Flashcard Study Guide

Front

What is sales tax?

Back

Sales tax is a percentage of the purchase price that is added to the total cost of goods or services.

Front

How do you calculate sales tax?

Back

To calculate sales tax, multiply the cost of the item by the sales tax rate (as a decimal).

Front

What is the formula for total cost including tax?

Back

Total Cost = Item Cost + (Item Cost × Sales Tax Rate)

Front

What is gratuity?

Back

Gratuity, also known as a tip, is a sum of money given to service workers for their service.

Front

How do you calculate gratuity?

Back

To calculate gratuity, multiply the total cost (including tax) by the gratuity percentage (as a decimal).

Front

What is markup?

Back

Markup is the amount added to the cost price of goods to cover overhead and profit.

Front

How do you calculate the total cost with markup?

Back

Total Cost = Cost Price + (Cost Price × Markup Rate)

Front

What is simple interest?

Back

Simple interest is calculated on the principal amount only, not on the interest accrued.

Front

What is the formula for calculating simple interest?

Back

Simple Interest = Principal × Rate × Time

Front

What is the principal in finance?

Back

The principal is the initial amount of money borrowed or invested, before interest.