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Maysun


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Really simple question
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I am a total beginner at bookkeeping and have a simple question. In my study material it is stated:

to find out what is 21% of 2% you compute 21x0,02 = 0,42.

Obviously I can remember this 'trick' but can someone explain why this works this way? I would have thought computing something like: 0,21/0,02.



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Shamus


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those should be periods, not commas.

21% of 2% would as the question states be 21 * .02 (you've just moved the decimal p[lace to give you your muliplier)

Its really not a trick but rather quite basic maths. If you think about what a percentage is (a fraction of 100) you just take the driver required (in this case 2) and divide by 100 to give you your multiplier. (2/100=0.02). It doesn't matter whther the other side of the calculation is a number or a percentage, the calculation mechanics are exactly the same.

Common use of this is in calculating the percentage ownership of sub subsidiaries which makes me think that you are doing accountancy rather than bookkeeping studies? That said, consolidations don't normally come in at initial studies so where are you in your journey?

Kindest regards,

Shaun.




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Shaun

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