Fun
Economic &
Management Sciences
Grade 9
2012 edition for CAPS
Name: __________________________________
Written by
Barbara Williamson
EZ Learn Books CC
Contents
Part 1: Introduction to business studies
1.
2.
3.
Sectors of the economy ........................................................................... 3
Functions of a business ........................................................................... 17
Planning a business ................................................................................ 23
Part 2: Introduction to accounting
4.
5.
6.
7.
Recording cash transactions of a trader ........................................... 35
Recording credit transactions ............................................................ 61
Subsidiary ledgers .................................................................................. 96
Financial reporting1 .............................................................................. 125
Part 3: Introduction to economics
8.
9.
10.
11.
1
Economic systems ..............................................................................
The economic cycle ............................................................................
Price theory ............................................................................................
Trade unions .........................................................................................
147
150
157
163
For extension
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1
Part 1:
Introduction to business studies
It is important to understand how your business fits into the economy, what activities
are carried out in a business and how to create a unique business. Innovative ideas,
and careful planning are needed here!
2
Part 1: Introduction to Business Studies
1. Sectors of the economy

1.1. Case study
Part A
Watch the following Youtube clips:
Part 1: http://www.youtube.com/watch?v=nfczfI0G_30&feature=related (6 minutes)
Part 2: http://www.youtube.com/watch?v=NmeqgOiWFv4&feature=related (4 minutes)
Part 3: http://www.youtube.com/watch?v=bBAeZySgPYE&feature=related (3 minutes)
OR
Read the following article:
How chocolate is made
It’s funny to think that a bar of chocolate starts out using the fruit
from a tree that might grow in your garden…if you live in the
tropics!
Here you can discover where cocoa trees grow, what they produce and how you end up with the
cocoa, dark and milk chocolate we all know and love.
From Trees to Beans
Cocoa beans come from cocoa pods that grow on cocoa trees – simple! The cocoa tree, (real name
Theobroma Cacao), grows in warm, humid places near the Equator. There’s got to be guaranteed
rainfall and fertile soil for it to thrive, and Ghana, the Ivory Coast, Brazil, and Nigeria are all perfect
– production’s increasing in Malaysia too.
A cocoa tree looks a bit like an apple tree but has broader, rich green leaves. It flowers and fruits all
year round, and produces large cocoa pods that sprout from tree trunks and main branches.
There’s not that many of them though – each tree only has 20-30 pods a year. Take a look inside
the pods and you’d see 30-40 seeds sitting in a sweet white pulp rather like cotton wool – these are
the cocoa beans. And no wonder cocoa is precious; it takes a whole year’s crop from one tree to
make 454 grammes (1lb) of cocoa.
Different trees, different cocoa
There are three main types of cocoa: Forastero, Criollo and Trinitario – this last one is a cross
between the first two. Forastero is widely grown – it’s a hardy tree producing the strongest flavour
beans. And within Forastero, a variety called Amelonado is most popular, largely grown in West
Africa and Brazil. Criollo trees aren’t as tough as Forastero. Its beans have a milder chocolate
flavour and a unique aroma. They’re grown in Central and South American and Indonesia.
Trinitario isn’t found in the wild, but is grown in the Caribbean as well as in Cameroon and Papua
New Guinea. Cadbury get their cocoa from Ghana in West Africa, where the main harvesting period
is October to December. When they’re ripe, the cocoa pods turn a rich golden colour. They’re cut
down from the trees and split open, and the pulp and beans are removed from the outside husk.
To get a good chocolate flavour, the beans then have to be fermented. There are two main
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Fun Economic & Management Sciences Grade 9
methods: Heap and Box. In West Africa the Heap method is used. The cocoa beans are piled up on a
layer of banana tree leaves, with more leaves on top to cover them. Then they’re left for five or six
days to ferment – this when much of the chocolate flavour develops. The pulp around the beans
becomes liquid and drains away.
Next the wet beans are dried in the sun and turned frequently so they dry evenly – this is crucial
because if any beans are still wet, they’ll go mouldy when they’re stored. Once the farmers are
happy that the beans are dry, they’re taken to buying stations, where the beans are weighed and
packed into sacks.
The Box method is used in the West Indies, Latin America and in Malaysia, and you tend to find it in
large plantations. Over a tonne of beans is put in to a wooden box which has gaps in the base for air
to get in and liquid to drain out. The boxes are covered in banana leaves and stored in a building for
6-8 days. They’re mixed a couple of times during this process, and then special equipment is used
to dry them.
Processing the Beans
Once Cadbury have bought their cocoa beans, they arrive in the United Kingdom and are
transported to one of the world’s most modern processing factories, at Chirk in North Wales.
The sacks of beans are emptied out on to a conveyor belt and before anything else happens they’re
cleaned to get rid of any dust and stones they’ve picked up along the way. Next the beans roasted
in a big revolving drum called a continuous roaster. Hot air goes into it as the beans pass along it,
and it’s during this process that you’ll really begin to smell chocolate!
The roasted beans are ‘kibbled’ (broken in to small pieces), then ‘winnowed’ – the brittle shells are
blown away, leaving just the ‘nibs’, the centres of the beans. The nibs are ground between steel
rollers until they become a chocolate-coloured liquid, rather like thick cream, over half of which is
cocoa butter. The liquid is called ‘mass’ or ‘cocoa liquor’ and this is the basic ingredient for all cocoa
and chocolate products.
Mass contains ‘cocoa butter’ and about half of is pressed out. You’re left with a solid block that can
then be ground into cocoa powder.
How Dark Chocolate is Made
To make dark chocolate, cocoa mass is sent from Chirk to Cadbury’s chocolate making factories. It’s
mixed with extra cocoa butter and sugar, then ground and ‘conched’. Conching is a crucial process:
it means the chocolate is rolled and kneaded, transforming itself from a gritty substance to a very
smooth one. Chocolate also needs to be ‘tempered’. This involves cooling it to a particular
temperature, to make it stable. It means you get a nice glossy finish, and you don’t get the problem
of cocoa butter rising to the surface – which is harmless, but spoils the look of the chocolate.
Now the dark chocolate is ready to use and can be poured into moulds or over chocolate centres.
The finished chocolate bars or individual chocolates sail on down the production line to be wrapped
and packed into boxes ready for distribution.
How Milk Chocolate is Made
The cocoa mass is sent to the Cadbury milk factory near Hereford. Here it is mixed with sugar and
fresh full cream milk, which has already been condensed into a thick liquid. The mixture is dried in
vacuum ovens to become milk chocolate ‘crumb’. The milk chocolate crumb is taken to Cadbury
chocolate factories and finely ground between enormous rollers before extra cocoa butter and
special flavourings are added.
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Part 1: Introduction to Business Studies
The amount of cocoa butter added depends on what the chocolate is for – bar chocolate needs to
be thick, but if it’s to cover assortments and bars with different centres, thinner chocolate is used.
In the UK up to 5% vegetable fat is added too – this stabilises the chocolate and gives the ideal
texture to ensure that the melting properties of the chocolate are precise and preserve the taste
and ideal texture of the chocolate.
Next, milk chocolate needs to be conched (rolled and kneaded so that it becomes silky smooth),
and tempered (cooled to a particular temperature to make it more stable) – just like for dark
chocolate. Now the chocolate’s ready for its final destination – maybe it’ll be poured over a
Crunchie, become a Classic Dark, or end up as a lovely bar of Dairy Milk.
Moulded chocolate, countlines and enrobing
So once we’ve made dark chocolate and milk chocolate, what happens to it? That depends on what
we’re making. Bars of chocolate, like Cadbury Dairy Milk, are called ‘moulded’ products – because
chocolate is poured into a mould to make them. Liquid chocolate is poured in, it’s shaken (to make
sure it fits the mould perfectly), and then cooled, before being wrapped at high speed.
‘Countline’ products are things like Crunchie, with a chocolate covering around a different centre.
The centres of the bars are laid out on a conveyer belt, and they pass under an ‘enrobing’ machine,
which covers each bar in a layer of liquid chocolate. Chocolate assortments like Milk Tray are made
the same way.
http://www.cadbury.co.za/about/how-chocolate-is-made/
Accessed 10 November 2011
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Fun Economic & Management Sciences Grade 9
Part B
Discuss the following in your group or as a class. Make notes of the discussion in the space provided.
1.
The article and Youtube clips illustrate how chocolate is made from cacao beans.
1.1.
Briefly describe this process.
1.2.
How does the chocolate then end up in the hands of you, the hungry consumer?
2.
Consider the entire transformation and movement of chocolate as discussed in question 1.
2.1.
How do you think you could you split this up into three main parts, each part being made up
of similar activities?
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Part 1: Introduction to Business Studies
2.2.
How is value added to the beans and chocolate along the way as they move through these
sectors?
2.3.
What other activities need to take place to physically move the beans and chocolate
through these sectors? Which sector do you think these would form part of?
2.4.

What types of skills do you think are needed in each sector?


3.
As we become more concerned about looking after our fragile environment, we need to think
about how to use our limited resources more carefully and in ways that ensure any resources
used are regenerated wherever possible i.e. in a sustainable manner.
3.1.
Can you think of any ways in which resources could be used in a sustainable manner in each
of the three main parts you showed above?



3.2.
All processes usually have an element of waste e.g. the outside husk of the cacao bean
might be thrown away. How do you think the waste products in the chocolate making
process might be better utilised, either in this process, or elsewhere?
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Fun Economic & Management Sciences Grade 9
The sectors of the economy
Businesses make products to satisfy people’s needs and wants. Consumer goods are consumed by
the end-user, whereas production goods are needed to make consumer goods and capital goods
(machinery etc. used in manufacturing). These products move through the following sectors of the
economy so as to be extracted from the earth, manufactured and then made available to the end
user (consumer).
Primary
sector
Primary sector industries
involve extracting raw
materials from the earth
e.g. agriculture, fishing,
mining and forestry. These
activities involve mostly
unskilled labour.
Secondary
sector
Secondary sector industries
convert these raw materials
into a form we can use. A
product may move through a
number of processes or
factories in the secondary
sector before it takes the form
of a product required by the
consumer. Manufacturing
activities involved skilled
labour, managed by
professionals.
Tertiary
sector
Tertiary sector businesses
transfer goods to the
consumer e.g. wholesalers,
retailers, transport, banks
etc. These include
commercial and personal
services provided by
professionals, supported
by some skilled labour.
Adding value in the supply chain
The string of activities through which a product or service moves from its extraction to being made
available to the consumer is known as the supply chain. As products move along the supply chain,
value is added at each step. Raw materials that have been extracted are worth more than those
still in the earth, as they are available for use. Products that have been manufactured are worth
more than the unprocessed raw materials as they are in a form that can be used by the consumer.
Products that are available in shops are worth more than those still in a factory, as they are
accessible to the consumer. A variety of distributions channels exist to move different types of
products in different ways, to suit the needs of different consumers.
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Part 1: Introduction to Business Studies

1.2. Artistic activity
1.



Think of any THREE different products.
2.
Using the spaces on the following pull out page, draw pictures to show how each product
moved through the different sectors to become available to the consumer.
3.
Cut out your cards, shuffle them and pass them on to a classmate.
4.
Take the shuffled set given to you, and arrange them to determine what products have been
illustrated, and how each moves through the different sectors of the economy. Paste them
below:
Primary sector
Secondary sector
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Tertiary sector
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Fun Economic & Management Sciences Grade 9

1.3. Group activity
In preparation
Raid your recycling bin at home, and bring some (or all) of these items to school.
Lesson 1
You will need a large piece of paper (at least A3) and coloured pens
1.
2.
3.
Brainstorm ideas for products you can make with the materials you brought from home.
Develop your brainstormed ideas, keeping in mind that it should be useful and functional,
satisfying some real need. It should also be a feasible business idea that will be sustainable over
time, replacing the need for non-environmentally products or processes. Your idea should also
be unique, being differentiated from other similar products in some way so as to create a
competitive advantage.
In order to help you evaluate each idea, conduct a SWOT analysis for each. This involves
carefully analysing the strengths and weaknesses of the product idea itself, as well as the
relevant opportunities and threats in the external business environment for this idea.
Idea No. 1:
Internal
Strengths
Weaknesses








External
Opportunities
10
Threats








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Part 1: Introduction to Business Studies
Primary sector
Secondary sector
Tertiary sector
Product 1
Product 2
Product 3
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Fun Economic & Management Sciences Grade 9
(Pull out page)
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Play to Learn!
Part 1: Introduction to Business Studies
Idea No. 2:
Internal
Strengths
Weaknesses








External
Opportunities
Threats








Idea No. 3:
Internal
Strengths
Weaknesses








External
Opportunities
4.
Threats








Based on your SWOT analyses, select the best idea and explain your choice.
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Fun Economic & Management Sciences Grade 9
Lesson 2
5.
Build your product.
Lesson 3
6.
7.
Present your product to the class, describing the need that it fulfils and how it will be used.
Consider how the products move through the sectors of the economy now that recycling is
being used. Show this movement diagrammatically.
Rating scale
Waste products used
Product is useful
Idea is creative
Business idea is sustainable
Idea replaces a “non-green” product or process
Diagram shows recycling’s role in sectors of economy
Total out of 10
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


2
2
2
1
2
1
1
1
1
0
1
0
0
0
0
0
0
0
Part 1: Introduction to Business Studies
Sustainable use of resources
As our population grows, we put more and more pressure on the environment in which we live. We
are only now starting to realise the huge impact of carbon emissions, waste being dumped, the
destruction of our rain forests etc. Individuals and businesses are starting to relook at how we use
the limited resources available to us, and how we get rid of our waste. Recycling is playing a much
greater role now than ever before, and people are constantly researching new energy sources
and fuels to reduce the effects on global warming and the earth on which we live. In order for
businesses to succeed, innovation and creativity are vital in solving these problems. With a little
creativity, recycling and innovative use of resources can take place in all sectors of the economy.
Sustainable use of primary sector resources
The primary sector deals with extraction of resources from the earth. Since these resources are
limited, if not carefully managed, they will run dry. Preference should be given to using renewable
resources. For example, bamboo can be used instead of wood, as it grows faster. Fish should be
carefully managed and bred rather than simply fished from the sea, to avoid extinction of species.
Recycling in the secondary sector
Raw materials used for manufacturing can often be replaced by recycled
materials. This solves two problems – the use of original materials is replaced by
recycled materials, and it avoids non-biodegradable waste products being
dumped. Although it is often costly to remanufacture recycled products, this
cost can be offset against the cost of new materials, and the value of looking
after our environment is priceless.
A “green” tertiary sector
Even though the products moving through the tertiary sector have already been produced, further
materials and fuels are required to transport and manage these goods. Tertiary sector businesses
can look at using more energy-efficient transport options, and looking for environmentally friendly
alternatives for the warehouses and offices e.g. solar power for lighting and heating, paperless
administration etc.
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Fun Economic & Management Sciences Grade 9

1.4. Business report
Select any product of your choice. Write a report to the CEO of a company in one of the sectors it
passes through in which you
 Analyse the way in which the product moves through the sectors of the economy.
 Consider the value added at each step of the process through all three sectors.
 Explain the importance of sustainability and suggest how the company chosen could utilise
resources more sustainably in its part of the process.
Your report should take the format of a business report, in other words it should clearly indicate who
it is prepared for, the subject of the report, and it should be signed and dated at the end. In order to
fully understand the processes involved, you might like to conduct some research into the
production of your chosen product and company.
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My notes
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Part 2:
Introduction to accounting
It is very important for any business to keep track of where its money is at any time
and to use that money to make the best possible profits. Many good businesses fail
because of poor financial management!
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Fun Economic & Management Sciences Grade 9
My notes
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Part 2: Introduction to accounting
4. Recording cash transactions of a trader
4.1. Treasure hunt
(20 marks, 15 minutes)

Carefully study the accounting records shown below to find the treasure of information requested by
the questions that follow.
Cash receipts journal of Salon Emma – February 2010
CRJ7
Analysis
Sundry
accounts
Current
of
Doc Day
Details
Fol
Bank
income Amount
Details
F
receipts
EFT
CRR
CRR
016
1
10
28
28
Doc
Day
130
131
132
133
134
2
8
15
22
27
Emma Williams
Cash
Cash
P Williamson
2 000
7 000
4 000
20 000
2 000
20 000
Capital
B1
4 000
24 000
Rent income
N2
2 000
7 000
11 000
33 000
B5
9 000
N1
Cash payments journal of Salon Emma – February 2010
Sundry accounts
Material Admin
Name of payee Fol
Bank
costs
costs
Amount
Details
Stuart Stationers
1 000
1 000
Trish’s Supplies
3 000
3 000
EC Equippers
15 000
15 000 Equipment
Emma Williams
10 000
10 000 Drawings
Trish’s Supplies
6 000
2 000
21 000
5 000
1 000
15 000
B5
N3
N4
Dr
General ledger of Salon Emma
Statement of Financial Position section
Capital
2010 1 Balance
Feb
Bank
2010
Feb
1
Balance
22
Bank
b/d
CPJ7
b/d
2010
Feb
1
2010
Feb
1
Balance
15
Bank
CPJ7
1
Balance
b/d
28
Sundry accounts
1
Balance
2010
Feb
Mar
Balance
b/d
CRJ7
b/d
CPJ7
F
B4
B2
Cr
b/d
CRJ7
Drawings
60 000
B1
250 000
20 000
270 000
B2
10 000
70 000
Land and buildings
150 000
B3
Equipment
50 000
B4
15 000
65 000
Bank
12 000 2010
Feb
33 000
45 000
24 000
28
Sundry accounts
Balance
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CPJ7
c/d
B5
21 000
24 000
45 000
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Fun Economic & Management Sciences Grade 9
Nominal accounts section
Current income
2010
Feb
1
Balance
28
Bank
N1
63 000
b/d
CRJ7
9 000
72 000
Rent income
2010
Feb
2010
Feb
2010
Feb
1
Balance
28
Bank
1
Balance
28
Bank
b/d
CPJ7
b/d
CPJ7
1
Balance
28
Bank
N2
12 000
b/d
CRJ7
4 000
16 000
Material costs
35 000
N3
5 000
40 000
Administration costs
8 000
N4
1 000
9 000
Salon Emma
Trial balance as at 28 February 2010
Fol
Statement of Financial Position section
Capital
Drawings
Land and buildings
Equipment
Bank
Nominal accounts section
Current income
Rent income
Material costs
Administration costs
Debit
B1
B2
B3
B4
B5
N1
N2
N3
N4
Credit
270 000
70 000
150 000
65 000
24 000
72 000
16 000
40 000
9 000
358 000
358 000
1.
What business are these accounting records for?
(1)
2.
For what period were these transactions recorded i.e. when?
(1)
3.
What amount was deposited directly into the business bank account by EFT, and why?
(2)
4.
What receipt number was issued to P Williamson and why was it issued?
(2)
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Part 2: Introduction to accounting
5.
What amount did the business deposit into the bank account on the 28 th?
(1)
6.
Who supplied the business with equipment?
(1)
7.
When did Emma draw cash for her own use?
(1)
8.
What cheque number was used to pay Trish’s Supplies on the 27th?
(1)
9.
What was the cost of the Land and Buildings owned by this business?
(1)
10.
How much money was available to the business on 1 February 2010?
(1)
11.
What account number has been allocated to Material Costs?
(1)
Now think carefully …
12.
Why do you think Emma contributed an extra R20 000 this month?
(2)
13.
If rent income is a fixed monthly amount, when was the extra office space first let out to the
tenant?
(2)
14.
Do you think the drawings taken out by Emma is reasonable, given the profits made by the
business? Show any calculations.
(3)

4.2. Discovery activity
You will need: scissors, Prestik, a pencil and an eraser
20
You would like to start a business with a few friends, making and selling boerewors rolls.
1.
2.
3.
Carefully cut out all the icons on the next page and attach a small piece of Prestik to the back
of each. Note: each money icon represents R50. For the others, you will need to enter the
relevant amounts.
Turn over this page to see the accounting equation template that you will use to understand
the new concepts you are about to learn.
For each transaction given, move the icons about on the accounting equation to show the
financial effect. For items other than cash, write the value on each icon. Remember that each
transaction will affect two different things!
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Fun Economic & Management Sciences Grade 9
WHAT I HAVE
ASSETS
WHO OWNS IT
EQUITY
+
-
LIABILITIES
R
22
R
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Part 2: Introduction to accounting
Partners’ investment in the business:
Breadrolls:
R
R20
Paper serviettes:
Loan from Mom:
R
R10
Boerewors:
R
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Fun Economic & Management Sciences Grade 9
(pull out page)
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Part 2: Introduction to accounting
Transactions:
1.
Fortunately you have all decided to save your tuckshop money to invest in this new venture,
and together have R50 to start. You place this money into an old Tupperware dish marked
“Boerie Stand”. Show this in your table, and check that it balances.
2.
You realise that there is not a lot you can buy with R50 these days, and convince your mom to
invest in your brilliant business idea. She agrees to lend you R100, on condition that you pay her
back with interest of R5 at the end of the month. Show this in your table, and check that it
balances.
3.
It’s time to go shopping! You spend R120 on tasty boerewors from your local butcher, R20 on
fresh rolls from the bakery and R10 on paper serviettes to serve the boerie rolls to your
customers. Show this in your table, and check that it balances.
4.
Now it’s time to make your boerie rolls.
4.1.
Cut out the roll, boerewors and serviette.
4.2.
Fold the roll in half and wrap it around the boerewors.
4.3.
Fold the serviette over the roll.
4.4.
Place your prepared boerie roll back on your table.
5.
Time to sell! You pack your prepared boerie rolls into a clean box and head off to sell them to
hungry neighbours for R15 each. Luckily there is an important rugby match on, and it’s nearly
lunch time. You sell all 20 rolls you and your friends have made. Show this in your table, using
your “prepared” boerie roll to represent the rolls you sold. You will have to allocate a value to it.
Check that the table balances.
4.
What happened to your stock of rolls and sausages – how did you end up classifying them after
they were sold?
5.
What happened to your totals when you sold your rolls?
6.
How can you account for the extra money you received – how did you allocate it on the “Who
owns it” side?
7.
Calculate your total cost of production i.e. to make all 20 rolls.
8.
Calculate the cost per roll.
9.
What profit did you make on the sale of the rolls?
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Fun Economic & Management Sciences Grade 9
Taking cost of sales into account
When goods are sold by a business, the selling price cannot be considered to be all profit – the
cost to the business of those goods must be taken into account.
SALES – COST OF SALES = GROSS PROFIT
To account for this, the selling price is recorded as income, but the trading stock sold is converted
from an asset to an expense: “cost of sales”.
Mark-up calculations
Businesses often choose to determine the selling price by calculating the cost price and then
adding a set percentage to this amount. The mark-up added is to cover other operating
expenses and allow for a profit to be made.
COST PRICE X (100% + MARK-UP%) = SELLING PRICE
The calculated price may then be adjusted slightly to arrive at a sensible price to label the item
with. Odd numbers confuse customers, and prices set just below a round rand seem cheaper.
When recording a sales transaction you might only know the selling price and the mark-up
percentage that was used. To calculate the cost price you use the same calculation as above
and work backwards i.e.
COST PRICE
=
SELLING PRICE
(100% + MARK-UP%)
The effect of sales on the accounting equation
When stock is bought, it is recorded as an asset, as it will generate a future income.
1. The sales amount is recorded in the same way as income from services provided was
recorded last year.
2. The cost of sales now needs to be taken into account. Since the stock that was bought is no
longer available to sell, this asset needs to be removed and turned into an expense i.e.
Trading Stock becomes Cost of Sales.
1.
2.
26
Effect
+
+
-
ASSETS
Reason
Trading stock increases
Bank decreases
Bank increases
Trading stock decreases
Effect
+
-
EQUITY
Reason
Sales income
Cost of sales expense
Play to Learn!
Effect
LIABILITIES
Reason
Part 2: Introduction to accounting
Accounts in the equation
ASSETS
OWNER’S EQUITY
These are the items owned by the
business, that have some monetary
value.
This is the value of the business that
belongs to the owner, including capital
and any profits made.
Non-current assets
Capital
Land and buildings
Vehicles
Equipment
Drawings
Net profit
Current assets
Stock
Bank
“Non-current” means that it will
not be turned into cash (or
paid back) within the next
year. Obviously then “current”
means cash will be received
for this asset (or the liability
paid back) within the next
year.
Expenses
Income
Cost of sales
Stationery
Telephone
Wages
Etc.
Sales
Current income
Rent income
LIABILITIES
This is the money owed by the business.
Non-current liabilities
Mortgage bond
Current liabilities
Bank overdraft
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27
Fun Economic & Management Sciences Grade 9
4.3. Formative assessment
1.
(30 marks, 20 minutes)

Complete the table by filling in the missing amounts to determine gross profit, sales or cost of
sales.
(6)
1.1.
1.2.
1.3.
1.4.
1.5.
1.6.
Sales
R6 000
R3 400
-
Cost of sales
R4 000
R1 700
R1 900
R3 200
=
R8 500
R13 500
Gross profit
R3 800
R2 300
R3 500
R4 000
2.
If the cost price is R300 and you want to add a 50% mark-up, what will your selling price be? (2)
3.
If the cost price is R346 and you wish to add a mark-up of approximately 75%, what selling price
would you suggest? Think carefully after completing your calculation, and explain your answer.
(4)
4.
If the selling price is R500 and a 150% mark-up was used, what was the cost price?
(2)
5.
Show the effect on the accounting equation of the following transactions.
5.1.
Goods costing R5 000 were bought for cash.
5.2.
Goods costing R2 500 were sold for R6 000.
5.3.
Goods costing R2 000 were sold at a mark-up of 50%.
5.4.
Goods that had been marked up by 100% were sold for R9 000.
Effect
ASSETS
Reason
Effect
EQUITY
Reason
Effect
(16)
LIABIITIES
Reason
5.1.
5.2.
5.3.
5.4.
30
28
Play to Learn!
Part 2: Introduction to accounting
Cash journals of a trading business
The cash journals of a trading business look very similar to that of a service business (as you learnt in
Grade 8). The only difference is that instead of Current Income and Material Costs (or Consumable
Stores), you now have to account for Sales, Cost of Sales and Trading Stock instead.
The Cash Receipts Journal will have a column for Sales (where Current Income was used before),
as well as a new column for Cost of Sales. This is to remind us to account for the cost of the goods
that were sold, and transfer this amount from the asset Trading Stock to the expense Cost of Sales.
When entering sales into the CRJ, the selling price received is entered into both Bank and Sales
(similar to entering current income for a service business), but then the cost price of the goods sold
is also entered in the Cost of Sales column, the total of which will be posted to both Trading Stock
and Cost of Sales at the end of the month.
Doc
Day
XXX
1
Details
Cash sales
Cash receipts journal of XXX – date
Analysis
Cost
Fol
of
Bank
Sales
of
receipts
sales
Selling
Selling
Cost
price
price
price
CRJX
Sundry accounts
Amount
Details
F
The Cash Payments Journal will have a column for Trading Stock (where Material Costs was used
before), to account for the goods that have been bought for resale.
Doc
Day
XXX
2
Name of
payee
XXX
Cash payments journal of XXX – date
Trading
Fol
Bank
Stationery Wages
stock
Cost
Cost
price
price
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CPJX
Sundry accounts
Amount
Details
F
29
Fun Economic & Management Sciences Grade 9

4.4. Example
Required
Record the following transactions in the cash journals of Paddy Traders for March 2011. Total the
journals at the end of the month.
1.
2.
3.
4.
Bought goods costing R2 500 from WW Wholesalers and paid with cheque number 221.
Cash sales R7 000 (cost price R3 500).
Bought and paid for stationery (R1 000) and stock (R5 000) from Super Sellers.
Banked R10 000 for cash sales (R8 000 – mark-up 100%) and rent income received from B Smith
(R2 000 – receipt 109 issued).
Bought and paid for equipment from TT Traders, R20 000.
Paid for merchandise bought from TT Traders, R3 000.
5.
6.
Solution
Doc
Day
CRR
CRR
109
2
4
Cash receipts journal of Paddy Traders – March 2011
CRJ5
Analysis
Cost
Sundry accounts
Details
Fol
of
Bank
Sales
of
Amount
Details
F
receipts
sales
Cash sales
7 000
7 000
7 000
3 500
Cash sales
8 000
8 000
4 000
B Smith
2 000 10 000
2 000 Rent income
17 000 15 000
7 500
2 000
In the CRJ, the “Cost of sales” column is used to
remind us that we need to record the cost of
goods sold, but the bank is not affected by this
amount (see posting instructions below).
Doc
Day
221
222
223
224
1
3
5
6
30
Cash payments journal of Paddy Traders – March 2011
CPJ5
Sundry accounts
Trading
Name of payee
Fol
Bank
Stationery
stock
Amount
Details
F
WW Wholesalers
2 500
2 500
Super Sellers
6 000
5 000
1 000
TT Traders
20 000
20 000 Equipment
TT Traders
3 000
3 000
31 500
10 500
1 000
20 000
Play to Learn!
Part 2: Introduction to accounting

4.5. Exercise
Using the transactions given below, record the relevant information in the cash journals of Cronje
Traders for June 2011. Close off the journals at the end of the month.
Note: The business uses a mark-up percentage of 75%.
June 2011
2.
Received R75 000 from the owner, T. Cronje, to increase his investment in the business.
Receipt 101 issued.
3.
Paid municipality for water and electricity with cheque 201, R200.
7.
Purchased trading stock from Croall Suppliers, R4 500, and paid by cheque.
10.
Cash sales according to cash register roll R3 500.
14.
Cashed cheque to pay wages, R700.
15.
Purchased stationery, R370. Cheque made out to Croall Suppliers.
18.
Bought computer from Dlamini Suppliers for R5 000, paid by cheque.
20.
Bought merchandise from DC Wholesalers and paid by cheque, R5 600.
25.
Cash sales R5 250.
27.
Bought stationery from Super Stationers, R760.
28.
Cashed cheque to pay wages, R750.
30.
Paid telephone account, R400.
Doc
Doc
Day
Day
Cash receipts journal of Cronje Traders – June 2011
CRJ3
Analysis
Cost
Sundry accounts
Details
Fol
of
Bank
Sales
of
Amount
Details
F
receipts
sales
Cash payments journal of Cronje Traders – June 2011
CPJ3
Sundry
accounts
Name of
Trading
Fol
Bank
Wages Stationery
payee
stock
Amount
Details
F
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31
Fun Economic & Management Science Grade 9
4.6. Formative assessment
(20 marks, 20 minutes)

Use the following information to draw up the books of first entry for Aitchison Art Supplies for
March 2011.
NB: Mark up is 50% on cost.
March 2011
2. C. Aitchison increased her capital contribution from R75 000 to R100 000 by EFT.
5. Purchased goods from Altona Wholesalers, R4 500, and paid by cheque 335.
7. Wrote out cash cheque to pay wages, R800.
11. Purchased new shelves and filing cabinets from Andrist Furnishers, R2 200 paid by cheque.
14. Cash sales of merchandise, R7 950.
17. Goods sold for cash, R5 250.
23. Paid Brass Motors for repairs to a vehicle, R350.
27. Received a cheque for R1 800 from K. Browne as rent for the month. Issued receipt 112.
28. Purchased goods from Cassim Suppliers, R6 700 paid by cheque.
Doc
Doc
Day
Day
Cash receipts journal of Aitchison Art Supplies – March 2011
CRJ4
Analysis
Cost
Sundry accounts
Details
Fol
of
Bank
Sales
of
Amount
Details
F
receipts
sales
Cash payments journal of Aitchison Art Supplies – March 2011
CPJ4
Sundry
accounts
Trading
Name of payee
Fol
Bank
Wages
stock
Amount
Details
F
20
32
Play to Learn!
Part 3: Introduction to economics
Part 3:
Introduction to economics
Economics is basically choice. People have many wants and needs, but there exist
only limited resources (ingredients to make the products to fulfil those needs).
Economics looks at how these choices are made. An understanding of basic
economics and the South African economy will help you to understand why
businesses exist and how they fit into the economic environment.
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33
Fun Economic & Management Science Grade 9
My notes
34
Play to Learn!
Part 3: Introduction to economics
9. The economic cycle

9.1. Group activity
Each group will need: a bank note, pencils, large poster-sized piece of paper or card and marker
pens.
1.
2.
3.
Form a group of about 4 learners.
Take out a bank note and put it on the table in front of the group (only one is needed for the
group).
Where did the note come from before you received it?
4.
Where will it probably go when it leaves the classroom?
5.
Think about and discuss this bank notes’ movements for the next week.
6.
Show the life cycle of this bank note diagrammatically on your large page. Plan how you will
draw it here:
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35
Fun Economic & Management Science Grade 9
7.
Present the life cycle of your bank note to the rest of the class.
8.
As a class, discuss how money moves through the economy, based on all your ideas. Make
rough notes of the discussion.
Individual
1
Group skills
Does not
communicate with
others, makes no
real contribution
2
Makes a
contribution, but
does not work
well with rest of
group
3
4
Makes a contribution
and communicates with
group members
Makes a valuable
contribution and is able to
bring out the best in other
group members
3
4
Basic flows of money,
goods and services,
with factors of
production identified
Basic flows of money, as well
as financial and foreign
sector involvement identified
Group
1
Ability to
identify
movements of
money in the
economy
No real movements
identified
Creativity of
ideas and story
No creativity of
ideas
Presentation
skills
Poor skills
2
Some basic flow
of money
identified
between
consumers and
business
A basic story line
achieved, but
boring
Basic vocal skills
A good story created
Some eye contact,
good reference to
drawings as a visual aid
TOTAL OUT OF 16
36
Play to Learn!
Story goes beyond basic
expectations and holds
interest of other learners
Excellent skills keep learners
interested throughout
presentation
Part 3: Introduction to economics
A basic economic cycle
in a closed economy
Although at first it may seem that money can only be used once, in fact it is used over and
over again, having a much larger effect on the economy than simply buying one item. This
“snowball” effect is why a small action by, for example, a consumer buying a bar of
chocolate, affects the whole economy. The money paid for the chocolate will be used to pay
the suppliers of cocoa, sugar etc., who in turn will pay their workers and so on.
The following diagram illustrates this flow of money, goods and services, as well as the factors
of production (raw materials, labour, capital and entrepreneurship) in the economic cycle:
BANKS
LOANS
INVESTMENTS
SAVINGS
LOANS
GOODS
AND SERVICES
BUSINESS
CONSUMER
LABOUR
Savings and investment
Money that is saved at financial institutions by a number of individuals (in return for interest)
can be invested in large businesses. These businesses provide goods and services needed, as
well as providing jobs for people. This then stimulates trade, as people have money to spend
and there are products on which money can be spent.
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37
Fun Economic & Management Science Grade 9

9.2. Class activity2
Your educator will need to prepare your resources before this lesson according to the guie in the
solution book.
1.
Form a group of between 4 and 6 learners. You will represent a new country – choose a name
for your country.
2.
Choose one person to be the entrepreneur and one to be the banker. Other group members
will be salaried employees. Each group member will start with 2 units of money.
Banker: You will receive additional money from the reserve bank (your teacher). Use this to lend
to your group members as they need it, but charge interest (you choose the rate). When they
deposit money with you, give them interest (you choose the rate). You may buy goods with
your own money, but keep in mind at all times the amount owed to the reserve bank – this is
not yours to spend!
Entrepreneur: You may buy goods from your supplier (your teacher) for 1 unit each, then sell
them to your other group members. You choose the price at which you sell. You may borrow
additional funds from the bank in order to buy more stock, but remember that you will be
charged interest. You may also buy your own stock with profits you make, but remember to
keep track of how much you still owe to the bank!
Salaried employees: You will receive a salary of 2 units every 5 minutes. You may choose what
you do with this – you may buy goods, save your money (earning interest), or even borrow
additional funds to buy more at one time (and be charged interest).
3.
Start trading!
After playing the game
4.
How many goods were you able to buy throughout the game?
5.
Did you use the banks services, whether to invest or to borrow?
6.
How did the interest affect how much you could have bought if you had not invested or
borrowed?
7.
How did the bank make a profit?
8.
How did the entrepreneur make a profit?
9.
How did you solve the problem of wanting to buy goods from another country?
10.
How did you decide on a fair price for each currency swapped?
2
For extension only – introduces foreign sector in open economy
38
Play to Learn!
Part 3: Introduction to economics
The economic cycle in an open economy3
The foreign sector
Countries usually have different resources, resulting in the production of different products.
Because people naturally like variety, these products are traded between countries. Money
must be used to pay for these goods, but each country has a different currency. These
currencies are then swapped, so that countries can trade with each other. The currencies of
countries with goods that are either more valuable or more desirable, end up costing more
than the currencies of countries with less to offer.
When goods are exported, foreign exchange flows into the country, allowing the purchase of
foreign goods with that currency. When goods are imported, money flows out. More exports
than imports will result in a country’s wealth increasing, but too many imports and not enough
exports will mean that there is a negative cash flow. We then say that the country has a
deficit. We can now add the effects of the foreign sector into the economic cycle to show
the flow of money in an open economy:
BANKS
LOANS
INVESTMENTS
SAVINGS
LOANS
GOODS
AND SERVICES
BUSINESS
CONSUMER
LABOUR
GOODS
GOODS
FOREIGN
COUNTRIES
3
For extension only
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39
Fun Economic & Management Science Grade 9
9.3. Formative assessment4
1.
(20 marks, 15 minutes)

Complete the crossword from the clues given below.
(10)
Across:
2. A … economy involves only consumers, businesses and financial institutions within a country.
3. An open economy includes the … sector.
6. Countries have limited … available to produce goods and services to satisfy people’s needs.
9. The cost of one currency expressed in terms of another is known as the … rate.
10. Currency used in Japan.
Down:
1. This is both a measure of value and a means of exchange.
4. The … cost is the cost of choosing to make one product at the expense of another.
5. This refers to how efficiently available resources are used to produce products and services.
7. As South Africa becomes more competitive, we will be able to … more products to other
countries.
8. A good indication of economic growth is the gross … product of a country.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
4
For extension only
40
Play to Learn!
Part 3: Introduction to economics
2.
A slab of Swiss chocolate costs CHF2,50 (Swiss francs) in Switzerland, but South Africans are
willing to pay R22 for the same slab (excluding transport and import duties).
2.1.
What is the current exchange rate of Rands to Swiss francs?
(2)
2.2.
Which is the stronger currency?
(1)
2.3.
Suggest TWO ways in which Nestle’s South African factory could improve its productivity in
order to become more competitive.
(4)
2.4.
Explain why it is in South Africa’s interests to export rather than import chocolate.
(3)
20
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41