Sales tax and discount

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What is sales tax?

Back

Sales tax is a percentage of the sale price of goods and services that is collected by the seller and paid to the government.

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How do you calculate the total cost including sales tax?

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To calculate the total cost including sales tax, multiply the price of the item by the sales tax rate (as a decimal), then add that amount to the original price.

Front

What is a discount?

Back

A discount is a reduction in the price of a product or service, usually expressed as a percentage of the original price.

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How do you calculate the final price after applying a discount?

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To calculate the final price after applying a discount, multiply the original price by the discount rate (as a decimal) to find the discount amount, then subtract that amount from the original price.

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What is the importance of rounding in financial transactions?

Back

Rounding is important in financial transactions to ensure that amounts are expressed in a standard format, typically to two decimal places, which is necessary for currency.

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What is the formula to calculate the total cost of an item with sales tax?

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Total Cost = Price + (Price x Sales Tax Rate) or Total Cost = Price x (1 + Sales Tax Rate).

Front

If an item costs $100 and has a sales tax of 5%, what is the total cost?

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Total Cost = $100 + ($100 x 0.05) = $105.

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How do you convert a percentage discount into a decimal for calculations?

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To convert a percentage discount into a decimal, divide the percentage by 100. For example, a 20% discount becomes 0.20.

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What is the total cost of an item priced at $200 with a 10% discount and a 5% sales tax?

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First, calculate the discount: $200 x 0.10 = $20. The price after discount is $200 - $20 = $180. Then calculate sales tax: $180 x 0.05 = $9. Total cost = $180 + $9 = $189.

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What is the difference between a discount and a sales tax?

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A discount reduces the price of an item, while sales tax is an additional charge added to the price of an item.