*Percentages are everywhere, from invoices and payslips to shop receipts and restaurant bills, so it’s vital to get to grips with the basics.*

Per cent means ‘per hundred’, so a percentage is a fraction of 100. Eg 100% is the whole of 100. 75% is 75 parts of 100. As a fraction this would be 75/100 and as a decimal it would be 0.75.

You will come across percentages in many aspects of your life but in accounts, they are most commonly used for calculating discounts and VAT payments.

**Calculating a percentage of a quantity**

This is when you need to work out what a percentage of an amount is worth in real terms. To do this you must turn the percentage into a fraction and multiply it by the full quantity.

EG 5% of 300

= 5 / 100 x 300

= 5 **÷ **100 x 300

= 15

Alternatively you can turn the percentage into a decimal: 0.05 x 300 = 15

**Calculating one quantity as a percentage of another**

** **First of all you have to display the quantity as a fraction and then multiply it by 100.

EG 36 as a percentage of 90 = 36/90 x 100

It may be easier to turn the fraction into a decimal by diving 36 by 90: 36 ÷ 90 = 0.4, so 0.4 x 100 = 40%

**Increasing an amount by a percentage**

** **If you are adding VAT, for example, you will have to add 20% of the amount to the original figure.

EG £300 + VAT

First calculate 20% of £300

20/100 x £300 = 0.2 x 300 = £60.00

£60.00 + £300 = £360.00

An alternative method is to the add percentage to 100% (ie 20 +100), which is the whole amount, to give you the new percentage, divide it by 100 and then multiply it by the original figure.

EG 100 = 20% x £300

= 120% x £300

= 120/100 x £300

= 1.20 x £300

= £360.00

**Decreasing an amount by a percentage**

This is the opposite of the above calculation. It is used when working out discounts, ie an amount is taken off.

Eg. 20% discount of £300 = 20/100 x £300

Which reduces to 0.2 x 300 = £60

So, £300 – £60 = £240

**Calculating VAT when it is in the price**

If a price includes VAT, you may want to work out the actual cost of the product. To do this you treat the price as 20% which includes the value of the product – 100% and the 20% VAT.

EG £80 excludes VAT, how much is the VAT?

20/100 x £80 = £16

EG £80 includes VAT, how much would it be without VAT? 100/120 x £80 = £66.67