Use the following information below to answer the question Ojo bought a bicycle for ₦20,000, and repaired it at a cost of ₦5,000. He then sold the bicycle f...

Net profit on a simple trading transaction is the selling price minus every cost incurred to acquire and prepare the item for sale. Here the total cost is the purchase price of the bicycle plus the cost of repairing it, since the repair was necessary before the bicycle could be resold.

1. Cost price of the bicycle: \( \text{₦}20{,}000 \)
2. Repair cost: \( \text{₦}5{,}000 \)
3. Total cost: \( \text{₦}20{,}000 + \text{₦}5{,}000 = \text{₦}25{,}000 \)
4. Selling price: \( \text{₦}30{,}000 \)
5. Net profit: \( \text{₦}30{,}000 - \text{₦}25{,}000 = \text{₦}5{,}000 \)

Net profit of ₦5,000 is what is left once both the original cost and the repair expense are covered by the sale proceeds. A figure that ignores the repair cost, such as taking only the purchase price away from the selling price, would overstate the profit, and a figure that adds costs together instead of subtracting them from the selling price would not represent profit at all.

Always add every cost of acquiring and preparing an item, not just the purchase price, before subtracting from the selling price to find net profit.