It gives a rough approximation so it can never be totally accurate but I don't think it is all that far off based on my own system. A lot of people seem to have got into the habit of over-estimating the PSU requirements for a system, there is less harm in it than going too far the other way I suppose but it does mean often that you are paying more money than you need to.
The most accurate way to do it is through hardware of course but not everyone has access or the need to.
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