Financial Literacy
Definitions
Grade 7 EMS
Assets are the items that have monetary value
and are owned by the business.
Assets
Current assets are assets that will not
be converted into cash in the short term.
E.g. buildings
Current
Assets
Non-current assets are assets that will be
converted to cash in the short term. E.g.
raw materials
Non-current
Assets
Liabilities are money owed by the business to
other people or businesses.
Liabilities
Creditors are people or businesses that you
owe money to.
Creditors
Current liabilities are loans that will be paid
back in the short term. E.g. an overdraft.
Current
Liabilities
Expenses are payments for goods or services
needed to keep the business running.
Expenses
Fixed expenses are payments that need to be
made each month. These payments are the
same month to month e.g. rent
Fixed
Expenses
Variable expenses are payments for goods or
services depending on the business activities
for that month. E.g. raw materials
Variable
Expenses
Income is the money earned by
a business.
Income
Equity is the value of the business.
Equity
Income-expenses = profit
Profit
Profit is the money a business has after the
expenses have been subtracted from the income.
Profit Motive is the action of working towards
making a profit in the business.
Profit
Motive
Non-current liabilities are loans that will
take a long time to pay back e.g.
Non-current
liabilities
Capital is the money, goods and property that
can be used to make an income.
Capital
Fixed capital refers to things that are used to
make goods to satisfy needs and wants e.g.
machinery, buildings, tools and vehicles.
Fixed
Capital
Loss is any money that is lost by the business, a
decrease in the businesses value or when the expenses
of the business are greater than the income.
Loss
been paid. Receipts used to record a businesses
transactions are called source documents.
Receipts
Receipts are the written proof that something has
Budgets
Budgets are the plan that is written down on
how you are going to spend your income.
Savings is money that is put aside each month
for future use.
Savings
Accountants and bookkeepers are the people
who keep the records of all the transactions a
business has made.
Accountants
and
Bookkeepers
Financial records are the journals and
ledgers (books) where all the transactions are
recorded.
Financial
Records
Forecasts are estimations made by managers,
on how much money they will be getting in
and how much the expenses will be.
Forecasts
Financial capital is the money used to buy
machinery, buildings, tools, raw materials
and vehicles.
Financial
Capital
Share capital is money invested by the owners
into the business.
Share
Capital
Transactions are any financial action taken
in a business.
Transaction
Revenue is the income the government gets
from taxes.
Revenue