Hey Laxmi, I am also learner, I will also check the reply of othres for this thread. Just visit http://adwords.google.com/support/bin/answer.py?hl=en&answer=31756 and http://en.wikipedia.org/wiki/AdWords It will help.
They advertise things and people buy things and the difference between what people buy and the advertising cost is profit/loss. It's what happens with all advertising/marketing. It's not rocket science.