How to Calculate a Percentage
In most cases, calculating percentages is not too difficult and you are familiar with how percentages are applied in everyday situations.
For example, retail stores are regularly offering sales on the products they sell. A '30% off' sale means that the selling price on items in the store will be reduced by 30%, or 30 out of every 100. In this example, we will calculate a 30% reduction in the selling price of a \$20 item.
$$ \newcommand{\ctext}[1]{\style{font-family:Arial}{\text{#1}}} \begin{align} \ctext{Reduction in selling price} &= \frac{30}{100} \times \$20 \cr &= \$6 \cr \ctext{Sale price} &= \$20 - \$6 \cr
&= \$14 \end{align} $$
In the example, we calculated the reduction in the selling price (30% of \$20), and then we subtracted the reduction from the initial price (\$20 - \$6) to give the sale price.
A similar process can be used in to calculate a percentage increase. For example, your old job was 40 kilometres from your house, and your new job is 8 kilometres further from your house. We will now calculate what percentage your commute to work has increased by.
$$ \begin{align} \ctext{Commute} &= \frac8{40} \times 100\% \cr &= 20\% \end{align} $$
This means that your commute has increased by 20%.
These skills can be applied to a range of accounting problems and will help you to analyse financial statements.
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