Rounding up and down

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I need to double check something for the sake of making sure I get my first assignment accurate.

It probably seems common sense to some but I'm not 100% sure if I've got this right

I understand that when calculating VAT we always round the VAT down to the nearest penny?

The thing I'm confused about is about the discounts: For example -
The price of the item is 650 - after the 10% trade discount the amount is 552.50 - then comes the settlement discount...
the 2% settlement discount on the calculator is 13.8125
I assume I round down to 13.81?
having said that, IF the settlement discount was 13.8178, would I round up to 13.82? or do we always round the discount down, regardless of the number and regardless of whether it's a trade discount or a settlement discount.

Thanks for any help.
Rich

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Rounding up and down

    Hello Rich,

    I used Excel to check this to see what it would do when going past two decimal places. But first off, a 10% discount from £650 would leave £585 payable not £552.50 as you originally calculated.

    For rounding in a currency format, it appears that Excel rounds as follows when going to the third or more decimal place;

    0, 1, 2, 3 & 4 inclusive are rounded down.
    5, 6, 7, 8 & 9 inclusive are rounded up.

    Therefore,

    £13.8125 is rounded down to £13.81
    £13.8178 is rounded up to £13.82

    This makes perfect sense when you look at it since both include five different numbers and I can only assume that other software programmes would follow this logical rule.

    Regards,

    Robert
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Rounding up and down


    It is correct to round down the pence on VAT.

    However, my old computer system refused to do this - very annoying, but not worth stressing out over.

    Helen
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Rounding up and down

    haha I'm silly

    I'm laughing at my mistake as I know exactly what I did wrong. I said "If you take 10% of 650" and came up with the figure 552.50.....what happened is that 552.50 was the answer on the net amount of an invoice on the assignment I was working on at the time...whereas 650 was number I was using to illustrate a point. on the forum......I didn't work out the 10% of 650 tho..why I put 552.50 must be because I had that number in my head from the question I had just been doing. I just checked my assignment, thats the only reason I realised my mistake ha ha...thanks for pointing it out tho.

    As for rounding down - when we are working out a discount on a net amount, say a settlement discount, do we round the number up or down depending? I just figured we always round the discount down the same way we always round the vat down.

    edit - actually, I think the mistake was I said 10% instead of 15% - 15% off of 650 leaves 552.50 ...what a doofas *smacks head*
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Rounding up and down

    To force Excel to round down VAT just use a formula like; =ROUNDDOWN(SUM(K5*17.5)/100,2). (Note that K5 here is just the target cell that I copied and pasted this reference from).

    Regards,

    Robert

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