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Fundamentals of accounting
Fundamentals of accounting

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2.1 Mastering accounting numeracy

Competent accountants should be able to use mental calculations as well as a calculator to perform a range of numerical tasks.

In the modern world, the assumption is that we use calculators to save the tedious process of working out calculations by hand or mentally. The danger, of course, is that you may use a calculator without understanding what an answer means or how it relates to the numbers operated upon. For example, if you calculate that 8% of £20 is £160 (which can easily happen if either you forget to press the percent key or it is not pressed hard enough), you should immediately notice that something is very wrong.

Using a calculator requires certain skills in understanding what functions the buttons perform and in which order to carry out the calculations. Your need to study this material is dependent on your mathematical background. If you feel weak or rusty in basic arithmetic or maths, you should find this material helpful. The directions and symbols used will be those found on most standard calculators. If you find any of the instructions contained in this material do not produce the expected answer, please look at the instructions for your calculator and amend the instructions in this week so that they match those for your own calculator.

There are four basic operations between numbers, each of which has its own notation:

  • Addition 7 + 34 = 41

  • Subtraction 34 – 7 = 27

  • Multiplication 21 x 3 = 63, or 21 * 3 = 63

  • Division 21 ÷ 3 = 7, or 21/3 = 7.

The next section will examine the application of these operations and the correct presentation of the results arising from them.