Accounting is not advanced mathematics, but it does use some everyday arithmetic that you need to do accurately. Many learners arrive worried that the subject is full of hard equations. In fact the number work is modest, and it is the same few skills used again and again.

Getting comfortable with this arithmetic now removes one of the commonest sources of lost marks later. It also frees your attention for the ideas that make accounting interesting: how a business earns, spends and reports its money. A learner who trusts their arithmetic works faster and checks their own answers.

Percentages

Percentages appear all over accounting, in depreciation rates, discounts, margins and ratios. You need two skills. The first is finding a percentage of an amount, for example 20% of RM8,000 = RM1,600.

The second is writing one number as a percentage of another, for example RM20,000 as a percentage of RM50,000 = 40%. Practise both until they are automatic. Questions rarely say which one is needed, so you must spot it from the wording.

Here is an example. A small trading business (the figures are invented) buys goods for RM12,000 and sells them for RM15,000. The gross profit (sales minus the cost of the goods) is RM3,000.

Two different percentages describe the same trade, and learners often mix them up. The margin is profit as a percentage of the selling price: RM3,000 ÷ RM15,000 × 100 = 20%. The mark-up is profit as a percentage of the cost: RM3,000 ÷ RM12,000 × 100 = 25%.

The money is the same but the base is different. So always ask “a percentage of what?” before you divide. Choosing the right base matters more than the arithmetic.

Careful addition and subtraction

Much of accounting is adding columns of figures and subtracting one total from another. Under time pressure, one slip changes every figure after it. Neatness is a method, not fussiness.

Keep figures in aligned columns, with units under units and thousands under thousands. Rule off totals clearly so you know which numbers you have already added. A column may have amounts to add and amounts to take away, as a cash record does.

Label each entry so a subtraction is never mistaken for an addition. A common mistake is to treat a return or an allowance as an extra sale. It actually reduces the total, so it must be subtracted.

Working with ratios

Some results are shown as ratios, such as a current ratio of 2:1. This means dividing one figure by another (current assets ÷ current liabilities) and reading the answer as “so many to one”.

If current assets are RM30,000 and current liabilities are RM12,000, the ratio is 30,000 ÷ 12,000 = 2.5, written 2.5:1. A ratio has no RM sign.

It compares two amounts and is not an amount itself, so “RM2.5” would be wrong. A ratio also loses its meaning if the figures are the wrong way round, so decide which figure goes on top before you divide.

Rounding sensibly

Questions often say “to the nearest RM” or “to two decimal places”. Follow the instruction exactly. Learners often miss this: round only at the very end.

If you round a figure partway through and keep calculating with the rounded value, small errors build up. Your final answer can drift far enough to lose a mark even when your method is right. Carry the full figures through your working, then round the last line as the question asks.

Estimating to catch errors

Get into the habit of asking, “does this look sensible?” before moving on. Accounting has natural limits that make this easy. Gross profit can never be larger than revenue.

A margin cannot be more than one hundred per cent. A closing cash balance should not be negative unless the business has overdrawn.

Say a debtor (a customer who owes money) should owe RM4,000 but your total is RM40,000. The size alone tells you a decimal point or a zero has gone wrong. A quick check like this catches many slips in seconds, before they spread through the rest of a question.

Why this matters for the topics ahead

These skills are tools you will use in almost every later topic. Percentages return when you meet depreciation and profitability ratios. Careful addition is the whole of preparing a trial balance, where the two sides must agree to the last RM.

Ratios return when you judge whether a business can pay its debts. The same arithmetic keeps coming back, so time spent on it now pays off many times.

Try it yourself

Exercise: (a) What is 15% of RM6,000? (b) Express RM12,000 as a percentage of RM48,000. (c) A current ratio is current assets RM30,000 ÷ current liabilities RM12,000. What is it?

Show the answer
  • (a) 15% × 6,000 = RM900.
  • (b) 12,000 ÷ 48,000 × 100 = 25%.
  • (c) 30,000 ÷ 12,000 = 2.5:1.

Now put your arithmetic to work with the accounting equation. If percentages or ratios still feel uncertain, one of our teachers can work through a page of examples with you at a comfortable pace. We start from the step that feels shakiest. Book a trial class.