Accuracy of a flow measuring instrument

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rollingstein
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I have an instrument whose spec. sheet mentions Accuracy as 2% of FSD.

The scale runs from 0 to 1000 Litres per hour. Does this mean if I check the instrument versus a gold standard calibrating instrument at a flow of 500 Litres per hour (which is our typical flow) the absolute error can be as large as 2% of 1000? i.e. 20 Litres?

If so, then the allowable error at 500 LPH nominal flow becomes 4%.

Am I doing this right?
 
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Yes, your measurement accuracy is 500±20 LPH. There is usually also a relative error of ε%, so you measure (1+0.01ε)500±20

If you have calibration equipment you can measure the error (with a certain accuracy) and correct for it (with a certain accuracy).

If the error is allowable or not is up to you, I have no idea where the 4% comes from.