Profit and Loss calculation: Fake currency A store buys an item for $\$50$. They price it then, at $\$80$ ($\$30$ profit margin). * * * A customer buys the item from them with a fake $\$100$ note. The store returns $\$20$ to the customer. * * * My question is, how much loss did the store incur? Is it > (1) $\$50 + \$20 = \$70$; or > > (2) $\$80 + \$20 = \$100$? (2) seems to be correct. But what exactly is the definition of loss here? Should it be calculated on the store's **selling** or **cost** price?

Figured it out.


Loss = Cost Price - Selling Price


Prospective gains do not feature into loss computation

In this case,


Selling price = -$20 (which he returned)
Cost Price = $50


**Overall loss = $70**