.P) – Cost Price (C.P)


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Loss = Cost Price (C.P) – Selling Price (S.P)
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 Selling Price = Cost Price + Profit

 Selling Price = Cost Price - Loss


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 Cost Price = Selling Price – Profit


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 Cost Price = Selling Price + Loss


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 Profit (in percent) = x 100 = x100
   

 
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 Loss (in percent) = x 100 = x100


   
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 Selling Price = Cost Price + x% of Cost Price, , if Profit is x%.


 Cost Price = Selling Price x ", if Profit is x%.
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 Selling Price = Cost Price - x% of Cost Price, , if Loss is x%.


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 Cost Price = Selling Price x ", if Loss is x%.


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Discount and Market Price

 Discount = Marked Price – Actual Selling Price

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#$
 x 100

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 Discount in Percent = Marked Price –
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 Actual Selling Price = Marked Price – Discount

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( $
= Marked Price -  x Marked Price


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 Marked Price =
( $
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 Successive (2nd) discount is calculated on the balance after deduction of

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the first discount from the marked price and so on.

Simple Interest
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• Simple Interest (S.I) = = PNi, where P is the Principal, N is the Period

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in years and R% is the rate of interest for 1 year.     = interest for
unit principal for one year
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• Amount (A) = Principal + Interest


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• Interest = Amount - Principal


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Compound Interest (C.I)

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Compound Interest (C.I) =   , " - , where P is the Principal, N is

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the Period in years and R% is the rate percent annually.

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• Amount, A =   , "


• Principal = Amount – Compound Interest

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Difference between C.I and S.I for 2 years =  "

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• Difference between C.I and S.I for 3 years = . / , "

Recurring Deposit (R.D)


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Recurring Deposit is a special type of deposit in which a person deposits a


fixed sum every month over a period of years and receives a large sum at the
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end of the specified number of years. Since the deposit is made month after
month, it is called Recurring Deposit. Recurring Deposits are also known as
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Cumulative Term Deposits. The amount deposited every month is called the
Monthly Deposit.
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Total Interest = , where N = ,
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P be the Monthly Instalments,

R % be the rate of Interest and


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‘n’ be the number of monthly instalments.


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Amount Due = Amount Deposited + Total Interest


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Fixed Deposit

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Fixed Deposit are deposits for a fixed period of time and the depositor can

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withdraw his money only after the expiry of the fixed period. It is also known
as Term Deposits. However, in the case of necessity, the depositor can get his
fixed deposit terminated earlier to get a loan from the bank under terms laid

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down by the bank. There are two types of fixed deposits, namely

 Short Term Deposits


 Long Term Deposits

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Short Term Fixed Deposits are accepted by the banks for a short period

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ranging from 46 days to one year. The interest paid on this deposit is Simple
Interest.

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Long Term Fixed Deposits are accepted by the banks for a period of one year
or more. The interest paid on this type of deposit is Compound Interest.
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Quarterly Interest =
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Half Yearly Interest =
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