Percent and percentages accounting
Definition: percentage is a fraction, whose denominator is 100. The term percent means for every 100.
The numerator of the fraction is called the rate percent. Percentage is usually denoted by the sign`` %’’ and some times shortened as p.c.
Percentage explains the increase, the decrease, profit, loss, commission, brokerage etc. with the unit as 100.
To get the percent profit, the formula to be used is as follows:
Percent profit = Total profit x 100
Cost price
e.g.: 5 are called 5 percent (or 5%)
100
5, which is the numerator is called the rate percent.
Also, 3% means 3 (or 3 out of 100)
100
Percentage is the standard way of comparison of two quantities. If we want to compare two fractions 7 and 8 , make the denominator 100 for both the fractions.
50 25
Therefore 7 = 14 = 14% -- means 14 out of 100
50 100
Also 8 = 32 =32% --means 32 out of 100
25 100
Therefore 8 greater than 7
25 50
Note the following
1) 5% of rupees 200 means 5 x 200 = 10 (`of ‘means multiplication)
100 1
2) 75% is equivalent to 75 = 3
100 4
3) Increase % = increase x 100
Original 1
Before attempting questions on percentage, it is advisable to learn all short forms of percentages.
1) 5% = 5 = 1 = 0.05
100 20
2) 10% = 10 = 1 = o.1
100 10
3) 25% = 25 = 1 = 0.25
100 4
Simple interest account
When we need money but do not have enough to meet our requirements, we borrow it. The sum borrowed is said to be the principal. The excess of the money we return after a certain period over the sum borrowed is known as the interest.
Mr. Mallaiah is barrowed rupees 20,000 from a bank for a business. After one year, he pays a sum of rupees 2,000 to the bank consideration for the some of money used by him at rate of 10% per annum in this connection, explain:
Principal: The sum borrowed is called principal. With reference to the above example, principal = Rupees 20000
Interest: A certain sum of money paid to the lender besides the principal is called interest. It is the charge paid for using the principal. In the above example, it is Rupees 2,000.
Amount: The principal together with the interest is called the amount.
Amount = principal + interest
=20000 + 2000 = Rupees 22,000
Rate of interest: The interest we have to play for using Rupees 200 for one 1 year is said to be the rate of interest.
Time: it is the period of time in years for which principal is used and is denoted by `T’ in the formula.
Formula Simple interest = principal x time x rate
_____________________
100
S.I = P x T x R
Amount = A = P + S.I
Therefore, P = 100 x S. I
_________
T x R
When money is borrowed at simple interest, the interest changed is the same irrespective of the period involved.
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