The picture on the cover of this book is inspired by Grade 9
learner, Ricardo da Silva.
learned many practical things about business.
And since I definitely want to run my own business
one day, what I’m learning now goes hand in hand
with my plans for the future, giving me many of the
tools I need to make a success of my life.
Grade 9 Learner’s Book
I’ve really enjoyed EMS this year because we’ve
Via Afrika
Economic and
Management Sciences
Grade 9 Learner’s Book
P. Bean, S. De Bod, B.D. Houghton, M. Kleyn, T. Kotze,
E.L. Llewellyn, A. Marx, J.N.T. Mbotho, B. Ndlovu, C.S.F. Trollip
Language: English
www.viaafrika.com
Via Afrika Economic and Management Sciences
Building on everything you’ve learned in EMS, this book will help you
understand many new things about money and business. You’ll explore
different types of economies and how they work. You’ll also get useful
advice on how to create a business plan, as well as the opportunity
to apply your theoretical knowledge of accounting. The more you
discover, the more you might think about a career in the world of
finance. You might want to work for a large company as an accountant,
actuary or stockbroker. Whatever your dream may be, you’ll see that
a good understanding of EMS makes anything possible – especially if
your dream is to start your own successful business.
Marika Kleyn • Patrick Bean • Steyn de Bod • Barbara Houghton • Tatiana Kotze
Estelle Llewellyn • Anne-lee Marx • Nozipho Mbotho • Bongani Ndlovu • Simon Trollip
Via Afrika
Economic and
Management Sciences
Grade 9 Learner’s Book
It is illegal to photocopy any part of this book
without the written permission of the publisher.
EMS Gr9 LB (intro).indd 1
2013/04/26 1:16 PM
40 Heerengracht, Cape Town 8001
PO Box 5197, Cape Town 8000
www.viaafrika.com
cover design by
typesetting by
cover photograph by
Jupiter Drawing Room
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Jupiter Drawing Room
printed and bound by
isbn:
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First edition
First impression
April 2013
© All rights reserved.
No part of this book may be reproduced or transmitted in any form or by any means,
electronic or mechanical, including photocopying, recording, or any information storage
and retrieval system, without permission in writing from the publisher.
Every effort has been made to obtain copyright of all printed extracts in this book. However,
if we have unwittingly used material requiring copyright, we request the copyright holder
to bring the matter to our attention so we can make the acknowledgements.
Acknowledgements
illustrators
Adam Carnegie, Heidel Dedekind, Alae Newington, Brice Reignier, Gustav Reyneke
photographs
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Corbis p. 33 – Africa Media Online p. 44 – AfriPics p. 45 – Africa Media Online p. 70 – Gallo
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images p. 118 – Bigger Picture/Alamy p. 182, 183 – Greatstock/Afika Collection p. 200 –
Gallo images/Getty images
EMS Gr9 LB (intro).indd 2
2013/04/26 1:16 PM
Welcome
This is the best Grade 9 Economic and Management Sciences book you
will ever have!
Remember, good learning begins in the classroom! Always
●● listen and concentrate.
●● observe: watch carefully what’s happening.
●● make notes to help you remember what you are learning.
●● ask questions to make sure you understand.
Study tips
●●
●●
●●
●●
●●
●●
Allocate one hour every week-night as study time in addition to your
homework.
Decide when your main study time should be. Some learners study
better in the early morning, some study better in the evening.
Keep to your timetable.
Study time is a priority – it’s one of the most important things in your
life at school.
Find a quiet place to study. (Try a quiet classroom at school or the local
library if possible.)
Choose study partners who are serious about doing well to work with
you.
7 golden rules for success
●●
●●
●●
●●
●●
●●
●●
Always do your homework.
Don’t fall behind.
Study every day.
Eat healthy food and sleep at least eight hours each night.
Make sure you understand as you go along.
Do it now!
Don’t give up: learning gets easier and faster when you practise.
Because you are Our Future.
Good luck!
The authors
Term • Topic 
EMS Gr9 LB (intro).indd 1
• Topic  
i
2013/04/26 1:16 PM
Contents
How to use this book
2
Term 1
4
Week 1
Week 2
Revision ..........................................................................................8
Topic 1 – Financial literacy: Cash Receipts Journal and Cash
Payments Journal (sole trader)...................................................... 18
Topic 2 – The economy: Economic systems.................................... 22
Week 3
Topic 1 – Financial literacy: Cash Receipts Journal and Cash
Payments Journal (sole trader)...................................................... 24
Topic 2 – The economy: Economic systems.................................... 27
Week 4Topic 1 – Financial literacy: Cash Receipts Journal and Cash
Payments Journal (sole trader)...................................................... 32
Summary and questions................................................................34
Topic 2 – The economy: Economic systems....................................36
Summary and questions................................................................ 37
Weeks 5–6 Topic 3 – Financial literacy: General Ledger and Trial balance
(sole trader)...................................................................................38
Topic 4 – The economy: The circular flow...................................... 43
Weeks 7–10Topic 3 – Financial literacy: General Ledger and Trial balance
(sole trader)...................................................................................46
Summary and questions................................................................50
Topic 4 – The economy: The circular flow...................................... 52
Summary and questions................................................................54
Formal Assessment Task (FAT): Assignment....................................................56
Formal Assessment Task (FAT): Controlled test................................................59
Term 2
62
Week 1
Week 2
Week 3
Revision ........................................................................................66
Topic 1 – Financial literacy: Credit transactions – debtors............70
Topic 2 – The economy: Price Theory............................................ 72
Topic 1 – Financial literacy: Credit transactions – debtors............ 76
Week 4
Topic 2 – The economy: Price Theory............................................ 78
Topic 1 – Financial literacy: Credit transactions – debtors........... 80
Topic 2 – The economy: Price Theory............................................ 82
Week 5
Topic 1 – Financial literacy: Credit transactions – debtors............84
Weeks 6–7 Topic 2 – The economy: Price Theory............................................86
Summary and questions................................................................89
EMS Gr9 LB (intro).indd 2
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Week 7
Topic 1 – Financial literacy: Credit transactions – debtors............90
Summary and questions................................................................ 92
Weeks 8–9 Topic 3 – Entrepreneurship: Sectors of the economy.....................94
Summary and questions..............................................................100
Formal Assessment Task (FAT): Data response .............................................. 101
Formal Assessment Task (FAT): Mid-year examination .................................. 102
Term 3
106
Week 1
Week 2
Revision ...................................................................................... 110
Topic 1 – The economy: Trade Unions.......................................... 112
Topic 2 – Financial literacy: Credit transactions – debtors...........114
Week 3
Topic 1 – The economy: Trade Unions..........................................118
Topic 2 – Financial literacy: Credit transactions – debtors.......... 120
Weeks 4–5 Topic 1 – The economy: Trade Unions..........................................125
Summary and questions.............................................................. 128
Topic 2 – Financial literacy: Credit transactions – debtors.......... 129
Summary and questions...............................................................137
Weeks 6–7 Topic 3 – Financial literacy: Credit transactions – creditors ....... 139
Topic 4 – Entrepreneurship: Functions of a business...................141
Week 8
Topic 3 – Financial literacy: Credit transactions – creditors ....... 148
Summary and questions...............................................................153
Topic 4 – Entrepreneurship: Functions of a business.................. 154
Summary and questions...............................................................155
Weeks 9–10 Topic 5 – Financial literacy: Credit transactions – creditors ....... 158
Summary and questions...............................................................177
Formal Assessment Task (FAT): Project ......................................................... 178
Formal Assessment Task (FAT): Controlled test ............................................. 179
Term 4
182
Week 1
Revision ...................................................................................... 186
Weeks 2–7 Topic 1 – Financial literacy: Transactions – cash and credit ....... 188
Summary and questions.............................................................. 199
Topic 2 – Entrepreneurship: The business plan...........................200
Summary and questions.............................................................. 219
Weeks 8–9 Examination preparations .......................................................... 220
Formal Assessment Task (FAT): Final examination ........................................ 232
Glossary
.............................................................................................. 240
EMS Gr9 LB (intro).indd 3
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actions
How to use this book
Key terms are shown in red
the first time they appear.
They are listed at the
beginning of a unit.
Week
Topic
2
1 The three major economic systems
Key terms
communism
Das Kapital
demand
economic system
globalisation
market economy
mixed economy
planned economy
supply
The Wealth of
Nations
You can also find the
definitions of key terms in
the Glossary at the back of
this book. Make sure you
understand these words and
revise them when you study.
productive resources
– natural resources,
human resources,
capital resources and
entrepreneurship
used to make goods
and services
Week
Topic
4
economic growth –
steady growth in the
productive capacity
of the economy
New words are in blue
and are explained in the
margin.
Term
2
Topic 2 The economy: Economic systems
apartheid – a policy
introduced by the
national party in
south africa in 1948
which divided people
into racial groups.
people classified
white were allocated
more resources and
had political rights in
comparison to people
classified black,
indian and coloured.
isolated – being kept
away from others
All countries need a system to determine how to use its productive
resources.
How this is done will depend on the economic system. In this topic you
will learn about the planned economy, the market economy and the mixed
economy.
1.1 A planned economy
A planned economic system is a system where the government owns
the land or natural resources and businesses and pays the workers. The
government decides what goods and services people need and set the
prices of these goods and services. All the profits from the production of
goods and services in the country go to the government. You will learn
more about the origin, characteristics, advantages and disadvantages of this
system in this topic.
1.2 A market
economy
Topic
2 The
economy: Economic systems
A market economic system is a system where individuals own the land or
natural resources and businesses and these owners pay the workers for
goods
and providing
services. The profits from the production of
4making
The
global
economy
goods and services go to the owner/s. The government is not too involved
in the most
economy.
You will
learn more
thehave
origin,
characteristics,
Today
countries,
including
Southabout
Africa,
mixed
economic systems
advantages
of services
this system
this topic.scale. This is
and
produceand
anddisadvantages
trade goods and
on ain
worldwide
known as globalisation. A global economy results in greater economic growth
1.3 a A
mixed
economy
and
better
life for
all.
A mixed economic system is a system where both the government and
The
policy ofown
apartheid
Africa
forbusinesses.
many years.The
After
our first
individuals
land orisolated
naturalSouth
resources
and
government
democratic
in 1994
all countries
accepted
usThe
andgovernment
trade improved.
and privateelections
individuals
provide
goods and
services.
will
usually provide
goods and services that are necessary for the people of
Globalisation
means:
the country while private individuals could provide the same goods and
modern
communication
transport
things and
services but charge higher and
prices
if therebring
is a demand
for people
it. You ‘closer’
will learn
andabout
makethe
theorigin,
world ‘smaller’
more
characteristics, advantages and disadvantages of this
●● countries become more dependent on each other because countries
system in this topic.
specialise in the products that give them an advantage over others
●● there are fewer trade restrictions between countries
2● trading
Origin
each systems
●
andof
investments
between countries are important for good
relations between countries
2.1
The
planned
economy
●● transnational corporations
are becoming more important and are less
Theaccountable
planned economy
is based
on the writings of a German philosopher, Karl
to national
governments
Marx.
His book,
Thein
Communist
Manifesto
written inand
1848
when many
●
● workers
can live
one country
and usewas
information
communications
●●
technology (ICT) to work for a business or government in another country
workers can share and learn from the best available technology (e.g. the
internet).
Term
1 • Week 2 Topic 2 The economy
●●
22
Each term begins with a
striking photograph for
you to enjoy.
Activity 4
Working in two different economic systems
In groups of 4 to 5 learners, role-play the differences between
working in a planned and a market economic system. Use the
example of buying and selling groceries where there is competition
among the many supermarkets compared to one state-owned grocery
store where there is no competition.
(10)
– debtors
Activity 1
Advantages and disadvantages of credit sales
In small groups of four or five learners you need to:
1 Discuss the advantages of allowing credit sales
2 Discuss the disadvantages of allowing credit sales
3
Debtors
When a business allows customers to buy on credit the customers are called
debtors. These credit customers owe money to the business. If a customer
is allowed to buy on credit, they will be given certain terms and conditions.
These will cover how much they may buy on account, the maximum period
of time they have to pay back the outstanding debt, also known as the credit
term, and what interest will be charged on an account if it is not paid back in
time.
36
Term 1 • Week 4 Topic 2 The economy
58
59
The balance of the debtor’s outstanding account is an asset for the business.
It is treated as a current asset because the money will be received within a
short period of time.
Activity 2
Businesses and debtors
Find the following information about a store which sells goods on credit:
1
2
3
4
What are the credit terms of the business?
What background checks does the business do?
How does the business decide on how much credit to allow a customer?
What will the business do to a debtor who does not pay the money owed
to the business?
Activities help you to
understand what you have
learned.
Work in pairs and get information by going to a store; searching the
internet or from a magazine. You must always state the source of your
information.
You and your partner will give feedback to your class.
(10)
2
Week 2 Topic 1 Financial literacy • Term 2
EMS Gr9 LB (intro).indd 2
71
2013/04/26 1:16 PM
ic
The task in the Formal Assessment Task
(FAT) box will prepare you for the FAT
that your teacher will give you in class.
Go through these when you study to
do well in your tests and
exams.
Term
1
Assignment
Formal Assessment Task (FAT): Assignment
1 Read the following extracts and answer the questions that follow.
Formal Assessm
3 Read Ruth’s sto
(10)
Extract A
“I have been with
yeast, sugar and
need coal, wood
earn more per mo
to go to work.”
In KwaZulu-Natal there are many sugar farmers and sugar plantations. Mr and Mrs Khumalo work on one
of the plantations owned by an international sugar company. They receive weekly wages. The sugar price
is determined by the demand and supply of sugar worldwide. If there is a large demand, the profits of the
company increases. Sometimes the company will pay its workers a bonus if their sales are good.
3.1 Does Ruth
3.2 Find out t
today.
3.3 Do you thi
so?
3.4 How do yo
3.5 How does
4 Read the follow
schooling. Rep
Extract B
Topic
4
Tanzania produces coffee. All coffee plantations are owned by the state and its workers live and work
on the plantations. The system is known as the ujamaa. The state sells all the coffee produced and the
workers receive the goods and services to satisfy their basic needs. 27% of Tanzania’s coffee is exported.
When the coffee price falls, the state’s income also decreases.
Summary and questions
1.1 Which extract describes a capitalist economy?
(1)
1.2 Which extract describes a socialist economy?
(1)
1.3 Who pays the workers in extract 1?
(1)
Questions
1.4 Who pays the workers in extract 2?
(1)
●● The circular flow of income in a closed economy involves three
1.5 the
Who
receives
the profits
in extract
(1)
A Choose
correct
answer
from the
options.1?
(4)
participants, namely consumers, producers and the government.
1.6 Who receives the profits in extract 2?
(1)
●● In a closed economy the product market is where goods and services are
1 The
participants
a closed
economy
are:better off than the workers in extract 2?
1.7 three
Do you
think the in
workers
in extract
1 are
bought and sold and the factor market is where factors of production are
a theExplain
government,
foreign sector and businesses
your answer.
(2)
bought and sold.
b1.8theHow
government,
foreign sector
and households
did the Tanzanian
government
benefit from the increase in coffee sales?
(1)
●● The circular flow of income diagrams illustrate what happens in the real
c1.9theHow
government,
businesses
households
did the South
Africanand
government
benefit from the increase in sugar sales?
(1)
22 The
factor
market
determines
the
price
at which
the
of with a capitalist or a
world between households, businesses and the government. There is an
Read each sentence below and state whether
this
is factors
associated
production
are sold. These factors are:
interaction of roles as a household could also be an owner of a business.
socialist economy.
(20)
●● There are factors that disrupt or interfere with the circular flow of income.
a2.1land,
labour, between
capital and
goods
Inequality
classes
●● The government’s participation as producer and employer of labour is
b2.2land,
labour,
capital
and
entrepreneurship
Summary
Private ownership of the means of production i.e. land, mines and factories.
Questions
c2.3rent,
wages,
salaries
profits of production i.e. land, mines and factories.
very important and the government’s role in economic activities must be
State
ownership
ofand
the means
3 A2.4
closed
economy excludes:
recognised.
●● The circular flow of income in a closed economy involves
three
Unemployment
A Choose the correct answer from the options.
(4)
a2.5households
participants, namely consumers, producers and the government.
Free hospitalisation and medical treatment
b2.6businesses
●● In a closed economy the product market is where goods and services are
1 The three participants in a closed economy are:
Private and government schooling
c2.7foreign
sector
bought and sold and the factor market is where factors of production are
a the government, foreign sector and businesses
People
buy their own houses
strike
affects
income
bought and sold.
b the government, foreign sector and households 4 A2.8
People
arethe
paid
by theof:
state
a2.9households
●● The circular flow of income diagrams illustrate what happens in the real
c the government, businesses and households
The more you earn, the more tax you pay
b
businesses
2 The factor market determines the price at which the factors
of
world between households, businesses and the government. There is an
2.10 Companies
produce on a large-scale
(10 × 2 = 20)
c both households and businesses
production are sold. These factors are:
interaction of roles as a household could also be an owner of a business.
Formal
B Pair the concept in Column A with its meaning in Column
B.Assessment
(5) Task (FAT) continues 
●● There are factors that disrupt or interfere with the circular flow of income.
a land, labour, capital and goods
Summary
4
Summary and questions
●●
Dear learners in S
My name is Anna
(obshchestvovede
We also study lite
too, where we lea
schooling to univ
inflation and the
include equal dis
best possible util
A summary at the end
of each term helps you
when you study.
The government’s participation as producer and employer of labour is
very important and the government’s role in economic activities must be
recognised.
I would love to he
Love, Anna
b land, labour, capital and entrepreneurship
Column A (concept)
Column B (meaning)
c rent, wages, salaries and profits
1 A closed economy
a Consumers
3 A closed economy excludes:
2 An open economy
b Compulsory payment to the government
a households
3
Income
Excludes the foreign sector
54
Term 1 •c Assignment
b businesses
4 Taxation
d Money received
c foreign sector
5 Households
e Includes households, businesses, the
4 A strike affects the income of:
government and foreign sector
a households
f Banking
b businesses
C Draw the circular flow of income of the Skhosana family.
(6)
c both households and businesses
B Pair the concept in Column A with its meaning in Column B.
(5)
Questions at the end of
each term help you to
revise what you have
learned.
Msongelwa Skhosana is the Area Manager of Pick n Pay in Eshowe. His wife,
Column A (concept)
1 A closed economy
2 An open economy
3 Income
4 Taxation
5 Households
Term
52
1
Formal
Assessment Task (FAT):
Topic 4 • Summary and questions
Final examination
•
•
Topic 4 • Summary and questions
4
Marks: 200
Time: 2 hours
Phindile is a teacher at the Eshowe Primary School, a government school.
Column B (meaning)
Msongelwa’s father lives with them and receives a government pension. Their
a Consumers
two children, Msufufwa and Bathabile attend the local government school.
b Compulsory payment to the government
Their monthly expenses include rates for their house, electricity, water,
c Excludes the foreign sector
transport, school fees, groceries, recreation and attending sporting activities.
d Money received
e Includes households, businesses, the
Total marks 15
government and foreign sector
f Banking
Final examination
C Draw the circular flow of income of the Skhosana family.
(6)
Summary and questions • Topic 4
Msongelwa Skhosana is the Area Manager of Pick n Pay in Eshowe. His wife,
Phindile is a teacher at the Eshowe Primary School, a government school.
Msongelwa’s father lives with them and receives a government pension. Their
two children, Msufufwa and Bathabile attend the local government school.
Their monthly expenses include rates for their house, electricity, water,
transport, school fees, groceries, recreation and attending sporting activities.
Instructions
•
This question paper consists of FOUR SECTIONS.
•
Answer ALL the questions.
•
Read the instructions for each question carefully and answer only what is
required. Use the mark allocation to determine the length of answers.
•
Questions must be answered on the ANSWER SHEET provided.
Total marks 15
Summary and questions • Topic 4
53
53
An example of an exam
paper at the end of the
book will also help you
practise and learn all you
need to know.
Section A
QueStion 1
[12 marks]
Choose the correct answer from the ones given and circle the correct one on the
ANSWER SHEET.
1.1 An open economy includes...
a Households and Firms
b Government
c Foreigners
d All the above
1.2 Which one of the following statements does NOT tell us more about the global economy?
a The world is getting smaller
b South Africa is less independent on other countries
c Is a result of improved communications technology
d Chinese products are for sale in South Africa
1.3 The double entry and influence on the accounting equation of the following
transaction:
‘bought stationery on credit’ is
a Dr Creditors (L–); Cr Stationery (O+)
b Dr Stationery (O–); Cr Creditors (L+)
c Dr Creditors (L+); Cr Stationery (O–)
d Dr Stationery (O–); Cr Creditors (L+)
1.4 Economic ……………… is the ability of a country to improve the standard of
living of its people.
a growth
b import
c production
d sustainability
EMS Gr9 LB (intro).indd 3
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Term
1
4
EMS Gr9 LB BOOK.indb 4
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5
EMS Gr9 LB BOOK.indb 5
2013/04/25 9:43 PM
Term
1
Introduction
Topic 1 Financial literacy: Cash Receipts Journal and
Cash Payments Journal (sole trader)
In grade 8 you learnt how a service business will record its cash financial
transactions. In this topic you will learn what a retailer is and how to record
cash financial transactions. A retailer operates a business that buys products
in bulk from a supplier and then sells them in smaller units to customers. The
retailer adds a profit to each unit before selling it. In South Africa we have big,
well-known retailers such as Woolworths, Pick n Pay and Spar right down to
small corner cafes and spaza shops. The retailers meet all our needs, from
luxury products to essential products.
Topic 2 The economy: Economic systems
All countries need a system to determine how to use its productive resources.
How this is done will depend on the economic system. In this topic you learn
about the planned economy, the market economy and the mixed economy.
Topic 3 Financial literacy: General Ledger and Trial
balance (sole trader)
In this topic you will learn about posting new accounts from the cash journals
of a trading business to the General Ledger. Remember the new accounts you
learned in Term 1 Topic 1:
●●
●●
●●
6
EMS Gr9 LB BOOK.indb 6
Trading stock is an asset which means it increases on the debit side.
Sales is an income account and increases on the credit side.
Cost of sales is an expense and increases on the debit side.
Term 1 • Introduction
2013/04/25 9:43 PM
Topic 4 The economy: Circular flow
The circular flow shows how an economy works in the real world. The
economy of a country can be viewed as a system where goods, services,
factors of production and money change hands between many participants.
This system can be studied as:
●●
●●
a closed economy which excludes trade with other countries
an open economy which includes trade with other countries (also called
foreign trade).
This topic only deals with the participants in the circular flow of a closed
economy.
Term 1
Revision: Week 1
Grade 8 Revision p8
Topic 1
Topic 2
Topic 3
Topic 4
Financial literacy:
Cash Receipts
Journal and Cash
Payments Journal
(sole trader)
The economy:
Economic systems
Financial literacy:
General Ledger and
Trial balance (sole
trader)
The economy: The
circular flow
Weeks 2–4
Weeks 2–4
Weeks 5–10
Weeks 5–10
1 Introduction p38
2 Posting of cash
transactions of a
trading business from
Cash Receipts Journal
and Cash Payments
Journal to General
Ledger p38
3 Preparing of a Trial
balance of a trading
business p46
1 Introduction p43
2 The participants in
the circular flow of a
closed economy p43
3 Flow of goods and
services, money and
factors of production
in the circular
flow of a closed
economy p45
4 Flow diagrams to
illustrate the circular
flow of a closed
economy p52
1 Introduction p18
2 Cash transactions of a
trading business p18
3 Cash journals of a
trading business p24
4 Effect of cash
transactions on
the accounting
equation p32
1 The three mayor
economic
systems p22
2 Origin of each
systems p22
3 Characteristics of
each economic
system p29
4 The global
economy p36
Introduction • Term 1
EMS Gr9 LB BOOK.indb 7
7
2013/04/25 9:43 PM
Week
1
Revision
Term 1 Topic 1 The economy: Government
You have learned about the following in this topic:
●
●
●
●
●
●
●
The meaning of government and the difference between a democratic and
a dictatorial government
The different levels of government: the national, provincial and local
government
The three branches of the National Government: legislative, executive and
judicial
The three different kinds of municipalities: metropolitan, local and district
The role of government regarding households and their use of resources
and services (as both consumers and producers)
The different national departments, the departments in provinces, and the
functions that municipalities perform
The roles of the different levels of government regarding businesses and
their use of resources and services (both as consumers and producers)
Term 1 Topic 2 The economy: National Budget
●
●
●
●
●
●
8
EMS Gr9 LB BOOK.indb 8
A National Budget is a plan that shows the government’s income and
expenditure. In South Africa, the Department: National Treasury compiles
the budget.
The state Income and Expenditure Account is the principal financial
account of the state. It shows how much the state plans to collect from
taxes, and how it intends spending this income.
Government revenue comes mainly from taxes. Some other government
revenue comes from loans, donations, administrative income, commercial
income, and the sale or rent of government property.
Government spending or expenditure shows how the state uses its revenue
to finance services in public interest.
Government spending can be grouped into functional, administrative and
financial classifications.
The National Budget influences growth by increasing spending on
infrastructure, expanding income and increasing employment. To
redress economic inequalities, spending on housing, rural development,
community services, and social grants has been increased.
Term 1 • Revision
2013/04/25 9:43 PM
Term 1 Topic 3 The economy: Standard of living
In this topic, you studied the following:
●
●
●
●
●
●
The difference between standard of living and lifestyle. Standard of living
relates to what people earn while lifestyles refer to the quality of life that
people have. In South Africa, the population’s standards of living and
lifestyles differ substantially.
How society changed from self-sufficiency to a modern economy. People
are no longer self-sufficient; they rely on employment to earn money
and buy goods and services. However, in most industrialised countries,
including South Africa, there is large-scale unemployment and the
division between rich and poor is widening.
How the lack of development, particularly in rural areas, leads to
problems, such as overgrazing, depletion of the land, overfishing, cuttingdown of trees, and pollution.
The impact of development on the environment and rural society, and
the link to the major environmental crises in the world today. These
crises include deforestation, climatic change, global warming, and
environmental damage.
Unemployment is a growing issue faced in South Africa and throughout
the world.
The productive use of resources and promotion of healthy environments.
It is important to consider what each person can do on a small scale to
make a difference.
Term 1 Topic 4 Financial literacy: Accounting concepts
●
●
●
●
●
●
A sole trader is a business that one person owns alone.
The debit side is the left-hand side of an account and the credit side is the
right-hand side of an account.
Owner’s equity is the value of the owner’s investment or the owner’s
financial interest in the business.
Capital is a personal contribution or investment that the owner of the
business makes.
Drawings are money or items that the owner takes from the business for
personal use.
Income is money the business earns from operations, and expenses are
money the business spends to run the business.
Revision • Term 1
EMS Gr9 LB BOOK.indb 9
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Week
1
●
●
●
●
●
●
●
●
When income is more than expenses, we refer to it as profit and when
expenses are more than income, we refer to it as a loss.
A transaction is a financial action or event that takes place in a business.
Liabilities are money that the business owes to other people or businesses,
and we differentiate between current liabilities and noncurrent liabilities.
Assets are the possessions of a business, and we differentiate between
current assets and noncurrent assets.
Banking involves services that banks offer to individuals and businesses.
Cash receipts are all monies that the business receives, while cash
payments are all monies the business pays.
Subsidiary journals, also called books of first entry, are the first books in
which the business writes down transactions.
The Accounting equation is as follow:
Assets = Owner’s Equity + Liabilities.
Term 1 Topic 5 Financial literacy:
Source documents
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●
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●
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●
●
●
10
EMS Gr9 LB BOOK.indb 10
Businesses use source documents to record the different kinds of
transactions in the accounting system of a business.
Not all business documents are source documents. Some documents are
supporting documents to the source documents.
Source documents are either completed by hand or are generated by a
computer.
Source documents can be internal or external.
A business needs to file all its business documents in an organised, safe
manner.
Receipts are used as source documents when the business receives
payment from clients or other businesses.
The details that appear on a cash register slip are also printed in the cash
register roll inside the cash register.
The cash register roll serves as the source document for cash sales.
The business completes a deposit slip for bank notes, coins, cheques and
postal orders that it receives.
Bank statements report on fluctuations in the bank account balance of a
business because of deposits made, cheques issued, bank charges, etc.
The business uses the cash invoice as a source document where it does not
use a cash register.
Term 1 • Revision
2013/04/25 9:43 PM
●
●
The cheque counterfoil serves as source document for cheque payments
the business has made.
The three parties to a cheque are the drawer, the payee and the drawee.
Term 1 Financial literacy: Overview of the accounting
cycle
●
●
●
●
●
●
●
●
●
●
●
●
●
Businesses use source documents to record the different kinds of
transactions in the accounting system of a business.
Not all business documents are source documents. Some documents are
supporting documents to the source documents.
Source documents are either completed by hand or are generated by a
computer.
Source documents can be internal or external.
A business needs to file all its business documents in an organised, safe
manner.
Receipts are used as source documents when the business receives
payment from clients or other businesses.
The details that appear on a cash register slip are also printed in the cash
register roll inside the cash register.
The cash register roll serves as the source document for cash sales.
The business completes a deposit slip for bank notes, coins, cheques and
postal orders that it receives.
Bank statements report on fluctuations in the bank account balance of a
business because of deposits made, cheques issued, bank charges, etc.
The business uses the cash invoice as a source document where it does not
use a cash register.
The cheque counterfoil serves as source document for cheque payments
the business has made.
The three parties to a cheque are the drawer, the payee and the drawee.
Revision • Term 1
EMS Gr9 LB BOOK.indb 11
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Week
1
Term 2 Topic 2 Financial literacy: Cash Receipts
Journal (services)
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●
●
●
●
●
A service business offers customers a service. The customer then pays the
business a fee. The main form of income for such a business is therefore
Current income.
In this section, you learned about two main source documents, and that
each one has a specific purpose.
● The first source document is the Cash register tape:
Use the Cash register tape when a business receives money from a
customer for services the business provided to the customer. The
business charges a fee for the service. You record this transaction in the
CRJ.
● The second source document is the receipt:
Use the receipt for any other money, except for Current income, that the
business has received. You record this transaction in the CRJ.
When the business receives money, record the transaction in the CRJ.
Record each transaction in the journal on the day it takes place.
Cast the journal at the end of the month and cross cast it (check that the
bank column total equals the total of all the other columns added up).
Start a new journal at the beginning of every month.
Term 2 Topic 3 Entrepreneurship: Factors of
production
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●
12
EMS Gr9 LB BOOK.indb 12
The four factors of production are: natural resources, capital, labour and
entrepreneurship.
Capital is money that is available to a business. It is invested in capital
goods such as machines, buildings and equipment that are used to
produce other goods or services.
Two ways to obtain capital are to borrow it or supply your own.
Labour is the work that people, who produce goods and supply services,
do mentally or physically.
Labour can be divided into the following categories: unskilled, semiskilled, skilled and highly skilled labour.
Workers play a role in the economy, as they are the labour production
factor that produces goods and services in the economy.
Goods and services produced within the borders of a country are called the
Gross Domestic Product (GDP).
Term 1 • Revision
2013/04/25 9:43 PM
●
●
●
Workers have six basic rights and employers have to assist workers in their
rights.
The six rights are: the right to work, the right to freedom of association,
the right to collective negotiation, the right to strike, and the right to
protection.
Remuneration for the factors of production is set out as follows:
● Capital = interest,
● natural resources = rent,
● labour = salaries and wages,
● entrepreneurship = profit.
Term 2 Topic 4 The economy: Markets
A market is a place where buyers or consumers meet with sellers or producers
to buy and sell goods and services. Often, middle people are involved in
the buying and selling of goods and in the providing of services. This might
increase the price of goods and services, but more often than not, we need
these people!
In this topic, you learned about the basic idea of buying goods, services and
even labour in exchange for a price or a wage (or salary). In a competitive
market economy, the demand for a good or service and the supply of the good
or service set the price. If there is only one doctor in a private practice in a
town, the demand will be great. Therefore, the doctor will be able to charge
more for his or her services.
A well-functioning market has the following characteristics:
●
●
●
many buyers and sellers
buyers and sellers have equal access to information (for example, when
prices change)
products are comparable.
In the goods and services market, households buy goods and services and
make payments to the businesses who sell goods and services in exchange for
money.
In the factor market, businesses are the buyers of the factors of production
offered by members of households in exchange for money.
Revision • Term 1
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Week
1
Term 3 Topic 1 Financial literacy: Cash Receipts
Journal (services)
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●
●
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●
When you receive money into the business, you record the transaction in
the CRJ.
Record each transaction in the journal on the day that the transaction
takes place.
Use the Cash register tape when you receive money from a customer into
the business for services the business has given to the customer. The
business charges a fee for the service. Record this transaction in the CRJ.
Use a Receipt for any other money, except for Current income that you
receive into the business. Record this transaction in the CRJ.
Cast (total) the journal at the end of the month and cross cast it (check that
the bank column total equals the total of all the other columns added up).
Start a new journal at the beginning of every month.
Term 3 Topic 2 Financial literacy: Cash Payments
Journal (services)
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●
14
EMS Gr9 LB BOOK.indb 14
In this section, you learned about three main source documents and that
each one has a specific purpose. These source documents are:
Cheque counterfoil: this is used when you pay any money from the Current
account of the business. You record this in the CPJ.
Cash register tape: this is used when you receive money from a customer
into the business for services the business provided. The business charges
a fee for the service. You record this in the CRJ.
Receipt: this is used for any other money, except for Current income,
which you receive into the business. You record this in the CRJ.
When you pay out money, you record the transaction in the CPJ.
When you receive money, record the transaction in the CRJ.
Record each transaction in the relevant journal on the day that the
transaction takes place.
Cast (total) the journals at the end of the month and cross cast them (check
that the bank column total equals the total of all the other columns added
up).
Start a new journal at the beginning of every month.
Term 1 • Revision
2013/04/25 9:43 PM
Term 3 Topic 3 Entrepreneurship: Forms of ownership
Sole trader
Name of
owners
Name of
business
Owner
Formation
procedures
Easy to
establish
Legal
personality
Liability
Partners
Close
corporation
Members
No letters
No letters
The name must
added to the
added to the
end with CC
end of the name end of the name
Was easy to
establish;
registered a
founding
statement
Does not have a Does not have a It is a separate
separate
legal entity;
separate
exists
legal
legal
personality
separately from
personality
its members
Unlimited; the
owner is liable
in his personal
capacity for all
the debts
Continuity
Has no
continuity
Management Owner
Taxation
Partnership
The owner pays
tax on income
he/she has
received from
the
business
Easy to
establish;
partnership
agreement
Private
company
Shareholders
Public
company
Shareholders
Proprietary
Limited or (Pty)
Ltd are added to
the name
Need to
register a
memorandum
of incorporation
Limited or Ltd
is added to the
name
The company
has a separate
legal
personality
The company
has a
separate legal
personality
Unlimited; the
partners are
jointly and
severally liable
for all the
debts in the
partnership
Has no
continuity
All/some
partners
Limited liability
Limited liability
Limited liability
Has continuity
Has continuity
Has continuity
All/some
members
The partners
pay tax on
income they
have received
from the
business
A CC pays
income tax at
a fixed rate of
28% on net
profit;
members
pay 15% on
dividends
received
One or more
directors
required
A private
company pays
income tax at
a fixed rate
of 28% on
net profits;
shareholders
pay 15% on
dividends
received
Three or more
for a public (Ltd)
company
A public
company pays
income tax at
a fixed rate
of 28% on
net profits;
shareholders
pay 15% on
dividends
received
Revision • Term 1
EMS Gr9 LB BOOK.indb 15
Need to
register a
memorandum
of incorporation
15
2013/04/25 9:43 PM
Week
1
Term 4 Topic 1 Entrepreneurship: Levels and functions
of management
Management is organising and controlling resources, tasks and people to
achieve a certain goal.
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16
EMS Gr9 LB BOOK.indb 16
A good leader should set an example to other people and make them
enthusiastic about doing something.
The four management tasks are planning, organising, leading and
controlling.
Top-level managers spend more time on planning, organising and
controlling than first-level managers do.
First-level managers spend more time on leading.
Bad managers do not have the knowledge or skills to do the job and only
care about themselves.
Good managers have qualities such as integrity, good communication
skills, and good time management skills, and are prepared to delegate,
can motivate others, etc.
Managers can be either autocratic or democratic in their decision making.
Managers can either deal with workers in a direct or a permissive way.
The three basic management styles are the autocrat, the permissive
autocrat, the democrat, and the laissez-faire manager.
Managers must adjust their management style to the support and guidance
that workers need.
Managers can adjust their personal management style to become telling,
participating, delegating or selling.
Term 1 • Revision
2013/04/25 9:43 PM
Term 4 Topic 2 Financial literacy: General Ledger and
trial balance (service)
In a General Ledger account:
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●
the left-hand side is called the debit side
the right-hand side is called the credit side
the effect of changes on accounts are as follows:
Assets
Drawings
Expenses
Capital
Income
Liabilities
●
●
●
●
●
●
●
Debit
+
+
+
–
–
–
Credit
–
–
–
+
+
+
All Assets, Drawings, Capital and Liability accounts are known as Balance
sheet accounts in the General Ledger and appear in the Balance sheet
section.
All Income and Expense accounts are known as Nominal accounts in the
General Ledger and appear in the Nominal account section.
Balance all Balance sheet accounts at the end of the month. You can use
the terms balance carried down (c/d) and balance brought down (b/d).
Pencil foot or total the Nominal accounts at the end of the month.
If accounts are balanced and the total on the debit side is less than the
total on the credit side, then the account has a debit balance.
If accounts are balanced and the total on the credit side is less than the
total on the debit side, then the account has a credit balance.
The Trial balance is a summary of the balances and totals of all the
accounts in the General Ledger. The total of all debit entries should equal
the total of all credit entries. It helps with internal control and tests the
double entry principle.
Revision • Term 1
EMS Gr9 LB BOOK.indb 17
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Week
2
Key terms
retailer
mark-up
cost price
selling price
trading stock
sales
cost of sales
record – to keep
track of finances by
recording them in a
journal
products – what a
retailer buys so that
he can sell them to
customers
bulk – buying a
product in large
quantities
luxury – items that
are not essential for
survival; nice to have
things.
Topic 1 Financial literacy: Cash Receipts
1
Introduction
In grade 8 you learnt how a service business will record its cash financial
transactions. In this topic you learn what a retailer is and how to record cash
financial transactions.
A retailer operates a business that buys products in bulk from a supplier and
then sells them in smaller units to customers. The retailer adds a profit to
each unit before selling it. In South Africa we have big, well-known retailers
such as Woolworths, Pick n Pay and Spar right down to small corner cafes
and spaza shops. The retailers meet all our needs from luxury products to
essential products.
2
Cash transactions of a trading business
You already know that a service business provides services to customers at a
price, for example security or cleaning services. Now you will learn about a
retail business.
2.1 What is a retailer?
A retailer is a business that sells good to consumers. Some retailers:
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●●
buy products in bulk from a wholesaler or manufacturer
packageand supply these items in small quantities to customers
add a mark-up or profit on each item sold
The price that the retailer pays for an item is called the cost price. The amount
added to the cost price is called gross profit and this is used to pay the
operating expenses of this business so that the retailer can make a net profit.
The price the customer pays for that same item is called the selling price.
Activity 1 Identify the type of business
For each of the following businesses you need to say whether it is a service
business or a retailer. Briefly explain your answer.
figure 1.1 Retailers
big and small
18
EMS Gr9 LB BOOK.indb 18
1
2
3
4
5
Spar
Fruit and Veg City
Dr Pillay – Dentist
Pam Golding Estate Agents
Bergville Sports Store
6
7
8
9
10
Sam’s Spaza shop
Westville Pharmacy (Chemist)
Musa Car Dealers
Truworths
Phumlani’s Corner Cafe
(20)
Term 1 • Week 2 Topic 1 Financial literacy
2013/04/25 9:43 PM
Journal and Cash Payments Journal (sole trader)
To understand how mark-up works let us look at a small retailer, Ravi Naidoo
who decided to sell sports shirts at your school.
Ravi bought 100 sports shirts at a cost of R50 each. He decided to sell them at
R75 each, therefore:
●●
●●
●●
The cost price is R50
The selling price is R75 and
The mark-up or gross profit is R25. This means that for every shirt he sells
he has R25 to cover his expenses and what is left is Ravi’s net profit.
2.2 How to calculate cost price (CP), selling price (SP) and
mark-up (MU)
Retailers normally know the cost price of an item. They then have to decide
what percentage mark-up to apply before they can calculate the selling price.
Sometimes they know the selling price and mark-up percentage and then
need to calculate the cost price. To do this they use the formula below.
CP ×
(100 + MU)
100
CP
SP
SP ×
100
(100 + MU)
Let us use Ravi Naidoo’s business to see how this formula works.
CP is R50
MU is 50%
So we want to work out what the SP is. To work this out we use the formula:
(100 + MU)
CP ×
100
(100 + 50)
= R75
50 ×
100
SP is therefore R75
Now if we knew that the SP was R75, and the mark-up is 50% and we wanted
to calculate the CP, we would use:
100
SP ×
(100 + MU)
100
= R50
75 ×
(100 + 50)
CP is therefore R50
Week 2 Topic 1 Financial literacy • Term 1
EMS Gr9 LB BOOK.indb 19
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Week
2
Activity 2 Calculating selling price and cost price
1 For the following you are required to work out the SP:
a CP is R3 000 and MU is 60%
b CP is R330 and MU is 45%
c CP is R31 250 and MU is 40%
d CP is R600 and MU is 10%
2 For the following you are required to work out the CP:
a SP is R6 825 and MU is 25%
b SP is R585 and MU is 30%
c SP is R67 260 and MU is 50%
d SP is R1 000 and MU is 33 1/3%
e SP is R5 500 and MU is 10%
scanners – these are
normally found at the
till in larger retailers
and are linked to a
computer and record
information when
goods are sold
(18)
Large retailers who can afford it use computers and scanners to do all the
calculations. In this system the teller scans the barcode on the items which
has all the details of that item, such as the selling price and the cost price.
figure 1.2 Barcodes contain all the required information about specific products
20
EMS Gr9 LB BOOK.indb 20
Term 1 • Week 2 Topic 1 Financial literacy
2013/04/25 9:43 PM
2.3
Ledger accounts of a trading business
You will now learn about three new ledger accounts that retailers use.
The first ledger account is called Trading stock. This is stock that the retailer
buys specifically to sell to customers. Trading stock is a current asset because
it belongs to the retailer until it has been sold. It represents the cost price of
the stock that is available to be sold.
The second ledger account is an income account, called the Sales account. It
represents the amount of stock that has been sold to customers at the selling
price.
The third account is an expense account, called Cost of sales. It represents
the cost price of the goods sold.
Figure 1.3
Trading stock is what the retailer buys specifically to sell to customers
Week 2 Topic 1: Financial literacy • Term 1
EMS Gr9 LB BOOK.indb 21
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Week
Topic
2
Key terms
communism
Das Kapital
demand
economic system
globalisation
market economy
mixed economy
planned economy
supply
The Wealth of
Nations
productive resources
– natural resources,
human resources,
capital resources and
entrepreneurship
used to make goods
and services
Topic 2 The economy: Economic systems
1 The three major economic systems
All countries need a system to determine how to use its productive
resources.
How this is done will depend on the economic system. In this topic you
will learn about the planned economy, the market economy and the mixed
economy.
1.1 A planned economy
A planned economic system is a system where the government owns
the land or natural resources and businesses and pays the workers. The
government decides what goods and services people need and set the
prices of these goods and services. All the profits from the production of
goods and services in the country go to the government. You will learn
more about the origin, characteristics, advantages and disadvantages of this
system in this topic.
1.2 A market economy
A market economic system is a system where individuals own the land or
natural resources and businesses and these owners pay the workers for
making goods and providing services. The profits from the production of
goods and services go to the owner/s. The government is not too involved
in the economy. You will learn more about the origin, characteristics,
advantages and disadvantages of this system in this topic.
1.3 A mixed economy
A mixed economic system is a system where both the government and
individuals own land or natural resources and businesses. The government
and private individuals provide goods and services. The government will
usually provide goods and services that are necessary for the people of
the country while private individuals could provide the same goods and
services but charge higher prices if there is a demand for it. You will learn
more about the origin, characteristics, advantages and disadvantages of this
system in this topic.
2
Origin of each systems
2.1 The planned economy
The planned economy is based on the writings of a German philosopher, Karl
Marx. His book, The Communist Manifesto was written in 1848 when many
22
EMS Gr9 LB BOOK.indb 22
Term 1 • Week 2 Topic 2 The economy
2013/04/25 9:43 PM
people in Europe were trying to get rid of their kings, who ruled as autocrats.
In 1867, Marx and a German factory owner, Friedrich Engels, wrote Das
Kapital. This book criticised the market economy because of the low pay
workers received. Many countries adopted the planned economic system
and a few converted to the most extreme form of a planned economy called
communism.
autocrat – decisions
made by one person
without consulting
others
2.2 The market economy
The market economy is based on the ideas of a British philosopher, Adam
Smith. His book, The Wealth of Nations (written in 1776) discusses how
to organise a modern economy. He has become known as the “father of
economics” and supported free enterprise in a market economic system.
Activity 1
Interpreting a cartoon
Divide into pairs and interpret the cartoon. Share your interpretations with
the rest of the class.
philosopher – a
thinker
free enterprise –
private business
operates in
competition and
largely free of state
control
A market economic system
compared to a planned
economic system
(10)
Week 2 Topic 2 The economy • Term 1
EMS Gr9 LB BOOK.indb 23
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Week
3
Topic 1 Financial literacy: Cash Receipts
3 Cash journals of a trading business
The three new ledger accounts mentioned above will need to be included in
the Cash Journals.
The Cash Payment Journal (CPJ) does not change much, but you will include
an analysis column for Trading stock. You will use this every time the
business buys trading stock for cash. Remember that trading stock is always
recorded at cost price.
The Cash Receipts Journal (CRJ) has quite a few changes. Firstly, you will no
longer need the current income column as that is for a service business. The
current income column is replaced by Sales which records the selling price of
goods sold by the business.
You will remember from the last lesson that every time a sale takes place, the
business also looses the stock as it has been sold to customers. So to record
this you will also add an analysis column for Cost of sales in the CRJ and this
records the cost price of the goods sold.
Sometimes the cost price will be given to you; and sometimes you will have to
calculate it based on the formula you have learnt.
So this is what the journals will now look like:
Cash Receipts Journal of
Doc
Date
Details
Month
Fol
Analysis of
Receipts
Bank
Cash Payments Journal of
Doc
Date
Name of Payee
Bank
Fol: CRJ Sales
Cost of Sundry Accounts
Sales Amount
Fol Details
SP
CP
Month
Fol
Year
Trading
stock
Year
Fol: CRJ
Sundry Accounts
Amount
Fol
Details
CP
When a sale takes place, the source document will still be the till slip or cash
register tape (CRT). Under Details, you write cash sales, and under Analysis
of receipts and sales you write the selling price. Under Cost of sales you write
the cost price. The rest of the columns remains the same as in the case of a
service business.
24
EMS Gr9 LB BOOK.indb 24
Term 1 • Week 3 Topic 1 Financial literacy
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Journal and Cash Payments Journal (sole trader)
Example 1
You are now going to look at Ravi Naidoo’s business in more detail to see how the journals work
for a retailer.
On 1 June 20.10 Ravi Naidoo started his business called Ravi’s School Shirts, and the following
are the transactions for the month.
1
3
4
8
10
15
17
Made a direct deposit of R 15 000 capital (R 01)
Purchased 150 shirts at a cost of R 50 each. (CC 01) from Gem Clothing.
Paid Telkom R 350 for the telephone.
Placed some advertisements at the schools in the area at a cost of R 250. Paid by cheque.
Sold 40 shirts to one of the schools and charged the R 75 per shirt. (CRT 01)
Bought 80 more shirts at a cost of R 50 each.
A good response from one of the schools led to him selling them 70 shirts and his mark-up
was 40%
2 Sold 30 shirts to another school at R 75 each
Solution:
Cash Payments Journal of Ravi’s School Shirts June 20.10
Doc
Date
Name of Payee
Fol
CPJ 7
Trading
stock
Bank
7 500 00
Sundry Accounts
Amount
Fol
Details
CC 01
3
Gem Clothing
CC 02
4
Telkom
350 00
350 00
Telephone
CC 03
8
Cash
250 00
250 00
Advertising
CC 04
15
Gem Clothing
4 000 00
12 100
00
7 500 00
4 000 00
11 500
00
600
00
Note:
●●
There are no major changes – the only change was to add the Trading stock column.
Week 3 Topic 1 Financial literacy • Term 1
EMS Gr9 LB BOOK.indb 25
25
2013/04/25 9:43 PM
Week
3
Cash Receipts Journal of Ravi’s School Shirts June 20.10
Doc
Date Details
Fol
Analysis of
Receipts
Bank
CRJ 6
Cost of
Sales
Sales
R 01
1
Ravi
15 000 00
CRT 01
10
Cash sales
3 000 00
3 000 00
3 000 00
2 000 00
CRT 02
17
Cash sales
4 900 00
4 900 00
4 900 00
3 500 00
CRT 03
28
Cash sales
2 250 00
2 250 00
2 250 00
1 500 00
25 150
00
Sundry Accounts
Amount
Fol Details
15 000 00
10 150
00
7 000
00
15 000
Capital
00
Note:
●●
●●
●●
Every time a sale takes place, you will record the selling price in the Sales column and the
Cost of Sales in the Cost of Sales column.
When you total the columns at the end of the month, you may show the Cost of Sales column
one line down as this column is an information column. Also when you cast and cross cast the
journal you do not include the Cost of Sales amount in the calculation. The reason for this is
because Cost of Sales does not represent money received but shows the amount that was paid
for the goods sold. The sum of the sales column and the sundry accounts should equal the
total of the bank column. For example 25 150 = 10 150 + 15 000.
Check totals by cross casting so:
25 150 = 10 150 + 15 000
Activity 3 Completing the cash journals of a retailer
Mr K Walker decided to open his own business selling hiking goods and he
called the business Hiking Traders.
Use the transactions below to complete the cash journals for January 20.10.
4 K. Walker made a capital contribution of R30 000 and deposited the
money in the current bank account of the business, issued receipt
no. 001
7 Paid Outdoor Traders R10 000 with cheque no. 001, for trading stock
bought.
11 Sold goods with a cost price of R960 for R1 400 cash, CRT 001.
15 Paid Pleasing Advertisers R800 with cheque no. 002 for advertising.
20 Cash sales, R2 500 (Cost of sales, R1 600), CRT 002
26 Issued cheque no. 003 for R5 500 to pay for stock bought from Backpack
Suppliers.
(25)
26
EMS Gr9 LB BOOK.indb 26
Term 1 • Week 3 Topic 1 Financial literacy
2013/04/25 9:43 PM
Week
3
Topic 2 The economy: Economic systems
2.3 The mixed economy
Neither the market economy nor the planned economy was successful enough
so governments in most countries introduced a mixed system.
The advantages and disadvantages of the planned economic system and the
market economic system are summarised in a table:
PLANNED ECONOMIC SYSTEM
Advantages
●●
●●
●●
●●
●●
Because it is fully controlled by the
government, it is less subject to
inflation and downturn than other
types of economies.
The focus of a planned economy
is usually on the benefits of the
country and its citizens.
Planned economies can distribute
wages, bonuses, materials and
services more equally.
Governmental agencies try to use
resources optimally.
Citizens benefit equally and receive
the necessary resources and this
increases their morale.
Disadvantages
●●
●●
●●
●●
●●
●●
Individuals have little incentive to
be innovative. Goods are often of
poor quality since there is a lack of
profit motive.
The lack of competition and profit
motives lead to ineffective and
inefficient use of the factors of
production.
The government can abuse its
absolute power and become
corrupt.
The economy does not respond as
well to supply and demand, firms
are simply told to produce a certain
number of goods or services.
It is not always easy to get
information from the government.
Individual freedom is lost.
MARKET ECONOMIC SYSTEM
Advantages
Disadvantages
●● The market (where profits can be
●● Unemployment and high inflation
made) motivates producers to
can occur.
produce goods that consumers will ●● Advertising creates false needs.
●● Producers often ignore the negative
want to buy.
●● Skilled labour is valuable.
impact of their production (e.g.
●● Competition pushes businesses to
pollution).
●● Markets do not work in some areas
be efficient: keeping costs down
(public goods, such as roads and
and production high.
●● The price system encourages
the national defence force).
●● Business with a monopoly may
producers and consumers to
restrict output and drive up prices.
conserve scarce resources, such as
●● Market economies tend to produce
electricity.
●● The market system involves a high
a lopsided distribution of income
degree of economic freedom.
with a large gap between the rich
and the poor.
Week 3 Topic 2 The economy • Term 1
EMS Gr9 LB BOOK.indb 27
27
2013/04/25 9:43 PM
Week
Topic
3
The problems created by these economies are solved through a mixed
economy which provides freedom of business ownership and profit earning,
but also social welfare and political freedom.
The mixed economy helps to increase national production because public
(government) and private (businesses) sectors work hard to bring about more
production freedom. In a mixed economy all national resourses are used
and because there is some government involvement, the public and private
sectors are forced to cooperate and create a good balance.
figure 1.4 The
economic system
determines the gap
between rich and poor
Private companies can prosper, but high regulation fees (e.g. licenses)
and taxes (14% VAT) raise prices and restrict consumer spending. Mixed
economies generally use resources sparingly and are more environmentally
aware.
Mixed Economic System
Advantages
Disadvantages
●● Mixed economies are more stable
●● High regulation fees and taxes
than market economies because
raise prices and restrict consumer
government regulations can
spending.
●● Mixed economies are not as
prevent inflation.
●● Citizens benefit from government
efficient in meeting the needs of
support such as grants and
consumers when compared to
subsidies and free social services
market economies.
such as health care and education. ●● Government subsidies can be anti●● The mixed economic system helps
competitive when some companies
to increase national production as
gain what they did not earn while
the government and private sector
companies that are doing well
work together and all national
indirectly pay for the subsidies
resources are used.
through taxes.
●● The private sector buys goods
●● Situations can happen where one
and services from government
or a few businesses control an
enterprises such as electricity and
entire product, called a monopoly.
●● A lack of adequate competition can
water.
●● Even though private businesses are
result in less need to improve on
taxed, they still prosper.
products and services, increased
●● Mixed economies generally waste
prices and less innovation.
fewer resources and are more
conscious of the environment.
In many mixed economies
the Government enforces the
protection of the environment.
28
EMS Gr9 LB BOOK.indb 28
Term 1 • Week 3 Topic 2 The economy
2013/04/25 9:43 PM
Activity 2Advantages and disadvantages of the mixed
economic system
Divide into groups of four to six learners and answer the following
questions in terms of the South African economic system which can best be
described as a mixed economic system.
1 Consider the advantages of the mixed economic system. Find
examples in South Africa that match at least three of these
advantages.
2 Formulate at least four disadvantages of the mixed economic
system that can be identified in the South African economy.
3
(6)
(8)
Characteristics of each economic system
3.1 The planned economic system
The government owns the land or natural resources, factories, mines and
businesses and pays the workers. The profits from the production of all goods
and services in the country go to the government who then provides all the
social services people need. This means there is greater equality among
people.
The government sets the prices of goods and services and decides what goods
and services people need and then produces them as planned.
Planned economies control all trade between them and other countries. Cuba,
North Korea and the former Soviet Union (Russia) are examples.
3.2 The market economy
Individuals own the land or natural resources, factories, mines and
businesses. These owners employ workers to make goods or provide services
which are bought and sold and the profits go to the owner/s. The owners pay
rent for the land or factory, pay their workers and buy capital goods for the
business.
These owners are usually richer than the workers in part because the workers
are often underpaid so that the owners can make more profits. This leads to
inequality. In a market economic system, prices of goods and services are
determined by the demand and the supply.
Week 3 Topic 2 The economy • Term 1
EMS Gr9 LB BOOK.indb 29
social services
– benefits and
facilities such as
education, subsidies,
health care, and
housing provided
by a government to
improve the life and
living conditions
of the children,
disabled, the elderly,
and the poor in the
country
profits – surplus
remaining after total
costs are deducted
from total revenue
capital goods –
things needed for
production, e.g.
machines
inequality – the
income gap between
the rich and poor
29
2013/04/25 9:43 PM
Week
3
The government is not too involved
in the economy. There are no truly
pure market economies, but the
United States of America (USA)
comes close.
figure 1.5
5% of the world’s population own 95% of its
assets
The following table summarises the characteristics of the two basic economic
systems.
Characteristics
Planned economy
Market economy
Ownership
The government owns all
land, mines, factories and
businesses
An individual may own
land, mines, factories and
businesses
Incomes
The government sets the
wage rate
Individual owners pay their
workers wages
Prices
The government sets prices
Prices are determined by the
demand from buyers and the
supply from producers
Trade
The government controls
trade
Anyone is free to trade
Necessities
The government must provide Individuals want profits so
social services and essential will rarely own businesses
services, for example
where there is no profit
sanitation to all its people
3.3 The mixed economic system
In this system both the government and individuals can own land, factories,
mines and businesses. The government will own businesses or supply
goods that are necessary, but not always profitable, for example railway
transport, water resources, sanitation, public schools and hospitals. A mixed
economy also allows private ownership, for example private schools and
hospitals. They are more expensive than those run by government because
the individual owners are able to charge higher fees if there is a demand, and
make profit.
30
EMS Gr9 LB BOOK.indb 30
Term 1 • Week 3 Topic 2 The economy
2013/04/25 9:43 PM
Most democratic countries fall in this category, for example Brazil, Mexico,
Canada, the United Kingdom and South Africa.
Activity 3
democratic – rule of
the majority
Government goods and services
1 List five social goods or services that the South African government
provides directly to consumers though state-run businesses.
2 Name five social services that the South African government
provides using government departments.
(20)
The following table shows how each economy deals with three main
questions:
Planned
Economy
Government
makes all
economic
decisions
Market
Economy
Businesses
use supply and
demand and
competition
between them
to decide
Who decides
how to produce
goods and
services?
Government
decides how to
produce goods
and services
Businesses
decide how to
produce goods
and services
For whom are
the goods
and services
produced?
The government Consumers
decides the
goods and
services are
given to
Who decides
what to
produce?
Mixed
Economy
Both Government and
businesses decide.
Businesses use supply
and demand and
competition.
Government provides
goods and service that
are necessary and helps
with funding in some
areas.
Businesses decided how
to produce goods and
services, but government
regulates the production
of goods and services in
certain industries.
Consumers and in some
cases the government
decides who gets the
goods and services.
Week 3 Topic 2 The economy • Term 1
EMS Gr9 LB BOOK.indb 31
31
2013/04/25 9:43 PM
Week
41
Topic 1 Financial literacy: Cash Receipts
4 Effect of cash transactions on the accounting
equation
In Grade 8, term 4, topic 3 you learnt about the General Ledger and the
accounts that are recorded in the ledger. You are now going to learn about a
few new accounts that are specific to the ledger and then how to use them in
the accounting equation.
In Ravi Naidoo’s business, the 100 shirts he purchased with the purpose of
selling them to his customers are called trading stock. The Trading stock
account is a current asset as the shirts belong to him until he has sold them.
When Ravi sells the shirts, a sale takes place and this is an income to him.
This account is called Sales and records the selling price of the goods sold.
Cost of sales is another account that is new to a retailer and this account
represents the cost price of the goods sold and is an expense.
Now you need to see how this impacts on the Accounting equation:
1 He buys the 100 sports shirts for R50 each
2 He sells all the shirts at a price of R75 each
No.
1
Assets =
Owner’s
equity +
2 SP
+ 5000
– 5000
+ 7500
+ 7500
2 CP
– 5000
– 5000
Total
+ 2500 =
+ 2500
Liabilities
Reason
Trading stock (asset) increases
Bank (asset) decreases
Bank (asset) increases
Sales (income) increase Equity
Trading stock (asset) decreases
Cost of sales (expense)
decreases Owner’s equity
It is very important to notice that whenever a sale takes place there are two
double entries made for the one transaction. The first one represents the
selling price and this is the money that the business will receive. The second
entry represents the cost price of the goods (trading stock) that were sold and
that no longer belong to the business.
The total of R2 500 in assets and Owner’s equity represent the gross profit
made on the shirts Ravi sold.
Summary and questions
32
EMS Gr9 LB BOOK.indb 32
Term 1 • Week 4 Topic 1 Financial literacy
2013/04/25 9:43 PM
Journal and Cash Payments Journal (sole trader)
Activity 4 The accounting equation
1 Analyse the following transactions using the basic accounting
equation.
Peter Smith owns a small business that sells vuvulezas to sports fans.
He buys them at R10 each and sells them for R25.
a Purchased 100 vuvuzelas and paid cash for them.
b Sold 40 at a soccer match at the local stadium
c Some tourists bought 10 units from Peter.
d Paid R200 for petrol for the business car.
e Sold 30 units but he only managed to get R20 each.
f Placed an advertisement in the local paper at a cost of R125.
2 Analyse the following transactions using the basic accounting
equation.
Nkosi Kwando owns a small spaza store and she marks up all her goods
by 50%.
a Buys R2 500 of trading stock from Makro and pays with a cheque.
b Issues a cheque for R1 200 for a new printer
c Sold some stock for R750 (Cost price – R500)
d Received R5 000 from the bank as a loan.
e Purchased more stock for cash – R3 500
f Good sales led to receiving R3 000 from cash sales.
g Stock with a cost price of R600 were sold.
h The tenant paid the rent of R375.
(40)
Nkosi Kwando’s spaza store
Week 4 Topic 1 Financial literacy • Term 1
EMS Gr9 LB BOOK.indb 33
33
2013/04/25 9:43 PM
Topic
1
Summary and questions
Summary
●●
●●
●●
●●
●●
●●
●●
●●
34
EMS Gr9 LB BOOK.indb 34
A retailer buys products at a cost price and sells them at a higher price
(selling price) to customers.
The amount that is added to the cost price to get the selling price is called
gross profit and is normally given as a percentage mark-up.
The goods the retailer buys to sell to customers is called trading stock. It is
a current asset and always recorded at cost price.
When stock is sold to customers it is recorded in the Sales account which
is an income account and represents the selling price.
When stock is sold, the business has less trading stock and this
transaction is recorded in Cost of sales which is an expense account and
represents the cost price of goods sold.
In the CRJ there is a Sales column which shows the selling price of goods
sold and a Cost of sales column which shows the cost price of the goods
sold. Calculations:
●●
SP = CP ×
●●
CP = SP ×
100 + MU
100
100
100 + MU
In the CPJ there will be a new column for trading stock and this shows the
cost price of stock purchased by the business.
Whenever a sale takes place, there are two double entries that will be
recorded. One is for the selling price and is debit bank and credit sales; the
other is for the cost price and is debit Cost of sales and credit trading stock.
Topic 1 • Summary and questions
2013/04/25 9:43 PM
Questions
1 State whether each of the following is true or false, and if false
give the correct answer:
(10)
a Cost of sales is an income account.
b A retailer sells goods to customer at a lower price than he paid.
c The difference between the selling price and cost price of
an item is called gross profit.
d Trading stock is a current asset and is always recorded at
cost price.
e When goods are sold there is only one double entry and
this records the selling price.
f In the CRJ we have a Sales and Cost of sales column. This
would be the same for a service business.
2 For each of the following transactions state the type of
business and in which journal the transaction will be recorded.
(10)
a cash sales
b received current income
c purchased trading stock
d paid the monthly rent.
e received a cash refund for stock returned to supplier.
Total marks 20
Summary and questions • Topic 1
EMS Gr9 LB BOOK.indb 35
35
2013/04/25 9:43 PM
Week
Topic
4
Topic 2 The economy: Economic systems
4 The global economy
economic growth –
steady growth in the
productive capacity
of the economy
apartheid – a policy
introduced by the
national party in
south africa in 1948
which divided people
into racial groups.
people classified
white were allocated
more resources and
had political rights in
comparison to people
classified black,
indian and coloured.
isolated – being kept
away from others
Today most countries, including South Africa, have mixed economic systems
and produce and trade goods and services on a worldwide scale. This is
known as globalisation. A global economy results in greater economic growth
and a better life for all.
The policy of apartheid isolated South Africa for many years. After our first
democratic elections in 1994 all countries accepted us and trade improved.
Globalisation means:
●●
●●
●●
●●
●●
●●
●●
modern communication and transport bring things and people ‘closer’
and make the world ‘smaller’
countries become more dependent on each other because countries
specialise in the products that give them an advantage over others
there are fewer trade restrictions between countries
trading and investments between countries are important for good
relations between countries
transnational corporations are becoming more important and are less
accountable to national governments
workers can live in one country and use information and communications
technology (ICT) to work for a business or government in another country
workers can share and learn from the best available technology (e.g. the
internet).
Activity 4
Working in two different economic systems
In groups of 4 to 5 learners, role-play the differences between
working in a planned and a market economic system. Use the
example of buying and selling groceries where there is competition
among the many supermarkets compared to one state-owned grocery
store where there is no competition.
(10)
36
EMS Gr9 LB BOOK.indb 36
Term 1 • Week 4 Topic 2 The economy
2013/04/25 9:43 PM
Topic
2
Summary and questions
Summary
In this topic you learned about the origin, advantages and disadvantages and characteristics of
three economic systems:
●● the planned system in which the government owns the means of production
●● the market system that has private ownership of the means of production
●● the mixed system in which the government and private people own the means of production.
You also learned about globalisation.
Questions
Read the following stories and answer the questions that follow:
Work on a sugar plantation
Jacob works for an international sugar company
which produces 80% of all sugar in South Africa. The
price of sugar increases and decreases according to
the demand for and supply of sugar. Two years ago,
the sugar plantations were affected by icy weather
conditions. This led to a sugar shortage. The company’s
profits fell and it got rid of over 300 plantation workers.
Jacob lost his job and had no income for a year. But, a
year later he was hired as the production manager at
a sugarcane factory. His salary doubled. Jacob is very
cautious about spending money as he knows what
it is like to have nothing. Jacob and his family own
their own home, but have many expenses, including
the education of their children, health insurance and
transport costs to and from work and school.
Work on a coffee bean
plantation
Ana works on a coffee been
plantation owned by the
government of the country. She
works 10 hours a day and she and
her co-workers all receive the same
income at the end of each month,
even when production of coffee
increases or decreases. Her family
stay for free on the plantation. The
government also pays her children’s
school fees. Ana’s husband is a
teacher and the government also
pays his salary.
1 Which plantation would you describe as an example of a market economy? Give a reason
from the story. (2)
2 Which plantation would you describe as being an example of a planned economy?
(2)
Give a reason from the story.
3 What happened to the income of (a) Jacob and (b) Ana when the plantation
experienced crop losses? (4)
(2)
4 Who made profits from the sugar cane plantation? 5 Who made profits from the coffee bean plantation? (2)
6 Which economic system provides more for the basic needs of its population?
Why do you say that? (4)
7 From an economic point of view, is Jacob and his family or Ana and her family
better off ? Why? (4)
Total marks 20
Summary and questions • Topic 2
EMS Gr9 LB BOOK.indb 37
37
2013/04/25 9:43 PM
Topic 3 Financial literacy: General Ledger
Weeks
Topic 5–6
3
Key terms
Trial balance
1
Introduction
In this topic you will learn about posting new accounts from the cash journals
of a trading business to the General Ledger. Remember the new accounts you
learnt in Term 1 Topic 1:
●●
●●
●●
Trading stock is an asset which means it increases on the debit side.
Sales is an income account and increases on the credit side.
Cost of sales is an expense and increases on the debit side.
In the CRJ, Cost of sales is an information column and as such we deal with it
slightly differently when posting to the journals.
2 Posting of cash transactions of a trading business
from Cash Receipts Journal and Cash Payments
Journal to General Ledger
You will post the Cost of sales column to two accounts in the General Ledger,
Cost of sales and Trading stock. When you post to the General Ledger, you
need to remember these rules:
●●
●●
Assets, drawings and expenses increase on the debit side (left side) and
decrease on the credit side (right side).
Capital, liabilities and income increase on the credit side and decrease on
the debit side.
When posting from the CPJ you will do the following:
●●
●●
Credit Bank and write total payments in the details column.
Debit all the other accounts and write Bank in the details columns.
When posting from the CRJ you will do the following:
●●
●●
Debit Bank and write total receipts in the details column.
Credit all the other accounts and write Bank in the details columns.
The Cost of sales column in the CRJ is not treated like this. When posting the
Cost of sales column you will do the following:
●●
●●
38
EMS Gr9 LB BOOK.indb 38
Debit Cost of sales with the total of the Cost of sales column and write
Trading stock in the Details column.
Credit Trading stock with the total of the Cost of sales column and write
Cost of sales in the Details column.
Term 1 • Week 5–6 Topic 3 Financial literacy
2013/04/25 9:43 PM
and Trial balance (sole trader)
Once you have posted to all the accounts, you will balance the Balance sheet
accounts and pencil foot the nominal accounts.
When balancing Balance sheet accounts in the General Ledger, you will
have to remember the following procedures:
●●
●●
●●
●●
To balance an account means to find the difference between the totals of
the debit amounts and of the credit amounts if there are entries on both
sides of an account in the General Ledger.
Where only one entry appears on either the debit or the credit side of an
account, leave the amount just as it is; it does not need to be balanced.
That will be the balance at the end of the month (See Capital Account on
page 40).
Where two or more amounts appear on one side only, draw a single line
underneath the last figure and total of the account.
Where one or more entries appear on both the debit and credit side of an
account, you will complete the following procedure:
●● Leave a line open after the last entry. Draw balancing lines on both the
debit and credit side of the account. Balancing lines have a single line
on top and a double line on the bottom. Get the total of all the entries
on the debit side as well as the total of the entries on the credit side.
The largest of the two sides totals are written between the balancing
lines on both sides (see the Bank Account on page 41).
●● The one side will now be less than the other side. This difference is
entered as balance c/d.
●● On the first day of the next month the balance will be brought down on
the opposite side. In the example this is on the debit side.
When pencil-footing Nominal accounts in the General Ledger you will have
to remember the following procedures:
●●
●●
●●
Accounts in the Nominal accounts section are not balanced at the end of
the month. We pencil foot Nominal accounts. This means that accounts
are totalled in pencil.
Where only one entry appears in an account: Leave the amount as it is;
there is no need to total the account.
Where more than one amount appears on one side: Add up the amounts
and write the total in pencil on the side on which the entries take place.
Week 5–6 Topic 3 Financial literacy • Term 1
EMS Gr9 LB BOOK.indb 39
39
2013/04/25 9:43 PM
Weeks 5–6
Using the journals of Ravi Naidoo’s business (See Term 1 Topic 1), you are now
going to see how to post to the General Ledger:
Cash Payments Journal of Ravi’s School Shirts June 20.10
Doc
CC 01
CC 02
CC 03
CC 04
Date Name of payee
3
4
8
15
Fol
Gem Clothing
Telkom
Cash
Gem Clothing
Sundry accounts
Amount
Fol
Trading
stock
Bank
7 500
350
250
4 000
12 100
B2
CPJ 7
00
00
00
00
00
7 500
Details
00
4 000
11 500
B3
00
00
350
250
00
00
600
00
N3
N4
Telephone
Advertising
Cash Receipts Journal of Ravi’s School Shirts June 20.10
Doc
R 01
CRT 01
CRT 02
CRT 03
Date Details
1
10
17
28
Ravi
Cash sales
Cash sales
Cash sales
Date
Dr
Dr
June
Fol
Analysis of
Receipts
3 000 00
4 900 00
2 250 00
Details
Bank
15 000
3 000
4 900
2 250
25 150
B2
CRJ 6
Cost of
Sales
Sales
00
00
00
00
00
15 000 00
3 000 00
4 900 00
2 250 00
10 150 00
N1
2 000 00
3 500 00
1 500 00
7 000 00
N2, B3
General Ledger of Ravi’s School Shirts
Balance sheet accounts
Fol
Amount
Date
Details
Capital
30
Total receipts
CRJ6
Fol
B1
Amount
15 000 00
Cr
12 100 00
13 050 00
25 150 00
Cr
30
Total payments
Balance
CRJ6
B2
CPJ
c/d
25 150 00
13 050 00
Trading stock (Asset)
11 500 00 June
30
Cost of sales
Balance
B3
CRJ
c/d
Cr
7000 00
3500 00
11 500 00
N1
CRJ
N2
Cr
10 150 00
Cr
N3
Cr
N4
Cr
b/d
30
Bank
CPJ6
July
1
Balance
b/d
30
Trading stock
4
Bank
8
Bank
Nominal accounts section
Sales (Income)
June
30
Bank
Cost of sales (expense)
CRJ6
7 000 00
Telephone (expense)
CPJ6
350 00
Advertising (expense)
CPJ6
250 00
EMS Gr9 LB BOOK.indb 40
15 000 00
Bank
Balance
40
Capital
1
1
Dr
June
Dr
June
Dr
June
N1
June
Bank (Asset)
25 150 00 June
July
Dr
June
Dr
Sundry accounts
Amount
Fol Details
11 500 00
3 500 00
Term 1 • Week 5–6 Topic 3 Financial literacy
2013/04/25 9:43 PM
Activity 1 Completing the cash journals of a retailer and
posting to the General Ledger
Enter the following opening balances and totals of a small grocery store,
Don’s Stores on 1 May 20.10.
Capital
Bank
Trading stock
Equipment
Loan
Sales
Cost of sales
Telephone
Salary
Advertising
Stationery
R95 000
R8 750
R14 500
R102 500
R10 000
R146 750
R95 000
R3 400
R22 000
R3 500
R2 100
During May 20.10 the following transactions took place for Don’s Store. Use
these transactions to complete the cash journals for the month.
Then post to the General Ledger and close off all accounts.
May:
1
3
4
5
7
10
14
15
18
20
23
24
28
Standard Bank made a direct deposit of R25 000 into the business bank
account. This was for a loan. (Rec 11)
Paid R1 000 to Telkom for the monthly telephone account. (CC 31)
Bought a new computer (equipment) from Comp Dealers for R5 000.
Cash sales amounted to R13 500 (CP was R9 000) CRT 38.
Purchased more trading stock from PDK – R23 000
Good sales led to R19 000 being deposited. (CP R12 000)
Paid Mr Smith, a salesman, his salary of R9 000.
An advertisement was placed in the Mercury at a cost of R2 000.
Don Smith, the owner, used a business cheque of R900 to pay Andy’s
Garage R900 to service his personal car .
Sold stock with a cost price of R8 500. (MU is 70%)
Issued a cheque to MJ Supplier for R19 400. R1 900 was for equipment
and the balance for stock.
Issued a cheque to Ms Beki for R11 000. This was for her salary.
Cash sales amounted to R13 200. (MU is 65%)
(75)
Week 5–6 Topic 3: Financial literacy • Term 1
EMS Gr9 LB BOOK.indb 41
41
2013/04/25 9:43 PM
Week
5–6
Activity 2 Completing the Cash Journals and posting to the General Ledger
Joseph Smith owns a small retailer, Joseph Cottons. A friend has been keeping track of his
finances for him, but his friend went on holiday on 20 August and could not complete the journals
for August and post to the General Ledger.
1 Joseph asks you to complete the CRJ and CPJ from 21 August (note the totals in the journals are
for the period up to 20 August) onwards. Copy these totals given below before you continue to
enter the transactions from 21 August onwards. Totals in the journals up to 20 August 2010:
Cash Receipts Journal of Joseph Cottons – August 20.10
Analysis
of
Doc Date Details
Fol Receipts
Bank
Sales
20
Totals
b/f
–
21 250
00
17 500
CRJ 8
Cost of
Sales
00
1 000
Sundry Accounts
Amount
Fol Details
00
Cash Payments Journal of Joseph Cottons – August 20.10
Name of
Doc Date Payee
20
Totals
Fol
b/f
Bank
13 400
Wages
00
2 500
00
CPJ 8
Trading
stock
7 850
00
Sundry Accounts
Stationery Amount
Fol Details
1 100
00
1 950
00
2 Post the journals to the ledger accounts given after you have filled in the opening balances and
totals given below.
Balances and totals on 1 August 20.10:
Bank
R2 390
Sales
R165 375
Wages
R25 000
Trading stock
Cost of sales
Stationery
R13 100
R94 500
R8 450
3 Finally, balance and pencil foot the accounts.
Transactions (from 21 August onwards):
21 Paid weekly wages with a cash cheque – R800 (CC 239)
Issued a cheque to Makro for R3 400. R3 200 was for Trading stock and the balance for
stationery.
23 Cash sales amounted to R8 575 – mark-up on cost is 25% (CRT 991).
Some of the stationery was incorrect, so it was returned to Makro and they gave a R50 cheque
as refund. (Rec 23)
24 Paid R150 to the municipality for water and lights.
25 Joseph increased his capital by making a direct deposit of R4 000.
28 Issued a cheque to Telkom for R450 to pay the telephone account.
Paid weekly wages of R800.
30 Cash sales amount to R5 000 (Cost price – R4 000).
(60)
42
EMS Gr9 LB BOOK.indb 42
Term 1 • Week 5–6 Topic 3 Financial literacy
2013/04/25 9:43 PM
Weeks 5–6
1
Topic 4 The economy: The circular flow
Introduction
Key terms
The circular flow shows how an economy works in the real world. The
economy of a country can be viewed as a system where goods, services,
factors of production and money change hands between many participants.
This system can be studied as:
●●
●●
a closed economy which excludes trade with other countries
an open economy which includes trade with other countries (also called
foreign trade).
This topic only deals with the participants in the circular flow of a closed
economy.
consumers – buyers
of goods and services
2 The participants in the circular flow of a
closed economy
2.1
Participants in a closed economy
Consumers, producers and the government all participate in a closed
economy.
2.1.1
circular flow
closed economy
factor market
businesses
foreign trade
government
households
open economy
product market
Consumers and producers
In Grade 8 you learnt that land is exchanged for rent, labour for wages or
salaries, capital for interest and entrepreneurs receive profit.
producers – sellers
of goods and services
that they make or
provide
exchanged – money
is the medium of
exchange used to
pay for goods and
services
In a market economy, consumers buy goods and services that
producers provide.
The consumers represent all the households and the producers
represent all the businesses. Although members of households
are also the owners of the factors of production (labour, natural
resources, capital and entrepreneurship) producers make and
market the goods and services.
When members of households provide labour for production they
get paid for their labour and that allows them to buy goods and
services – money flows from the producers to the households.
2.1.2
Government
Households and businesses pay taxes to the government. The
government spends this money to produce goods and provide
essential services to the people. Essential services include roads,
water, electricity, hospitals and clinics and education.
figure 1.6
Money exchanged for goods
Week 5–6 Topic 4 The economy • Term 1
EMS Gr9 LB BOOK.indb 43
43
2013/04/25 9:43 PM
Weeks
Week 55–6
–6
The government also employs people from households and pays them a wage
or salary in the same way a business does. In a mixed economic system the
government also produces goods and services which are sold to households
and businesses, for example communication (Telkom) and weapons (Denel).
2.2 The market
The prices of goods and services that consumers buy are determined in the
product market, and the prices for factors of production that businesses and
the government buy are determined in the factor market.
collectively – as a
whole; together
labour market –
when people who are
looking for work and
those offering work
meet and negotiate
salaries
Collectively, all supermarkets
form a product market. If
there is a shortage of rice
in the country the price of
rice will increase because
the supply cannot meet the
demand. The labour market
is one of the factor markets.
This is where people look for
employment and businesses
or the government looks for
labour by advertising vacant
positions. If a business wants to
employ workers with specialist
knowledge or ability, the
payment for their labour will
be higher than for those without
such knowledge or ability.
Activity 1
figure 1.7 A product market is where buyers and
sellers exchange money for goods, such as in a
supermarket.
Households
Answer the following questions about your own household.
1 How many people in your household earn an income?
2 Who pays them a wage or salary?
3 How do the businesses where members of your household work
make money. What goods do they make to sell or what services do
they provide)?
4 How is your household affected when prices increase?
5 How is your household affected when a member of the household
receives a salary increase?
44
EMS Gr9 LB BOOK.indb 44
(2)
(2)
(4)
(4)
(4)
Term 1 • Week 5–6 Topic 4 The economy
2013/04/25 9:43 PM
3 Flow of goods and services, money and factors of
production in the circular flow of a closed economy
In a closed economy money, goods and services and factors of production
flow from one group to the next. This is called circular flow.
A practical example of the above circular flow:
Mrs Negota is a member of a household and she works
in a flower shop called Blossom Florist. Mrs Negota sells
her labour through the factor of production market to
Blossom Florist in return for a salary. The factor market
decides on the wage that her labour is worth. She is paid
R4 000 per month. This becomes Mrs Negota’s income.
Blossom Florist sells their flowers. This becomes their
income and pays for their expenses, which includes Mrs
Negota’s salary. She buys goods and services needed
in her household. Her income pays for these goods and
services and becomes part of the circular flow from
households to businesses.
The key points in studying the circular flow of goods,
services and money are the following:
●●
●●
●●
●●
●●
Businesses produce or provide goods and services.
Households are the consumers. In a market
economy, they own the factors of production (land
or natural resources, labour, capital) and are
the entrepreneurs. They sell these factors for an
income.
Businesses make or produce goods and services
and sell them to households, other businesses and
even the government. This becomes their income,
which they spend on rent, wages or salaries,
interest. They may also make a profit.
Households spend their income on goods and
services.
Households and businesses pay taxes and the
government spends this money to produce goods
and provide services which are essential to the
survival of its people. The government also has
to pay for factors of production (e.g. salaries to
government employees) to produce the goods and
provide the services.
figure 1.8 Blossom Florist is part of the
Circular flow
figure 1.9 One of the most important parts of the
circular flow of goods is the interaction between
buyers and sellers.
Week 5–6 Topic 4 The economy • Term 1
EMS Gr9 LB BOOK.indb 45
45
2013/04/25 9:43 PM
Topic 3 Financial literacy: General Ledger
Weeks
Topic 7–10
3
3 Preparing of a Trial balance of a trading business
In Grade 8 you learned how to prepare a Trial balance. Here is a summary of
the key points:
●●
●●
●●
●●
●●
●●
A Trial balance is drawn up at the end of the month after the General
Ledger has been completed.
Like in the General Ledger, the Trail balance has two sections: Balance
sheet accounts and Nominal accounts.
Copy the General Ledger account headings into the Trial balance in the
order they appear in the General Ledger.
In Balance sheet accounts you enter the closing balance in the debit or
credit column of the Trial balance – enter the debit balance in the debit
column, and credit balance in the credit column.
For nominal accounts, you will take the pencil foot amount and enter it
into the debit or credit column depending on whether it is a debit or credit
amount.
Finally add up the debit and credit column. If they are equal, your Trial
balance balances, and you have fulfilled the double entry principle.
Here is an example of a General Ledger and corresponding Trial balance to
refresh your memory.
Example 1
General Ledger of Xolani’s traders
Balance sheet accounts
Date
Details
Fol
Dr
Amount
Date
– Capital (OE) +
Jun
Dr
Jun
Details
+
30
Total receipts
CRJ1
B1
2
Bank
Bank (Asset) –
52 600 00 Jun
Fol
CRJ1
B2
30
1
Balance
Dr
Jun
b/d
+
30
Bank
CPJ
46
EMS Gr9 LB BOOK.indb 46
1
Balance
b/d
25 000 00
Cr
CPJ1
8 250 00
Balance
c/d
44 350 00
52 600 00
44 350 00
TRADING STOCK (ASSET) –
9 400 00 Jun
30
B3
Cr
Cost of Sales
CRJ
5 200 00
Balance
c/d
4 200 00
9 400 00
Jul
Cr
Total Payments
52 600 00
Jul
Amount
9 400 00
4 200 00
Term 1 • Week 7–10 Topic 3 Financial literacy
2013/04/25 9:43 PM
and Trial balance (sole trader)
Nominal accounts
Dr
– SALES (INCOME) +
Dr
+ COST OF SALES (EXPENSES) –
Jun
Jun
30
Trading stock
CRJ
30
Bank
Jun
Dr
11
30
Bank
CPJ1
30
Bank
CPJ1
Dr
Jun
8
Bank
CPJ1
Jun
15
Bank
CPJ1
Cr
2 000 00
N4
Cr
N5
Cr
N6
Cr
N7
Cr
550 00
500 00
+ Consumables (Expense) –
Dr
Cr
6 000 00
+ Water and electricity (Expense) –
Dr
35 600 00
N2
CRJ1
+ Stationery (Expense) –
Jun
CRJ
N3
Bank
+ Salaries (Expense) –
Jun
Cr
5 200 00
– Rent income (Income) +
Dr
N1
1 800 00
Xolani’s traders
Trial balance on 30 June 20.10
Details
Fol
Debit
Credit
Balance sheet accounts
Capital
B1
Bank
B2
44 350 00
Trading stock
B3
4 000 00
25 000 00
Nominal accounts section
Sales
N1
Cost of sales
N2
35 600 00
Rent income
N3
Salaries
N4
6 000 00
Stationery
N5
550 00
Water and electricity
N6
500 00
Consumables
N7
1 800 00
5 200 00
2 000 00
62 600 00
62 600 00
Note:
●●
●●
The double entry principle was used, because the debit side is equal to the credit side. The
Trial balance is therefore balancing.
You should write the accounts in the Trial balance in the same order as they are in the General
Ledger. First, write all the Balance sheet accounts and then all the Nominal accounts.
Week 7–10 Topic 3 Financial literacy • Term 1
EMS Gr9 LB BOOK.indb 47
47
2013/04/25 9:43 PM
Week 77–10
–10
Activity 3 Complete the CRJ and CPJ, post to the General
Ledger and prepare a Trial balance
1 Complete the Cash Receipts Journal and Cash Payments Journal of
Hirsch Stores for August 20.10 using the information given below. Total
the columns at the end of the month.
Use your own document numbers.
Mark-up on cost is 25%.
August 20.10:
1
3
6
7
8
Purchased stationery from CAN Stores – paid by cheque. R125.
Bought trading stock from Makro for R2 400.
Cash sales amounted to R3 850.
Paid wages with a cash cheque. R500.
Issued a cheque to Metro for R3 200. R3 000 was for trading stock
and the balance was for stationery.
11 Issued a receipt to the tenant for the monthly rent. R1 000.
Cash sales amounted to R1 750.
14 Paid the wages with a cash cheque.
19 Returned stationery to the value of R50 to Metro (see 8th) – received
a cash refund.
21 Paid the wages.
23 Issued a cheque to Telkom for the telephone account. R450.
25 The owner, Mrs Hirsch made a direct deposit of R10 000 to increase
her capital.
28 Goods with a cost price of R2 600 were sold.
30 Paid NBS R5 500. R5 000 was a repayment on the loan and the
balance was for interest on loan.
2 Enter the following opening balances and totals in the General Ledger
of Hirsch Stores and then post to the General Ledger accounts.
Bank
Trading stock
Loan
Equipment
Capital
Sales
Cost of sales
Stationery
Interest on loan
R12 950
R21 540
R20 000
R134 000
R67 000
R375 000
R290 000
R3 100
R410
3 Prepare the Trial balance of Hirsch Stores on 30 August 20.10.
48
EMS Gr9 LB BOOK.indb 48
(85)
Term 1 • Week 7–10 Topic 3 Financial literacy
2013/04/25 9:43 PM
Activity 4 Complete the CRJ and CPJ, post to the General
Ledger and complete the Trial balance
Use the transactions given below to:
1 Complete the CRJ and CPJ of Fifa Dealers for July 20.10.
2 Post to the General Ledger after entering the opening balances and
totals.
3 Complete the Trial balance as at 31 July 20.10.
Balances and totals:
Capital
Bank
Trading stock
Equipment
Sales
Cost of sales
Salaries
Telephone
Stationery
R33 960
R22 900
R28 450
R25 000
R246 000
R155 000
R45 000
R2 410
R1 200
July 20.10
2 Issued a cheque to AmaZulu Dealers for R24 500. R23 000 was for
trading stock and the balance for stationery. CC 33
5 Cash sales amounted to R240 00 (CP R18 000). CRT 10.
11 Paid the salary of Kaka R10 000.
14 Good sales amounted to R28 800 (MU is 50%).
Due to a quality problem some stationery was returned to AmaZulu
Dealers and they gave us a cash refund of R500. Rec 8
17 Issued a cheque to Telkom for R880 for the telephone account.
21 Bought some new equipment from Germ Stores. R9 000.
26 Stock with a cost price of R12 500 was sold (MU is 25% on cost).
29 Paid Mr Jordaan his salary of R12 000.
30 Purchased more stock from AmaZulu Dealers for R3 200.
(75)
Week 7–10 Topic 3 Financial literacy • Term 1
EMS Gr9 LB BOOK.indb 49
49
2013/04/25 9:43 PM
Topic
31
Summary
andhere
questions
Unit heading
Summary
●●
●●
●●
●●
●●
●●
50
EMS Gr9 LB BOOK.indb 50
When posting to the General Ledger, apply the rules of the General Ledger
and remember that Cost of sales is an information column.
When posting from the CPJ you will credit Bank and debit all the other
accounts.
When posting from the CRJ you will debit Bank and credit the other
accounts except Cost of Sales and here you will debit Cost of Sales and
credit Trading stock.
Balancing and pencil footing is exactly the same for a service business and
a retailer.
When drawing up the Trial balance you will use the balance b/d figure
for Balance sheet accounts and the pencil foot or total figure for Nominal
accounts.
The Trial balance must balance – if it does not you need to find your
mistake and correct it.
Topic 3 • Summary and questions
2013/04/25 9:43 PM
Questions
1 State whether each of the following is a Balance sheet account or
a Nominal account and which side of the General Ledger they will
increase on.
(12)
a Sales
b Trading stock
c Capital
d Vehicles
e Loan
f Cost of sales
2 The Trial Balance given below does not balance as there are some
errors and missing information. You have been asked to correct it by
ensuring everything is on the correct side and place.
(18)
Trial Balance of Pinki Panther Stores at 30 June 20.10
Debit
Bank
Sales
240 000 00
Capital
244 750 00
Salaries
60 000 00
Trading stock
18 750 00
Loan
75 000 00
Cost of sales
?????
Vehicles
?????
262 500 00
Rent expense
24 000 00
Interest income
3 750 00
Telephone
Drawings
Credit
13 500 00
15 000 00
9000 00
The business operates on a fixed mark-up of 50%. This has not
changed during the year.
The owner paid her telephone account of R750 with a business cheque.
The amount was only credited to Bank.
Total marks 20
Summary and questions • Topic 3
EMS Gr9 LB BOOK.indb 51
51
2013/04/25 9:43 PM
Weeks
Topic 7–10
Topic 4 The economy: The circular flow
4 Flow diagrams to illustrate the circular flow of a
closed economy
The following flow diagram shows the flow of money (dotted blue lines) and
goods and services, and factors of production (solid black line) between two
participants, namely the households and businesses.
When the government is added
to the diagram it gets a bit more
complicated. Let us first add
the paying of taxes and the
production of essential goods
and services.
figure 1.10
Government provides goods and services
and gets taxes
The government also pays for factors of production received from households
(for example salaries for government employees) and this makes the diagram
more complicated.
figure 1.11
The government also buys goods and services
52
EMS Gr9 LB BOOK.indb 52
Term 1 • Week 7–10 Topic 4 The economy
2013/04/25 9:43 PM
Activity 2
Drawing circular flow diagrams
1 Study the diagram in Figure 1.10 and practise drawing it without
consulting your Learner’s Book.
(10)
2 One economic role player in the flow of money and goods and
services has been left out in Figure 1.11. Discuss the missing
element in the class and add it to the diagram.
(4)
4.1
Examples of how some factors change the diagram
Example
How the flow is affected
A member of a household has no job
No labour can be sold in return for an
income
A businesses is unable to pay its
workers
The labour do not receive an income
A businesses produces faulty goods
The goods cannot be sold and the
business earns no money
There is a drought
No goods are produced and the
business has no income
Workers go on strike (withdraw their
labour)
Workers receive no income and
businesses cannot produce goods
drought – a long
period with little or
no rain
Activity 3 Create a circular flow diagram
Draw your own circular flow diagram to explain the following:
Your mother is a teacher and works for a government school. She sells
her labour to the government in return for a monthly salary. She spends
her income on goods and services such as food, clothing and transport.
She also saves some money in the bank every month. The income she
receives and spends is part of the circular flow. She also pays taxes to the
government. Her taxes become part of the government’s income and the
(20)
government uses this income to pay teachers’ salaries.
Week 7–10 Topic 4 The economy • Term 1
EMS Gr9 LB BOOK.indb 53
53
2013/04/25 9:43 PM
Topic
4
Summary and questions
Summary
●●
●●
●●
●●
●●
54
EMS Gr9 LB BOOK.indb 54
The circular flow of income in a closed economy involves three
participants, namely consumers, producers and the government.
In a closed economy the product market is where goods and services are
bought and sold and the factor market is where factors of production are
bought and sold.
The circular flow of income diagrams illustrate what happens in the real
world between households, businesses and the government. There is an
interaction of roles as a household could also be an owner of a business.
There are factors that disrupt or interfere with the circular flow of income.
The government’s participation as producer and employer of labour is
very important and the government’s role in economic activities must be
recognised.
Topic 4 • Summary and questions
2013/04/25 9:43 PM
Questions
A Choose the correct answer from the options.
(4)
1 The three participants in a closed economy are:
a the government, foreign sector and businesses
b the government, foreign sector and households
c the government, businesses and households
2 The factor market determines the price at which the factors of
production are sold. These factors are:
a land, labour, capital and goods
b land, labour, capital and entrepreneurship
c rent, wages, salaries and profits
3 A closed economy excludes:
a households
b businesses
c foreign sector
4 A strike affects the income of:
a households
b businesses
c both households and businesses
B Pair the concept in Column A with its meaning in Column B.
(5)
Column A (concept)
1 A closed economy
2 Circular flow
3 Income
4 Taxation
5 Households
Column B (meaning)
a Consumers
b Compulsory payment to the government
c Excludes the foreign sector
d Money received
eGoods and services and factors of production
flow from one group to the next
f Banking
C Draw the circular flow of income of the Skhosana family. (6)
Msongelwa Skhosana is the Area Manager of Pick n Pay in Eshowe. His
wife, Phindile is a teacher at the Eshowe Primary School, a government
school. Msongelwa’s father lives with them and receives a government
pension. Their two children, Msufufwa and Bathabile attend the local
government school. Their monthly expenses include rates for their
house, electricity, water, transport, school fees, groceries, recreation
and attending sporting activities.
Total marks 15
Summary and questions • Topic 4
EMS Gr9 LB BOOK.indb 55
55
2013/04/25 9:43 PM
Term
1
Assignment
Formal Assessment Task (FAT): Assignment
1 Read the following extracts and answer the questions that follow. [10]
Extract A
In KwaZulu-Natal there are many sugar farmers and sugar plantations.
Mr and Mrs Khumalo work on one of the plantations owned by an
international sugar company. They receive weekly wages. The sugar
price is determined by the demand and supply of sugar worldwide.
If there is a large demand, the profits of the company increases.
Sometimes the company will pay its workers a bonus if their sales are
good.
Extract B
Tanzania produces coffee. All coffee plantations are owned by the
state and its workers live and work on the plantations. The system is
known as the ujamaa. The state sells all the coffee produced and the
workers receive the goods and services to satisfy their basic needs. 27%
of Tanzania’s coffee is exported. When the coffee price falls, the state’s
income also decreases.
1.1
1.2
1.3
1.4
1.5
1.6
1.7
Which extract describes a market economy? Which extract describes a planned economy? Who pays the workers in extract 1? Who pays the workers in extract 2? Who receives the profits in extract 1? Who receives the profits in extract 2? Do you think the workers in extract 1 are better off than the
workers in extract 2? Explain your answer. 1.8 How did the Tanzanian government benefit from the
increase in coffee sales? 1.9 How did the South African government benefit from the
increase in sugar sales? 2 Read each sentence below and state whether this is associated
with a capitalist or a socialist economy.
2.1 Inequality between classes
2.2 Private ownership of the means of production i.e. land,
mines and factories.
(1)
(1)
(1)
(1)
(1)
(1)
(2)
(1)
(1)
[20]
Formal Assessment Task (FAT) continues 
56
EMS Gr9 LB BOOK.indb 56
Term 1 • Assignment
2013/04/25 9:43 PM
Formal Assessment Task (FAT): Assignment (continued)
2.3 State ownership of the means of production i.e. land,
mines and factories.
2.4 Unemployment
2.5 Free hospitalisation and medical treatment
2.6 Private and government schooling
2.7 People buy their own houses
2.8 People are paid by the state
2.9 The more you earn, the more tax you pay
2.10 Companies produce on a large-scale
(10 × 2 = 20)
3 Read Ruth’s story and answer the questions that follow.
[10]
“I have been without a job since 2005. Now I live by selling. I usually
buy a bag of cake flour, fish oil, yeast, sugar and snoek and make
vetkoek (fried dumplings which can be stuffed with fish or meat). I also
need coal, wood and matches. It is worse than a proper job because
when I was still working I used to earn more per month as a domestic
worker than what I earn now. But now my health does not allow me to
go to work.”
3.1 Does Ruth live in a capitalist or socialist country? Why do
you say so? 3.2 Find out the price that Ruth would have to pay for the
goods that she mentions today. 3.3 Do you think that Ruth would be able to afford these items
today? Why do you say so? 3.4 How do you think Ruth survives?
3.5 How does Ruth receive medical treatment? 4 Read the following letter from a 15 year old learner living in
Russia. She describes her schooling. Reply to her letter telling
her how your schooling differs.
(2)
(2)
(2)
(2)
(2)
[10]
Dear learners in South Africa,
My name is Anna and I live in a town near Moscow in Russia. My
favourite subject is Social Studies (obshchestvovedenie) where we learn
about the ideas of Karl Marx, the founder of the Communist system. We
also study literature, history, geography, languages, sciences and fine
arts.
Formal Assessment Task (FAT) continues 
Assignment • Term 1
EMS Gr9 LB BOOK.indb 57
57
2013/04/25 9:43 PM
Term
1
Formal Assessment Task (FAT): Assignment (continued)
There is Moral Education too, where we learn how to be citizens of the
country. The government finances all education, from schooling to
university. The advantages of our economic system are that our country
is less subject to inflation and the focus is on the benefits of the
country as a whole and all the citizens. Other advantages include equal
distribution of wages and services to ensure wealth and opportunity for
all, as well as the best possible utilisation of the country’s resources.
I would love to hear about your country and the advantages of your
economic system.
Love, Anna
Total marks 50
58
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Term 1 • Assignment
2013/04/25 9:43 PM
Formal Assessment Task (FAT): Controlled test
1
Test 1
•
•
Marks: 100
Time: 60 min.
Question 1
[18 marks]
1.1 Pick the correct answer for each of the following.
1.1.1 Hilda’s Corner Shop buys products in bulk from wholesalers. Hilda’s
Corner Shop is a/an:
retailer
a
b
manufacturer
c
distributor
d
agency
1.1.2 The following General Ledger accounts are applicable to Gaba’s Garden Services:
•
Equipment
•
Current income
•
Sales
•
Cost of Sales
•
Trading stock
•
Consumables
a
All of the above
b
1, 2 and 6
c
1, 2, 5 and 6
1, 3, 4 and 5
d
1.1.3 The source document for the transaction, ‘paid the foreman’s salary by
cheque, R2000’ is a:
a
cheque
b
payslip
c
cheque counterfoil
d
duplicate receipt
1.1.4 In the past South Africa has been isolated from trading with many
other countries. This was because of:
a
a low economic growth
b
the policy of apartheid
c
the lack of skilled labour
d
a world with borders
Formal Assessment Task (FAT): Controlled test • Term 1
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Term
1
2
1.1.5 The three major participants in a closed economy are:
1
households
2
entrepreneurs
businesses
3
4
government
5
foreign trade
6
labourers
1.2
a
2, 5 and 6
b
1, 4 and 6
c
1, 3 and 4
1, 3 and 5
d
Answer the following short questions.
1.2.1 Give an example of a well-known trans-national company that operates
in South Africa.
1.2.2 What makes it possible for someone to live in one country and work in
another country?
1.2.3 What are the owners of businesses that operate in market economy called?
1.2.4 Who is known as the ‘father of capitalism’?
Question 2
Study the circular flow/economic cycle diagram below, and then answer the
questions that follow:
(2)
(2)
(2)
(2)
[32 marks]
B
Goods and services
D
Households
(1)
Government
(2)
Businesses
(3)
C
A
60
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Term 1 • Formal Assessment Task (FAT): Controlled test
2013/04/25 9:43 PM
3
2.1
2.2
2.3
2.4
Complete the diagram by filling in the missing words numbered A–D
Briefly explain the flow of MONEY by referring to the numbers 1, 2 and 3.
Mention at least two money flows for each.
Differentiate between imports and exports.
Households provide the factor of production to businesses. Name the four
factors of production and indicate what the different remunerations (money)
that the households will receive are called.
(8)
(12)
(4)
(8)
Question 3
[50 marks]
•
Complete the cash receipts and cash payments journal of Bundu Stores for
June 20.4 using the information given below. Total the columns at the end of the month.
•
Use own document numbers.
•
Mark up on cost is 50%.
June 20.4:
Purchased packing material from Peter Paper – paid by cheque. R175.
1
Bought trading stock from Trio Wholesalers for R3 100
4
6
Cash sales amounted to R14 100.
9
Paid wages with a cash cheque – R900
Issued a cheque to Stanley Bulk for R8 200. R7 500 was for trading stock and
10
the balance was for consumables.
Paid rent for the shop to J. Jaffee – R2 000
11
Cash sales amounted to R12 840
15
Paid the wages with a cash cheque. R1000
19
Returned consumables to the value of R 100 to Stanley Bulk (see 10th) – they
gave us a cash refund.
21
Paid the wages, R1 100
Issued a cheque to Telkom for the telephone account. R680
23
25
The owner – Mr Ruff – made a direct deposit of R12 000 to increase his capital.
28 Goods with a cost price of R10 400 were sold for cash.
30 Paid FNB R9 500. R8 000 was a repayment on the loan and the balance was
for interest on loan.
Formal Assessment Task (FAT): Controlled test • Term 1
EMS Gr9 LB BOOK.indb 61
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Term
2
62
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63
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Term
2
Introduction
Topic 1 Financial literacy: Credit transactions –
debtors
In previous Accounting topics you dealt with cash transactions only and
learnt how a business operates with cash sales and cash purchases. Money
was exchanged when the transaction took place.
In practice many businesses buy and sell goods on credit. Credit makes it
possible for customers to buy goods and services now, without making a
payment immediately. In this topic you will learn about credit sales and
debtors and how to record credit sales transactions in the Debtors Journal (DJ)
and debtors’ allowances in the Debtors Allowances Journal (DAJ). You will
also learn how to record receipts from debtors in the Cash Receipts Journal
(CRJ) and you will be introduced to the National Credit Act (NCA).
Topic 2 The economy: Price Theory
This topic deals with two fundamental concepts in economics, namely
demand and supply of goods and services. They are the market forces that
determine the price. Demand refers to how much of a good or service buyers
or consumers want. Supply refers to how much the market can offer.
Topic 3
Entrepreneurship: Sectors of the economy
People are constantly busy with business activities. They are either
producing, transporting, repairing or selling. Business activity can be
described as the process of converting inputs into outputs by adding value.
This business activity takes place in three sectors; the primary sector, the
secondary sector and/or the tertiary sector. Which sector the activity belongs
to is determined by the inputs, processes and outputs involved.
64
EMS Gr9 LB BOOK.indb 64
Term 2 • Introduction
2013/04/25 9:43 PM
Term 2
Revision: Week 1
Revision exercise 1 p66
Revision exercise 2 p67
Revision exercise 3 p68
Revision exercise 4 p69
1
2
3
4
5
6
7
8
9
Topic 1
Topic 2
Topic 3
Financial literacy: Credit
transactions – debtors
The economy: Price Theory
Entrepreneurship: Sectors
of the economy
Weeks 2–7
Weeks 3–7
Weeks 8–9
Introduction p70
Credit sales p70
Debtors p71
The National Credit Act
(NCA) p76
Debtors allowances p76
The Accounting cycle p77
Recording of transactions to
Debtors Journal (DJ) p80
Recording of receipts from
debtors in the Cash Receipts
Journal (CRJ) p84
Recording of debtors allowance
in the Debtors Allowance
Journal (DAJ) p90
1
2
3
4
5
6
7
8
9
Introduction p72
Law of demand p72
Law of supply p74
Equilibrium price and
quantity p78
Change in quantity
demanded p82
Change in quantity
supplied p83
Increase and decrease in
demand p86
Increase and decrease in
supply p87
Graphical illustration of change
in demand and the change in
supply p87
1 Introduction p94
2 Three main sectors of the
economy p94
3 Types of businesses found in
each sector p95
4 The interrelationship of the
three sectors p96
5 Sustainable use of resources in
the three sectors p97
6 The role of the three sectors in
the economy p98
7 Types of skills required in each
sector p99
Introduction • Term 2
EMS Gr9 LB BOOK.indb 65
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Week
1
Revision
Revision exercise 1
ash Receipts Journal and Cash
C
Payments Journal (sole trader)
Milly Smith started her business, Milly’s Monster Shop, on 1 January 20.10.
She sells an assortment of gifts at a mark-up of 20% on cost.
1 Complete the CRJ and CPJ for April.
April 20.10:
1
3
6
11
12
15
17
21
24
25
28
29
30
31
Paid the telephone account of R220 to Telkom with a cheque. (CC
45)
Bought more trading stock from Makro – R1 500 paid by cheque.
Cash sales amounted to R5 940. (CRT 215)
Received the rent income from John Smith – R2 000. (Rec 38)
Bought a new computer from CAN stores for R5 000. Paid a
deposit of R2 000 by cheque and the balance will be paid
for in the next 6 months starting in May.
Increased the loan by borrowing another R20 000 from
Standard Bank who did a direct deposit into our account.
Paid the staff their wages of R1 200.
Sold goods with a cost price of R1 500.
Milly paid R800 to AF Insurance company. R600 was for the
business insurance (sundry expense) and the balance for
insurance on Milly’s house.
Milly decided to increase her capital by R9 000, and this
was deposited into the business bank account.
Bought some stock from Metro – R4 350.
Paid R600 to Makro for stationery (sundry expense).
Some of the stock purchased from Metro (see 25th) was
damaged and returned to Metro – R150. Received a cash refund.
Paid the staff their wages.
Purchased stock from Makro for R6 000 and received a 10% trade
discount.
Cash sales of R9 000. (CP R5 000)
(40)
Revision exercise 1 continues 
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EMS Gr9 LB BOOK.indb 66
Term 2 • Revision
2013/04/25 9:43 PM
Revision exercise 1 (continued)
1 Answer these questions:
a If the business started with R3 300 in the bank at the start of
the month, how much money did it have in the bank at the
end of the month? Show clearly how you achieved your answer. (4)
b What do you call the type of cheque that was used on the 21st? (2)
c Did the business buy or sell more stock during the month?
Justify your answer with the relevant amounts.
(4)
Total marks 50
Revision exercise 2
Economic systems
Read the following text and answer the questions that follow.
All South Africans are excited because we are hosting a major sporting
event. This event is a Grand Prix. People from all over the world will come
to our country, like they did when we hosted the Soccer World Cup in
2010. Both the government, individuals and private companies want to
make money from this worldwide sporting event. However, a lot of money
is required to make a racing track through the city of Cape Town. Other
things are also necessary, such as safety precautions, skilled people to
change the tyres and fix the cars as they do each circuit.
1 Using the example above, state how (a) a market economy and
(b) planned economy would find the finances to make sure that
this motor-racing event happens. 2 What is the purpose of hosting such an event?
3 How will people in the country benefit if the event is financed by
(a) capitalists or (b) the state or government? 4 How would you propose the event be sponsored? Give reasons for
your answer. 5 Do you think this should be a priority of the present South
African government? Why do you say so?
(4)
(2)
(4)
(4)
(2)
Total marks 16
Revision • Term 2
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Week
1
Revision exercise 3
eneral Ledger and Trial balance
G
(sole trader)
Using the transaction given below, you are required to complete the table
with the headings given:
Example: The owner contributes R10 000 as capital
No
Document
Journal Amount
Duplicate receipt CRJ
1
2
3
4
5
6
7
8
Account
debit
10 000 00 Bank
Account
credit
Capital
Bought stationery for R100
Received rent from the tenant – R2 500
Sold stock for cash for R6 375. Mark-up is 70%
The owner paid her private telephone account with a business cheque
– R500
Bought trading stock for R2 500 and was given a 10% trade discount
Sold goods with a cost price of R3 000 and the mark-up was 60%.
Received current income of R625
The bank statement showed a direct deposit by the owner of R25 000 to
increase her investment in the business.
Total marks 15
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Term 2 • Revision
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Revision exercise 4 The circular flow
1 How will the circular flow of income be affected (disrupted) by the
following actions:
a Workers go on strike.
b Unemployment in the country increases.
c The government increases taxes.
d A storm damages the vineyards of the Western Cape.
e The petrol price increases.
(5)
2 Draw a diagram to illustrate the circular flow of income of Mr
and Mrs Katt and their children, Kate and Karl.
Mr and Mrs Katt and their children form a household. Mr Katt works
for a business that makes furniture and Mrs Katt is a housewife.
Kate and Karl attend the local primary school. Mr Katt earns R12 000
per month. He pays R2 000 in taxation to the government and their
household expenses are exactly R10 000 per month. They struggle
from month to month to cover their expenses and have no money
(15)
left to save.
Total marks 20
Revision • Term 2
EMS Gr9 LB BOOK.indb 69
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2013/04/25 9:43 PM
Week
Topic
2
Key terms
Credit sales
Account (as in buy
on account)
Creditworthy
Credit term
Debtors Allowances
Debtors Allowance
Journal
Source document
Debtor
Topic 1 Financial literacy: Credit transactions
1
Introduction
In previous Accounting topics you dealt with cash transactions only and
learnt how a business operates with cash sales and cash purchases. Money
was exchanged when the transaction took place.
In practice many businesses buy and sell goods on credit. Credit makes it
possible for customers to buy goods and services now, without making a
payment immediately. In this topic you will learn about credit sales and
debtors and how to record credit sales transactions in the Debtors Journal (DJ)
and debtors’ allowances in the Debtors Allowances Journal (DAJ). You will
also learn how to record receipts from debtors in the Cash Receipts Journal
(CRJ) and you will be introduced to the National Credit Act (NCA).
2
Credit sales
A cash sale means that a business takes money from the customer at the
time of the sales transaction. Many businesses also sell goods on credit or
on account. This is known as credit sales, which means that the customer
receives goods now but will pay the business at a later stage. Businesses
usually allow credit sales to increase sales and profit.
Credit bureaus – an
organisation that
keeps a record of
individual’s credit
history and payments
on debt
Before a business allows a customer to buy on credit, they need to do proper
background checks on the person applying for credit. The business will only
give credit to customers who are creditworthy. This means the person is a
responsible borrower and has the means to pay off the debt. The business also
needs to check the credit history of the customer. They do this by contacting
credit bureaus, banks and other companies or institutions where the
customer already has credit. Customers also need to provide a valid ID, proof
of residence and recent pay slips before they can buy on credit.
Figure 2.1 Credit sales allows customers to buy
goods on account and pay for it at a later stage.
70
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Term 2 • Week 2 Topic 1 Financial literacy
2013/04/25 9:43 PM
– debtors
Activity 1
Advantages and disadvantages of credit sales
In small groups of four or five learners you need to:
1 Discuss the advantages of allowing credit sales
2 Discuss the disadvantages of allowing credit sales
3
Debtors
When a business allows customers to buy on credit the customers are called
debtors. These credit customers owe money to the business. If a customer
is allowed to buy on credit, they will be given certain terms and conditions.
These will cover how much they may buy on account, the maximum period
of time they have to pay back the outstanding debt, also known as the credit
term, and what interest will be charged on an account if it is not paid back in
time.
The balance of the debtor’s outstanding account is an asset for the business.
It is treated as a current asset because the money will be received within a
short period of time.
Activity 2
Businesses and debtors
Find the following information about a store which sells goods on credit:
1
2
3
4
What are the credit terms of the business?
What background checks does the business do?
How does the business decide on how much credit to allow a customer?
What will the business do to a debtor who does not pay the money owed
to the business?
Work in pairs and get information by going to a store; searching the
internet or from a magazine. You must always state the source of your
information.
You and your partner will give feedback to your class.
(10)
Week 2 Topic 1 Financial literacy • Term 2
EMS Gr9 LB BOOK.indb 71
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Week
Topic
3
Key terms
demand
quantity demanded
supply
quantity supplied
equilibrium point
movement
change in quantity
demanded
change in quantity
supplied
shift
quantity – the
amount or number of
something
inversely related – as
one part goes up, so
the other goes down
Topic 2 The economy: Price Theory
1
Introduction
This topic deals with two fundamental concepts in economics, namely
demand and supply of goods and services. They are the market forces that
determine the price. Demand refers to how much of a good or service buyers
or consumers want. Supply refers to how much the market can offer.
2
Law of demand
Demand is a relationship between quantity and price. Demand is the different
quantities of a good or a service that consumers are willing to buy at various
possible prices during a specific period.
The law of demand states that the demand and the price of a good or service
are inversely related. This means that as one goes up, so the other goes down.
Both price and demand can affect the law of demand. So, high price goes
with low demand, and high demand goes with low price. In other words, the
higher the price, the lower the quantity demanded.
2.1 Demand schedule and graphical illustration of the
demand curve
The relationship between the price and quantity demanded is known as the
demand relationship. This relationship gives us a downward sloping demand
curve.
DEMAND SCHEDULE
Price (R)
15
10
5
Quantity
20
25
30
Figure 2.2
A demand curve
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Term 2 • Week 3 Topic 2 The economy
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A, B and C are points on the demand curve. Each point on the curve reflects
a direct relationship between quantity demanded (Q) and price (P). The
demand curve in Figure 2.2 shows the negative relationship between price
and quantity demanded.
The higher the price of a good or service, the lower the quantity demanded.
We can see this at point A. The lower the price, the more people will demand
of that good or service. That is the situation at point C.
Activity 1 The demand relationship
Study the graph and answer the following questions.
1 What is the quantity demanded if the price is R3?
2 What will happen to the quantity demanded if the price changes
to R5?
3 Explain demand.
4 Explain the law of demand.
(1)
(1)
(2)
(2)
Week 3 Topic 2 The economy • Term 2
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Week
3
3 Law of supply
Supply is the quantity of goods or services that producers (suppliers) are
willing to supply at various prices during a specific period.
The supply curve is therefore a line that describes the quantity that suppliers
are willing to supply at each price. In most cases, the higher the price of
something, the more of it will be offered for sale; the lower the price of
something, the less of it will be offered for sale. This leads us to the law of
supply.
The relationship between price and how much of a good or service is supplied
(quantity supplied) to the market is known as the supply relationship. The
law of supply states that the higher the price of a good, the more suppliers are
willing to supply that good or service.
3.1 Supply schedule and graphic illustration of the
supply curve
The supply relationship shows an upward slope (see Figure 2.3). This means
that the higher the price, the higher the quantity supplied. Producers supply
more at a higher price because selling a higher quantity at higher prices
increases income.
A, B and C are points on the supply curve. Each point on the curve reflects a
direct correlation between quantity supplied (Q) and price (P).
SUPPLY SCHEDULE
Price (R)
15
10
5
Quantity
30
25
20
figure 2.3
A Supply Curve
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Term 2 • Week 3 Topic 2 The economy
2013/04/25 9:43 PM
Activity 2
Interpreting demand and supply graphs
Study the demand graph and the supply graph below and answer the
questions that follow.
Demand
Price
S
S
Quantity
Supply
Price
D
D
Quantity
1
2
3
4
5
How much is demanded when the price is R6?
What is the price when the quantity demanded is 10 units?
How much will be supplied when the price is R8?
What will the price be when 40 units are supplied?
What price will the supplier be able to charge if 80 units are
demanded?
6 If the supplier wishes to sell 10 units, what price would he be able
to charge for it?
(1)
(1)
(1)
(1)
(1)
(1)
Week 3 Topic 2 The economy • Term 2
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Week
Topic
31
Topic 1 Financial literacy: Credit transactions
4 The National Credit Act (NCA)
The NCA helps to protect customers by putting certain measures in place.
This act prevents businesses from granting easy credit to consumers who then
struggle to repay the debt later and end up with financial problems. It has
been a very positive move and helps customers from becoming too deeply in
debt. The following are some of the measures:
●●
●●
●●
The business must make sure that the person can afford to repay the debt.
The businesses has to explain all the costs and conditions linked to the
account so that the customer can decide whether they can afford the
account or not.
The agreement must be in the language of choice of the customer and
needs to be simple so the customer can understand the agreement.
figure 2.4
The NCA protects South Africans by
making sure they can afford to pay
their debt.
5
Debtors allowances
When goods are sold on credit, the debtor may decide to return some or all of
the goods to the business. Reasons why goods are returned are because they
are damaged, the size is wrong, it did not fit properly or it is the wrong colour.
When a debtor returns goods to the business it is seen as sales returned
from the perspective of the business. The sales returns are called debtors
allowance and will be recorded in the Debtors Allowance Journal (DAJ) as
book of first entry.
The effect of sales returned is that the amount owed by the debtor to the
business decreases. As the goods are returned, the value of trading stock will
increase and the cost of sales will decrease.
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– debtors
6 The Accounting cycle
The Accounting cycle is a process that businesses must follow to control their
financial affairs.
The first step of the cycle is a source document. In the case of credit sales,
the source document will be a duplicate credit invoice. The business will
issue each debtor with a credit invoice after every transaction that involves a
credit sale. The documents follow in numeric order as the business issues the
document.
Once the document is issued, the transaction is recorded daily in a new
journal called the Debtors Journal (DJ). To keep further control of all debtors,
this transaction is recorded in the individual account in the Debtors Ledger.
At the end of the month, you need to total the two columns in the journal.
The next step is to post to the General Ledger. But you will learn this Term 3,
Topic 3.
Once you have completed all the ledger accounts, you will draw up a Trial
balance and this will be dealt with in Term 4, Topic 2.
Prepare the Financial
statements
Draw up a Trial
balance
Post the journals to
the General Ledger
Make a transaction
Complete the source
documents
Record the
transactions in
journals
figure 2.5
The Accounting cycle
Week 3 Topic 1 Financial literacy • Term 2
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Week
Topic
4
Topic 2 The economy: Price Theory
4 Equilibrium price and quantity
Price is a reflection of demand and supply. The relationship between demand
and supply affects how we decide to use our money. Both demand and supply
affect price.
If something is plentiful, it is usually cheap, for example soil. If something is
scarce, it is usually expensive, for example gold.
figure 2.6
Equilibrium Point
intersect – the lines
or curves pass or lie
across each other
efficient – working
productively with
a minimum wasted
effort or expense.
78
EMS Gr9 LB BOOK.indb 78
The interaction of supply and demand determines prices and quantities.
When the demand and supply are matched or equal the economy is said to
be in equilibrium. This is illustrated where the supply curve intersect the
demand curve, as in Figure 2.6.
At this point, the allocation of goods and services is at its most efficient
because the amount of goods being supplied is exactly the same as the
amount of goods being demanded. Everyone is satisfied with this economic
condition.
Term 2 • Week 4 Topic 2 The economy
2013/04/25 9:43 PM
At the equilibrium point, suppliers are selling all the goods and services that
they have produced and consumers are getting all the goods and services that
they are demanding. In Figure 2.6, equilibrium is at the intersection of the
demand and supply curves. At this point, the price of the goods will be P* and
the quantity will be Q*. We say that P* is the equilibrium price or market price
and Q* is the equilibrium quantity.
Activity 3
Price
R5
R10
R15
R20
R25
1
2
Market equilibrium
Quantity
Supplied in units
Demanded in units
1
5
2
4
3
3
4
2
5
1
Use the information in the table to draw the supply and demand
curve for DVDs at a local DVD shop. Make sure you label the axes,
the graph itself, as well as the supply and demand curves.
(8)
Identify the equilibrium price and the equilibrium quantity.
(2)
Week 4 Topic 2 The economy • Term 2
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79
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Week
Topic
41
Topic 1 Financial literacy: Credit
7
Recording of transactions to Debtors Journal (DJ)
People buy on credit or on account because they need or want something but
do not have the money to pay for it. A business will then offer credit sales
because it believes that it will increase sales and profits. This way a business
sells far more products than if it offered only cash sales.
When a business sells goods on account, the customer will be given a credit
invoice. This is the source document for this transaction. The credit term is
usually shown on the invoice and is a specified number of days (30, 60 or 90
days) after the date of the invoice. The customer gets the original invoice and
the business keeps a copy, called a duplicate invoice. The business uses this
source document to record the transaction in the Debtors Journal.
Figure 2.7
80
EMS Gr9 LB BOOK.indb 80
An invoice
Term 2 • Week 4 Topic 1 Financial literacy
2013/04/25 9:43 PM
transactions – debtors
The DJ is used to record credit sales only. Remember that cash sales are
recorded in the CRJ.
Example 1
ISC Stores sold R 500 worth of stock (cost price is R 300) on account to
Ross Mardon on 1 March 20.10. Credit invoice CI 22. Assume this was the
only credit sale for the month.
Solution:
Debtors Journal of ISC Stores – March 20.10 DJ3
Doc
CI 22
Date Debtor
1
Ross Mardon
Fol
Sales
Cost of Sales
500
00
300
00
500
00
300
00
In the document column, the document numbering will follow in numeric
order. The sales column represents the Selling price (SP) and the Cost of
Sales column represent the Cost price (CP).
Activity 3
Completing the DJ of COA Stores
Complete the Debtors Journal of COA Stores for July 20.10 using the
information given below:
July:
2 Dr Blaine bought goods on account – R350 (CP 225). Inv C341
5 Sold goods on account to Ms Jones – R560 (CP R390)
11 Mr Brad bought stock with a selling price of R770 on account (Mark-up
is 25%)
18 Dr Blaine bought goods for R200 and paid cash (CP R120)
23 More goods were sold to Mr Brad for R900 (CP R500)
(12)
Week 4 Topic 1 Financial literacy • Term 2
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Week
Topic
5
Topic 2 The economy: Price Theory
5
Change in quantity demanded
A movement along the demand curve shows a change in both price and
quantity demanded from one point to another. The movement implies that
the demand relationship remains the same. Therefore, a movement along
the demand curve will occur when the price of the good or service changes
and the quantity demanded changes according to the original demand
relationship.
A movement occurs when
a change in the quantity
demanded is caused only by
a change in price. Therefore
this movement is known as a
change in quantity demanded.
Study Figure 2.8. When the
price decreases from P1 to
P2, the quantity demanded
increases from Q1 to Q2. This
results in a movement down
along the demand curve.
figure 2.8
Change in quantity demanded
Activity 4 Change in quantity demanded
Study the information below. Indigo Stationery manufactures and sells
exercise books. The market information is given in the table.
Price
R4,00
R3,50
R3,00
R2,50
R2,00
Quantity demanded
(in millions)
15
20
25
30
35
Quantity supplied
(in millions)
35
30
25
20
15
Activity 4 continues 
82
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Activity 4
continued
1 Use the information in the table to draw the demand and supply
graph for exercise books. Show the equilibrium price and quantity
for the exercise books.
2 What will happen if the suppliers decide to increase the price of
exercise books from R3 to R4?
3 What will happen if the suppliers decide to decrease the price of
exercise books to R2?
4 If the price increases to R4, what will happen to the quantity
demanded?
5 What do we call the above processes?
6
(8)
(2)
(2)
(2)
(3)
Change in quantity supplied
A movement along the supply curve means that the supply relationship
remains the same. Therefore, a movement along the supply curve will occur
when the price of the good changes and the quantity supplied changes,
without moving the supply curve.
A movement occurs when a change in quantity supplied is caused only by a
change in price. Therefore this movement is known as a change in quantity
supplied.
In Figure 2.9, when the price decreases from P1 to P2, the quantity supplied
decreases from Q5 to Q6. This will result in a movement down along the
supply curve.
figure 2.9
Change in quantity supplied
Week 5 Topic 2 The economy • Term 2
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Week
Topic
5
Topic 1 Financial literacy: Credit transactions
8 Recording of receipts from debtors in the Cash
Receipts Journal (CRJ)
At the end of every month the business sends a statement of account to every
debtor. The statement shows a summary of all the transactions the debtor
made during a specific period. The debtor can either pay the account in full
or pay part of the debt. When a debtor pays it is recorded in the CRJ in the
Debtors Control column and the debtor is issued a receipt. The debtor receives
the original receipt and the business keeps the duplicate receipt to use as the
source document for the transaction.
Example 2
On 25 March 20.10, Ross Mardon paid R500 to ISC Stores in full settlement of his account. ISC
Stores issued receipt I21 to him.
Solution:
Cash Receipts Journal of ISC Stores March 20.10 Fol
Doc
Date Details
Fol
Analysis of
Bank
Receipts
I 21
25
Ross Mardon
500 00
Sales
Cost of
Sales
Debtors
control
500 00
crj 3
Sundry Accounts
Amount
Fol
Details
500 00
The receipt from the debtor will be entered in the Debtors control column in the CRJ and, unless it
was a direct deposit, it will be entered in analysis of receipts column. If it is a direct deposit, this
information will come from the bank statement, so your source document will be BS.
Activity 4 Completing the DJ and CRJ of Lindiwe Dealers
Use the transactions to complete the DJ and CRJ of Lindiwe Dealers for June 20.10
June:
1 Mrs Harry bought R700’s worth of goods on account (CP – R350) Inv X24
3 Mr Larry, a debtor paid R400 in part settlement of his account. Rec 11
7 Sold good to Mr Sony for R702 (Mark-up is 30%)
11 More sales on account to Ms Waters – R500 and cost price was R300.
15 Another debtor, Mrs Smiler, paid Lindiwe Dealers R300.
18 The owner increased her capital by making a direct deposit of R10 000
20 Mrs Harry purchased more stock on account. SP of R830 and CP of R550.
25 Mrs J Jones made a direct deposit of R250 in part settlement of her account.
30 Mrs Harry settled her account in full and she was given a receipt.
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EMS Gr9 LB BOOK.indb 84
(25)
Term 2 • Week 5 Topic 1 Financial literacy
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– debtors
Activity 5
Completing the DJ and CRJ of Forbes Dealers
Using the transactions provided below you are required to complete the DJ and CRJ of Forbes
Dealers for July 20.10
June:
2 Mrs Mugane bought goods to the value of R1 700 on account (CP – R 1000) Inv FD 29
4 Mr Naidoo, a debtor, paid R900 in part settlement of his account. Rec R33
10 Sold goods to Mr Smith for R1 440 (Mark-up is 60%)
14 More sales on account to Ms Le Roux – R2 500 and cost price was R1 200.
15 R2 000 of goods were sold to Mrs Mugabe on account. Cost price was R 1 250.
16 Another debtor, Mrs Dlamini, paid R500 in part settlement of her account.
21 The owner increased his capital by making a direct deposit of R 100 000
25 Mr Naidoo purchased more stock on account. SP of R430 and CP of R 265.
26 Mrs Singh made a direct deposit of R1 250 in settlement of her account.
28 Ms Le Roux paid R1 000.
30 Mrs Mugabe settled her account in full and she was given a receipt.
Activity 6
(30)
Completing the DJ, CRJ and CPJ of Danny Stores
From the transaction given below you are required to complete the DJ, CRJ and CPJ of Danny Stores
for July 20.10. Note that this business has both cash and credit sales.
July:
1 Bought R2 000 of trading stock from Metro.
2 Paid Telkom R390 for the telephone account.
4 Cash sales amounted to R2 300 (Cost R1 400)
The tenant paid Danny Stores the monthly rental of R1 500
6 Paid the staff their wages with a cash cheque of R600
8 Sold goods on account to Mrs Jensen – R800 and cost was R500
11 Issued a cheque to Makro for R1 200. R200 was for stationery and the balance for trading stock.
13 Mr Button bought R820’s worth of stock on account (CP – R450)
15 Issued a cash cheque to pay the staff their wages.
17 Due to some good sales, cash sales were R4 500 (Mark-up was 50%)
21 Paid the staff their wages with a cash cheque.
23 Ms Peterson bought some goods on account. The cost price was R490 (mark-up is 60%)
25 A debtor, Ms Jones, owed R390. She paid this by making a direct deposit in the business bank
account.
27 Paid wages.
28 More goods sold on account to Mr Bhengu – R550 (CP was R330).
Cash sales amounted to R2 900 (CP was R1 900)
30 Purchased more stock from Makro – R300
(40)
Week 5 Topic 1 Financial literacy • Term 2
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Weeks 6–7
Topic 2 The economy: Price Theory
7
Increase and decrease in demand
Demand for a good or service can change even though price remains the
same. A shift may either be to the right or to the left. Shifts in the demand
curve imply that the original demand relationship has changed. This means
that the quantity demanded is affected by other factors and not the price.
Some of these factors are:
●●
●●
●●
●●
●●
A change in income for consumers. If you earn more money, you can afford
to buy more goods.
A change in consumer tastes. If people do not like something, they will
buy less of that good.
A change in the prices of related goods (complementary goods or
substitutes). If the price of sugar increases then tea lovers will buy less tea.
If the price of butter increases, then people will switch to margarine.
A change in consumer expectations of future price changes. If people
anticipate an increase in the price of a certain good in the future, the
tendency is to buy more of that good now.
A change in the number of potential buyers.
Activity 5 Demand shift
Work in groups.
1 Use the following schedule to draw the demand and supply curves
for the CDs:
(8)
Price
R20
R40
R60
R80
R100
Quantity
Supplied in units
Demanded in units
1
5
2
4
3
4
5
3
2
1
2 Identify three factors that can cause an increase or a decrease in
the demand for the CDs.
3 Explain how these factors affect the demand.
86
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(3)
(9)
Term 2 • Weeks 6–7 Topic 2 The economy
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8
Increase and decrease in supply
A change in supply (a shift in the supply curve) occurs whenever factors that
affects the supply of the good, other than its price, change. Such factors include:
●
●
●
●
●
9
Prices of factors of production. A rise in the prices of factors of production
shifts the supply curve leftward.
An increase in technology shifts the supply curve rightward.
An increase in the number of suppliers shifts the supply curve rightward.
A change in prices of other goods produced, for example:
● When the price of a substitute good rises, the supply curve for the good
shifts leftward.
● A rise in the price of a complementary good shifts the supply curve
rightward.
If the future price of the product is expected to rise, the supply curve in the
present period shifts leftward.
Graphical illustration of change in demand and the
change in supply
9.1 Change in demand
This can best be explained by an example:
Suppose the price of a bottle of cooking oil was R8 and the quantity of
cooking oil demanded increases from Q1 to Q2, as in figure 2.10. In such a
case there would be a shift in the demand for cooking oil and the demand
curve will shift to the right. The shift is an increase in demand. figure 2.11
illustrates a decrease in demand, which is a shift to the left.
figure 2.10
figure 2.11
An increase in demand
A decrease in demand
Weeks 6–7 Topic 2 The economy • Term 2
87
Weeks 6–7
9.2
Change in supply
Suppose the price of the bottle of cooking oil is R8 and the quantity supplied
decreases from Q1 to Q2 as in figure 2.12. This would result in a shift in the
supply of cooking oil. A shift in the supply curve implies that the original
supply curve has changed. A shift to the right or downwards is an increase
in supply as in figure 2.13 and shift to the left or upwards is a decrease in
supply as in figure 2.12.
figure 2.12
figure 2.13
A decrease in supply
An increase in supply
Activity 6
Supply shift
Work in groups of four. Study the factors in the table below. Complete the
table by stating what affect each of the factors will have on demand and
supply, i.e. will the demand and supply increase or decrease?
Factor
Demand
A famous rock star dies. How does this affect the market
for his/her CDs?
DVDs are replaced with Blu Ray discs. How does this
affect the DVD market?
Summer clothes are sold at the end of the summer
season.
A big clothing store has a summer sale.
Supply
It starts raining during the outdoor Saturday flea market.
How does this affect the market for umbrellas?
An extra supplier starts selling umbrellas during a rainy
outdoor flea market day.
(24)
88
Term 2 • Weeks 6–7 Topic 2 The economy
Topic
2
Summary and questions
Summary
●●
●●
●●
●●
●●
You learnt how to draw and read both demand and supply graphs using a
schedule.
Demand refers to how much, or the quantity of a good or service is desired
by buyers or consumers. Supply refers to how much the market can offer.
The point where the demand and supply graphs intersect is known as the
equilibrium point. The equilibrium point gives both the equilibrium price
and the equilibrium quantity. It also shows the market clearing price.
A change in the price of a good or service will result in a change in
quantity demanded or quantity supplied. This effect is illustrated by a
movement along the demand or supply curve.
A change in factors other than the price, results in either an increase or a
decrease in the demand or supply curve.
Questions
(2 × 2 = 4)
Price
1 Define the following terms
a demand
b supply
2 Study the graph and answer the following questions:
P
a At a price of R60, how many pairs of shoes
would consumers want to buy? Why are
100
producers not prepared to sell at this price? (2)
b How many pairs of shoes are suppliers
70
willing to sell at R70?
(1)
60
c How many pairs of shoes are suppliers
willing to sell at R100? Why are buyers not
prepared to buy at this price?
(3)
d What is the equilibrium price (in Rand) and
81 21
quantity (in pairs of shoes)? (4)
Quantity
e What would be the effect on the demand curve
price of the pairs of shoes changes from R50 to R70?
3 Why is it difficult to buy a warm jersey in the middle
of summer?
4 The price of oranges is high in December and in July they are much cheaper. Why?
5 Draw a labelled graph illustrating the increase in supply.
5
(2)
(4)
(4)
(6)
Total marks 30
Summary and questions • Term 2
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Week
Topic
71
Topic 1 Financial literacy: Credit transactions
9 Recording of debtors allowance in the Debtors
Allowance Journal (DAJ)
If, for any reason, a debtor returns goods, the business will issue a credit
note to the debtor. This credit note will indicate the goods, value and reason
for returns. The debtor will receive the original credit note and the duplicate
credit note will be used to record the transaction in the Debtors Allowance
Journal as book of first entry.
Example 3
Ross Mardon returns stock with a selling price of R200 and cost of sales of
R100 to ISC Stores on 4 March 20.10. Credit note CN14 is issued. Assume
this was the only sales return for the month.
Solution:
Debtors Allowance Journal of ISC Stores – March 20.10 DAJ3
Doc
Date
Debtor
CN14
4
Ross Mardon
Fol
Debtors
Allowance
Cost of Sales
200 00
100 00
200 00
100 00
In the document column, the document numbering will follow in numeric
order.
The debtors allowance column represent the SP and the Cost of Sales
column represent the CP of the trading stock returned if it is not damaged
and thus can be resold.
Activity 7 Completing the DAJ of COA Stores
Complete the Debtors Allowance Journal of COA Stores for July 20.10 using
the information given below:
July:
6 Mr Blaine returns goods, R150 (CP R225). CN112 is issued.
12 Mrs Jones returns goods, R250 (CP R175). CN113 is issued.
14 Mr Brad returns goods with an original selling price of R385.
Mark-up is 40% on cost.
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EMS Gr9 LB BOOK.indb 90
(10)
Term 2 • Week 7 Topic 1 Financial literacy
2013/04/25 9:44 PM
– debtors
Activity 8
Completing the DAJ of Danny Stores
Using the transactions provided below you are required to complete the
DAJ of Danny Stores for June 20.10
June:
5
Mrs Harry returned goods worth R300 (CP R200). Credit note 3 was
issued.
9 Mr Sony returned all the goods purchased on his account on 7 June.
The sales totalled R702 and the mark-up is 50%.
23 Mrs Harry returned some of the goods purchased earlier the week. The
cost price of the goods returned is R360 and the profit margin is 60%
on cost.
(12)
Activity 9
Completing the CRJ, DJ and DAJ of Danny Stores
You are required to complete the CRJ, DJ and DAJ of Danny Stores for
July 20.10.
July:
4 Cash sales amounted to R4 300 (Cost R2 800)
8 Sold goods on account to Mrs Jensen – R1 200 and cost was R700
10 Mrs Jensen returned goods, R400 (cost R250). Credit note CN13 was
issued.
13 Mr Button bought R980’s worth of stock on account (CP – R450)
15 Mrs Button returned goods, R300 (cost R180). Credit note CN14 was
issued.
17 Cash sales were R4 500 (Mark-up was 50%)
23 Ms Peterson bought some goods on account. The cost price was R490
(mark-up is 60%)
25 A debtor, Ms Jones, owed R600. She paid this by making a direct
deposit in the business bank account.
27 Ms Peterson returned goods. The cost was R245 and the mark-up 60%.
Credit note CN15 was issued.
28 More goods sold on account to Mr Bhengu – R750 (CP was R530).
28 Cash sales amounted to R6 900 (CP was R4 100)
30 Mr Bhengu returned goods. The selling price was R220 and the cost
R150. Credit note CN16 was issued.
(20)
Week 7 Topic 1 Financial literacy • Term 2
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Topic
1
Summary
andhere
questions
Unit heading
Summary
●●
●●
●●
●●
●●
●●
●●
●●
When a business allows customers to buy goods and services and pay for
it at a later stage, it is known as credit sales.
A debtor is a credit customer who owes the business money
The Debtors journal records all sales on credit – the source document used
is a duplicate invoice.
When debtors pay money they owe the business it will be recorded in the
CRJ as the business is receiving the money – the source document used is
a duplicate receipt.
The NCA offers protection to debtors as a business has to meet certain
criteria before they allow a person to be a debtor.
When a debtor returns goods that he previously bought on credit it is
called Debtors Allowances.
Debtors allowances effectively decreases the amount owed by the debtor
and will increase the value of the trading stock if the goods returned are
not damaged.
The steps in the Accounting cycle are as follows:
Prepare the Financial
statements
Draw up a Trial
balance
Post the journals to
the General Ledger
92
EMS Gr9 LB BOOK.indb 92
Make a transaction
Complete the source
documents
Record the
transactions in
journals
Topic 1 • Summary and questions
2013/04/25 9:44 PM
Questions
1 Fill in the missing words in the following sentences
a The ___________ ___________ act gives protection to debtors
b When a debtor returns a product this is called an ___________ .
c The ___________ document used for credit sale is a _____________
___________ and for cash sales it is a ___________ ___________
___________ .
d A credit sale is recorded in the ___________ Journal
e When a debtor pays the business money owed to them this will be
recorded in the ___________ ___________ Journal and the source
document will be a ___________ .
f The ___________ ___________ is the process used by businesses for
recording of financial information.
(15)
2 Record the following transactions in the DJ and CRJ of Peters Stores for
May 20.10
8 Sold goods on account to Ms M Pillay for R150 (CP – R100) Credit
invoice ING 32
14 Received R500 from N Dladla in settlement of her account.
Receipt R 12
21 Issued credit invoice ING 33 to B Smith for goods sold to him on
account. The selling price was R600 and the mark-up is 100%. (15)
Total marks 30
Summary and questions • Topic 1
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Topic 3 Entrepreneurship: Sectors of the
Weeks
Topic 8–9
3
Key terms
business activity
chain of production
secondary
specialisation
sustainable
development
tertiary
the primary sector
converting – to
change from one form
to another
extracted – removed
from the soil
Eskom – the
Electricity Supply
Commission which
supplies all forms of
electricity and power
in South Africa
hydroelectricity –
electricity produced
by water power
1
Introduction
People are constantly busy with business activities. They are either
producing, transporting, repairing or selling. Business activity can be
described as the process of converting inputs into outputs by adding value.
This business activity takes place in three sectors; the primary sector, the
secondary sector and/or the tertiary sector. Which sector the activity belongs
to is determined by the inputs, processes and outputs involved.
2 Three main sectors of the economy
South Africa’s economy has three sectors, namely the primary, secondary and
tertiary sectors.
In the primary sector goods are extracted from the earth or produced from the
soil. This sector includes farming, mining, fishing and forestry. South Africa
is well-known as an agricultural and mining country and in our early history
most people made a living from this sector.
This secondary sector includes the production of goods and services. With
industrialisation increasing after 1950, this sector grew as goods from the
primary sector were processed and changed from their original form. For
example, coal and iron were processed to make steel and apples were made
into juice. This sector also includes electricity, gas and the supply of water.
In 1922, Eskom was formed and this industry provides
all forms of electricity from coal-fired power stations,
hydroelectricity and nuclear power. This sector also includes
the building industry and the construction of office blocks,
houses, roads, airports and dams. This is known as the
country’s infrastructure.
figure 2.14
Transformation from primary to secondary
sector
94
EMS Gr9 LB BOOK.indb 94
usinesses in the tertiary sector supplies services. The
B
services provided by the tertiary sector are essential to
any economy and includes wholesale and retail shops,
banks, insurance companies, property or estate agencies,
restaurants, hotels, train services, taxis, airports,
telecommunication services, e-communication, post
offices, personal services, social services, hospitals and
all government services. The government services include
police, courts, judicial services, sanitation and cleaning
services.
Term 2 • Weeks 8–9 Topic 3 Entrepreneurship
2013/04/25 9:44 PM
economy
The sectors are all linked. For example, a carpenter takes planks of wood
and makes a table. The table is sold to consumers and when the leg breaks
there is a repair service to fix it. We say that goods move through a chain of
production. The sectors of the economy and the chain of production can be
represented as a diagram.
Primary Sector
Secondary Sector
Tertiary Sector
Extraction as
raw material.
Eg: Piece of wood
Raw materials are
processed or
manufactured
Eg: Piece of wood
made into a table
by a carpenter
Final sale to the
consumer
Eg: The table is
sold in a shop
figure 2.15
Chain of production
Some businesses have elements of all sectors in their chain of production and
some choose to specialise. Specialisation means that a producer concentrates
on making specific products, or on providing a narrowly defined service, for
example a baker who only bakes bread.
3
Types of businesses found in each sector
The following table shows examples of the businesses found in each sector of
the South African economy:
The primary sector
The secondary sector
The tertiary sector
Farming
Forestry
Fishing
Mining
Manufacturing
Electricity
Gas
Water supply
Construction/Building
Wholesale and retail
shops
Financial institutions
Restaurants
Transport
Information technology
In the primary sector, mining far outweighs the contribution made by
farming, forestry and fishing. Minerals are called dwindling assets because
once they are removed, they cannot be replaced. South Africa still has the
largest mineral reserves in the world of gold, platinum, manganese and
uranium.
Weeks 8–9 Topic 3 Entrepreneurship • Term 2
EMS Gr9 LB BOOK.indb 95
infrastructure –
roads, schools, parks,
utilities, bridges and
communications
systems in a
community
wholesale – selling
of goods in large
quantities to be
retailed by others
retail – the sale
of goods to the
public for use or
consumption rather
than for resale
e-communication
– electronic
transmission of
information
personal services
– businesses
with the primary
purpose to render a
service directed at
individuals
social services –
organised activity
to improve the
condition of
disadvantaged people
in society
carpenter – a person
who makes and
repairs wooden
objects and structures
dwindling – in the
process of decreasing
or becoming less
until very little or
nothing will remain
95
2013/04/25 9:44 PM
Weeks 8–9
Uranium –
radioactive metal
used as a fuel in
nuclear reactors
Information and
Communication
Technology (ICT)
– systems (e.g.
computers and
telecommunications)
for storing, retrieving,
and sending
information
In the secondary sector our car industry is growing because many
international motor vehicle companies use our natural resources and
assemble their vehicles in South Africa.
In the field of Information and Communication Technology (ICT), South Africa
is recognised as a world leader. The cellular phone and internet markets have
shown growth with 33 million mobile phones and approximately 8,5 million
internet users in the country.
Activity 1
Identify the sectors
Identify the sector of the economy where each element in the picture
belongs.
(10)
4 The interrelationship of the three sectors
While each of the three sectors of the economy operates separately, they are
related and connected to one another. We say they are interrelated.
The primary sector needs goods such as tools, equipment and machinery
manufactured by the secondary sector to carry out activities. They also need
services from the tertiary sector.
figure 2.16
The secondary sector needs raw materials from the primary sector to produce
products and they depend on the tertiary sector for services.
Example of
interrelationship of the
three sectors
The tertiary sector needs manufactured goods from the secondary sector to
use in their businesses and to sell to consumers.
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Activity 2
Poster on the three sectors
In groups of four choose a product or service that you use often and
discuss how the three sectors are involved in the making and selling
of the product or service. Use the information you have to make a
poster to present to the rest of the class.
(20)
5 Sustainable use of resources in the three sectors
Sustainable development means to meet the basic needs of people today
without ruining the chances of future generations to do the same. In South
Africa many people live in poverty. We need economic growth so that our
economy can provide enough resources to help poor people. Environmental
issues are a main concern as more and more people populate the planet
and consume more food and use up more of the earth’s natural resources.
Economic growth is very often at the cost of environmental protection.
The emphasis should be on creating more goods and services using fewer
resources and producing less pollution and waste. Each sector of the
economy has to take responsibility for its own actions and how it affects the
environment.
5.1
Primary sector
More than 80% of South Africa’s land is used for agriculture. This makes it
the sector with the largest impact on natural resources. Many of the resources
in this sector are scarce and we should look after them. We need sustainable
practices to save South Africa’s biodiversity and to make sure that there will
be enough resources for future generations. Sustainable practices make best
use of nature’s resources, including water and land to reduce the sector’s
carbon footprint.
5.2 Secondary sector
Activities in this sector and the products created should not be harmful to
consumers or the environment. Businesses especially factories in this sector
should follow good practices to protect the environment. This sector should
create products of which some materials, after being used, can be re-used or
recycled to make other products.
5.3 Tertiary sector
biodiversity – the
number and variety
of plants and animals
in a particular habitat
or country
carbon footprint
– amount of
greenhouse gases
(carbon dioxide and
other gases that
contribute to global
warming) caused
by an individual or
organisation
Businesses in the tertiary sector should support green issues to sustain the
environment. Green issues means that we must:
●● use less energy and electricity
Weeks 8–9 Topic 3 Entrepreneurship • Term 2
EMS Gr9 LB BOOK.indb 97
97
2013/04/25 9:44 PM
Weeks 8–9
●●
●●
use and support energy efficient and environmentally friendly products
and services
reduce our carbon footprint by recycling.
Activity 3 Examples of businesses in the three sectors
Work in groups to develop practical examples of how businesses in the
three sectors can use natural resources in a sustainable manner. Research
the following categories for possible examples: buildings that are warm
in winter and cool in summer; devices that use little electricity, the right
energy source for the right activity, composting toilets, biogas digesters,
grey waste water systems, rainwater harvesting, landscaping and waste
recycling.
(16)
6 The role of the three sectors in the economy
The following table shows the value that the industries (from the different
sectors) add to our economy:
Industry
Value added (R billion),
2005 prices
Agriculture, forestry and fishing
40 528
Mining and quarrying
96 817
Manufacturing
289 294
Electricity, gas and water
34 734
Construction
58 599
Wholesale and retail trade, hotels and restaurants
239 367
Transport, storage and communication
174 621
Finance, real estate and business services
404 974
General government services
262 627
Personal services
104 676
Activity 4
Create a pie-chart
Use the data provided in the table above and prepare a pie-chart to show
the role of the primary, secondary and tertiary sectors.
(6)
The three sectors play an important role in providing employment to our
growing population. In 2010, the unemployment rate in South Africa was
estimated at 25,3%. Unemployment leads to an increase in social problems,
for example, crime and drug abuse.
98
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Term 2 • Weeks 8–9 Topic 3 Entrepreneurship
2013/04/25 9:44 PM
Activity 5
Conduct a survey
Interview five adults in your community. Ask each of them the same five
questions and then, together as a class, combine your answers and come to
conclusions about the economy in your area. Prepare a short report on your
findings.
Questions:
1 Are you employed/unemployed?
2 If employed, in which sector of the economy do you work? (You
might have to identify the sector on their behalf.)
3 If unemployed, in which sector do you hope to find employment?
4 What is the main source of income (salary, interest, profit, rent,
state allowance) for your family?
5 Which economic sector contributes the most to the area (city
suburb/town/rural area) you live in?
(2)
(2)
(2)
(2)
(2)
7 Types of skills required in each sector
The table below shows the different skills required in the three sectors.
Sector
Skills required and examples of workers
Primary
Physical skills: farm workers, fishermen, miners.
Secondary
Physical and managerial skills: factory workers, builders,
manufacturers, engineers, managers.
Tertiary
Mental, organisational and managerial skills: retailers,
entrepreneurs, financiers, investors, auditors, human
resource managers, information technologists, engineers,
communication operators, lawyers, doctors, nurses,
educators, police, pilots, train drivers
Like the rest of the world, South Africa is moving from the traditional primary
and secondary sectors into the knowledge-based, e-communication and
technological tertiary sector. This requires many of today’s current workers to
be re-skilled or retrained. Many jobs that you might do in the future might not
even exist today!
Weeks 8–9 Topic 3 Entrepreneurship • Term 2
EMS Gr9 LB BOOK.indb 99
knowledge-based –
trends in advanced
economies towards
greater dependence
on knowledge,
information and high
skill levels
99
2013/04/25 9:44 PM
Topic
31
Summary and questions
Summary
●●
●●
●●
●●
●●
●●
●●
●●
There are three sectors in the South African economy, namely the primary,
secondary and tertiary sectors.
The primary sector is the sector in which the initial exploitation of natural
resources takes place.
The secondary sector is the sector in which the processing of primary
goods takes place.
The tertiary sector is the sector in which all the services used in the other
sectors are supplied.
These three sectors are related or connected to one another; this is called
an interrelationship.
The sustainable use of resources in the three sectors is important.
Each of the three sectors plays an important role in the economy.
More physical work and skills are required in the primary and secondary
sectors while more managerial and mental skills are needed in the tertiary
sector.
Questions
Read the following extract from South Africa at 10 published by the World
Economic Forum and answer the questions that follow:
shareholders –
people who invest in
companies by buying
shares and become
part owners
CEO – Chief Executive
Officer
‘The lack of progress in agriculture compared to industry is because
industry has ownership structures which lend themselves more to
transformation than land does. Crucially, ownership and management
have been separated in industries, with shareholders owning the
company and managers running it ... Land, on the whole, is individually
owned and the individual is the CEO of the farm.’
Questions
1 In which sector would you place agriculture? 2 In which sector would you place industry? 3 How does the writer see the difference between ownership and
management in agriculture compared to industry?
4 What do you suggest should happen? (1)
(1)
(4)
(2)
Total marks 8
100
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Topic 3 • Summary and questions
2013/04/25 9:44 PM
Term
2
Data response
Formal Assessment Task (FAT): Data response
1 The table below shows the demand for a pair of jeans at different
prices. Study the table and answer the questions that follow.
Price per pair of jeans
R1 000
R800
R500
R300
Quantity demanded
300
200
100
50
a Describe the relationship between the demand and price in
the table. b Draw the relationship on a graph as shown by your teacher .
2 Study the curve you have drawn and answer these questions:
a How many pairs of jeans will be demanded at R500?
b Why does the curve have this shape?
c What is the law of demand?
(2)
(5)
(2)
(4)
(4)
3 Compare the factors that cause a shift in the demand curve with
those that cause a shift in the supply curve.
(20)
4 Read the economic report below and answer the questions that
follow.
Limited fuel supplies have caused an increase in the price of fuel.
The increase in fuel prices and other production costs has forced
supermarkets to increase the prices of basic foodstuffs. This has
had a negative impact on business performance and consumers.
Supermarkets have been experiencing a drop in sales, since consumers
can no longer afford to buy as many foodstuffs as before. This has
forced supermarkets to reduce the stock of foodstuffs on their shelves.
a What caused the increase in food prices? (4)
b What effect did the increase in food prices have on the
demand?(2)
c How did the lower demand affect the supply? (4)
d Explain in your own words how the scenario in the economic
report illustrates the economic problem (satisfying unlimited
(4)
needs and wants by means of limited resources). Total marks 50
Data response • Term 2
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Term
1
Formal Assessment Task (FAT):
2
Mid-year examination
•
•
Marks: 100
Time: 1 hour
INSTRUCTIONS
1.
This question paper consists of four questions.
2.
Answer ALL the questions.
3.
Read the instructions for each question carefully and answer only what is
required. Use the mark allocation to determine the length of answers.
MARK ALLOCATION
QUESTION
MARKS
1
10
2
27
3
30
4
33
TOTAL
100
QUESTION 1
Choose the correct answer from the ones given and circle the correct one on the
ANSWER SHEET.
1.1 Businesses in the ……… sector includes wholesale and retail shops.
A
primary
secondary
B
C
tertiary
industrialisation
D
1.2 A movement along the demand curve occurs when:
A.
the quantity demanded changes because there was a change in price
B.
fashions change and people want more or less of a product
C.
the price of a product affects the quantity supplied
D.
there are more potential buyers
1.3 The double entry and influence on the accounting equation of the following
transaction:
‘capital contribution by the owner’ is
A.
Dr Capital (O–); Cr Bank (A–)
Dr Capital (O+); Cr Bank (A+)
B.
C.
Dr Bank (A–); Cr Capital (O–)
D.
Dr Bank (A+); Cr Capital (O+)
102
EMS Gr9 LB BOOK.indb 102
[10 marks]
Term 2 • Formal Assessment Task (FAT): Mid-year examination
2013/04/25 9:44 PM
Mid-year examination
2
1.4
Which industry and economic sector benefited most from the 2010 World Cup
Soccer tournament?
A.
tourism; tertiary
motor vehicle; secondary
B.
C.
food processing; secondary
D.
raw materials; primary
1.5The following skills are mostly required in the Secondary sector.
i
Physical
ii
Mental
iii
Managerial
iv
Organisational
A
B
C
D
i and ii
i and iii
i and iv
i, ii and iii
QUESTION 2
[27 marks]
2.1 Calculate:
2.1.1 the SP when the CP is R660 and mark-up % is 50%
(3)
2.1.2 the SP when the CP is R600 and the mark-up is 60%
(3)
2.1.3 the CP when the SP is R67260 and the mark-up is 33 1/3%
(3)
2.1.4 the CP when the SP is R11100 and the mark-up is 25%
(3)
2.2 Which economic system is promoted in the book ‘Das Kapital’?
(2)
2.3 Give the Law of Demand
(3)
2.4 Why is it said that many of today’s current workers need to be re-trained or
re-skilled?
(3)
2.5 In which economic sector would you place a ‘fresh water fish farm’? Motivate
your answer.
(2)
2.6 Which South Africa act stipulates that an agreement with a customer must
be in the language of choice of the customer?
(2)
2.7 Name any three source documents.
(3)
Formal Assessment Task (FAT): Mid-year examination • Term 2
EMS Gr9 LB BOOK.indb 103
103
2013/04/25 9:44 PM
Term
3
2
QUESTION 3
3.1
Demand
[30 marks]
(12)
Supply
S
R
R
D
D
Units
S
Units
Look carefully at the demand graph and the supply graph above. Then
answer the questions below.
3.1.1 How much is demanded when the price is R20?
3.1.2 What is the price when the demand is 50 units?
3.1.3 How much will be supplied when the price is R20?
3.1.4 What will the price be when 20 units are supplied?
3.1.5 What price will the supplier be able to charge if 40 units are demanded?
3.1.6 If the supplier wishes to sell 5 units, what price would he be able to
charge for it?
3.2
EMS Gr9 LB BOOK.indb 104
(2)
Study the factors in the table below. Complete the table by stating what effect
each of the factors will have on demand and supply and price(short term),
i.e. will the demand and supply and price increase, decrease or stay the same?
Factor
Demand Supply
3.2.1 A famous painter dies. How does this
affect the market for his/her paintings
3.2.2 Solar powered cars are replacing petrolengine cars. How does this affect the
market for petrol engine cars?
3.2.3 Wearing black jeans has become a
fashion. What is the effect on the market
for black jeans?
3.2.4 The price of coffee increases. How will
this affect the market for tea?
3.2.5 The income of people who buys fresh
fruit and vegetables increase. How does
this impact on the market for fresh fruit
and vegetables?
3.2.6 There are three car wash businesses
in a town. A fourth car wash business
opens. How does this impact on the
market for washing cars?
104
(2)
(2)
(2)
(2)
(2)
Price






(18)
Term 2 • Formal Assessment Task (FAT): Mid-year examination
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4
QUESTION 4
[33 marks]
Prepare a table with the same headings as the example below. Complete the
columns of the table for each of the transactions as shown in the example. Assume
the bank has a favourable balance (i.e. that it is an asset)
Example:
Transaction: Paid the telephone account by cheque, R457
General Ledger
No. Doc
Cheque
counterfoil
Journal
CPJ
Account
Account
debited
credited
Telephone Bank
Amount
Effect on the
Accounting equation
A
O
L
R457 00 –457 00 –457 00
Transactions
1.
The owner increases her capital contribution from R200 000 to R215 000.
2.
R60 is automatically deducted every month (via debit order) from the
business’s current account to pay the monthly insurance premium to JBay insurance.
3.
Services rendered for cash, R300.
4.
Bought merchandise from Moeng Importers for R2000 and paid by cheque.
5.
Issued a cheque for R400 to Miekie Muis Media for an advert in the paper.
6.
Cash sales, R2800. Profit markup is 40% on the cost price for all products.
7.
Sold goods on credit to N. Befile for R420.
8.
Bought new point-of-sale equipment for the business, R5000
9.
The owner asked for a cheque for R600 to pay her personal water and
electricity account to the municipality.
10. The business obtained a loan, for R10000, from London Bank for future
expansion. The money was deposited in the business’s current bank account.
GRAND TOTAL: 100
Formal Assessment Task (FAT): Mid-year examination • Term 2
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Term
31
106
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107
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Term
31
Introduction
Topic 1 The economy: Trade Unions
Trade Unions have played an important role in South Africa since the 1880s. They have had both a
political and economic effect on the development of South Africa, both during the apartheid era,
and since our first democratic elections. In this topic you will learn about trade unions and the
contribution they have made to growth and development.
Topic 2 Financial literacy: Credit transactions – debtors
In this section you are going to post credit sales to the Debtors Ledger and General Ledger and also
see what the effects of credit transactions are on the accounting equation.
Topic 3 Financial literacy: Credit transactions – creditors
If a retailer/business does not have enough cash in the bank to pay for the goods they can buy goods
or services on account or on credit. This means the business can buy something today but only pay
for it later. In this section you will learn how to enter credit purchases and purchases returned in the
accounting records of a business.
Topic 4
Entrepreneurship: Functions of a business
In this topic you will learn about the business functions: administration, purchasing, marketing,
finances, public relations, human resources, production and general management. You will also
learn about risk management and the characteristics, role and importance of the business functions.
Topic 5 Financial literacy: Credit transactions – creditors
In this topic you will explore payments to creditors. A creditor is a business or person to whom
money is owed as goods or services were purchased on credit. The business will receive an account
statement from the creditor showing the total amount owed, the amount that must be paid and the
credit terms. Creditors are paid by cheque or EFT and the transaction is recorded in the CPJ.
108
EMS Gr9 LB BOOK.indb 108
Term 3 • Introduction
2013/04/25 9:44 PM
Term 3
Revision: Week 1
Revision exercise 1 p110
Revision exercise 2 p110
Revision exercise 3 p111
Topic 1
Topic 2
Topic 3
Topic 4
Topic 5
The economy:
Trade Unions
Financial
literacy:
Credit
transactions –
debtors
Financial
literacy:
Credit
transactions –
creditors
Entrepreneurship:
Functions of a
business
Financial
literacy:
Credit
transactions –
creditors
Week 2
Weeks 2–5
Weeks 6–8
Weeks 6–8
Weeks 9–10
1 Introduction
p112
2 The concept
of trade
unions p112
3 Brief historical
development
of trade
unions p112
4 Roles and
responsibilities
of trade
unions p118
5 The effect of
trade unions in
businesses
p125
6 Contribution
of trade unions
to sustainable
growth and
development
p127
1 Introduction
p114
2 Posting to the
Debtors Ledger
and General
Ledger p114
3 Effect of
credit sales
and receipts
from debtors
transactions on
the accounting
equation p130
4 Posting the DAJ
to the Debtors
ledger and
the General
Ledger p131
5 Effect of
debtors
allowance
transactions on
the accounting
equation p135
1 Introduction
p139
2 Creditors p139
3 Creditors
allowances
p139
4 Accounting
cycle p140
5 Recording of
transactions in
the Creditors
Journal
(CJ) p148
6 Recording of
transactions in
the Creditors
Allowance
Journal
(CAJ) p150
1 Introduction
p141
2 The business
functions p141
3 Risk
management
p154
4 Characteristics
of the business
functions p154
5 Role and
importance of
the business
functions p154
1 Introduction
p158
2 Recording of
payment to
creditors in the
Cash Payments
Journal (CPJ)
p158
3 Posting to
the Creditors
Ledger and
Gerneral Ledger
p159
4 Effect of credit
transactions on
the accounting
equation p168
5 Posting the CAJ
to Creditors
ledger and the
General
Ledger p170
6 Effect of
creditors
allowances on
the accounting
equation p175
Introduction • Term 3
EMS Gr9 LB BOOK.indb 109
109
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Week
1
Revision
Revision exercise 1
Credit transactions – debtors
Using the transactions given below, you are required to complete the table, using the headings
Date, Journal, Document and Amount.
August 20.10
Mr Zama is a debtor with Khumalo Stores and he owes the business R400.
3 Bought trading stock for R1 200 less 5% trade discount.
7 Sold goods to Mr Zama on account – R660 (mark-up is 50%)
11 Earned 3 months interest on fixed deposit. The fixed deposit invested was R10 000 and the
interest rate is 6% p.a. The amount was deposited directly into the business account as per the
bank statement
16 Goods with a cost price of R5 000 were sold for cash and the mark-up is 40%.
21 Mr Zama bought more goods on account – SP was R900 and the CP was R550
28 Mr Zama paid Khumalo stores the full amount he owed them.
29 Mr Zama bought more goods on account – SP was R1 200 and the CP was R750
30 The staff are paid a salary of R12 500. This month they received an increase of 5%. Payment
was made taking the increase into account
31 Mr Zama returned some of the goods purchased account – SP was R600 and the CP was R375.
Total marks 20
Revision exercise 2
Price theory
It is a very hot day at the rugby and the refrigerators in the tuck shop are out of order. There are no
cold soda drinks available. Akho and Siya decide to make a plan. They buy 24 cans of warm soda
drinks from the tuck shop at R5 per can and put them in tubs with water and dry ice. They carry
the tubs around and announce to the spectators that they have 24 ice-cold soda drinks available.
The spectators are so eager for cold soda drinks that they start offering them more than the R10 per
can they are charging. They sell the last two cans for R15 each and many of the spectators have to
be turned away.
1 Read the extract above and answer the questions that follow:
a Was the demand for the cold soda drinks high or low on the hot day at the rugby?
b Only Akho and Siya could supply cold soda drinks. What role did they play in
economic terms?
c Why were Akho and Siya able to increase the price of their soda drinks?
d Do you think Akho and Siya could keep putting up their prices as they like?
e Explain how prices influence demand and supply. (2)
(4)
(4)
(4)
(4)
Total marks 18
110
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Term 3 • Revision
2013/04/25 9:44 PM
Revision exercise 3 Sectors of the economy
Read the following extract from Wikipedia on the South African economy and answer the
questions that follow.
‘The domestic telecommunications infrastructure provides modern and efficient service to urban
areas, cellular and internet services. In 1997, Telkom, the South African telecommunications
parastatal, was partly privatised and entered into a strategic equity partnership...Five cellular
companies provide service to over 20 million subscribers, with South Africa considered to have
the 4th most advanced mobile telecommunications network worldwide. The five major cellular
providers are Vodacom, MTN, Cell C, 8ta (owned by the parastatal Telkom) and Virgin Mobile.’
1 To which sector does telecommunications belong? (1)
2 Quote a sentence from the above extract which shows that South Africa is not behind
the rest of the world? (2)
3 Is it necessary for the South African economy to improve telecommunications? Why do
you say so?
(2)
4 How do you know that there is competition amongst the suppliers of cellular phones in
South Africa? (2)
5 Which cellular phone provider do members of your family use? If you are not sure, ask
them.(2)
6 How does a cellular phone assist you and/o your family on a daily basis? (1)
Total marks 10
Revision • Term 3
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Week
Topic
2
Key terms
collective
bargaining
Constitution
grievance
industrial action
labour federations
lock-out
mass action
negotiate/
negotiations
NUM
office-bearer
protected strike
registered
retrenchment
strike
sustainable
development
trade union
United Nations
Organisation
industry – a
particular form or
branch of economic
or commercial
activity, for example
the tourist industry
slaves – people who
were bought and sold
for labour
peasants – people
who worked on the
land.
guilds –
organisations which
managed the training
of artisans and
defended their rights
in the workplace
112
EMS Gr9 LB BOOK.indb 112
Topic 1 The economy: Trade Unions
1
Introduction
Trade Unions have played an important role in South Africa since the 1880s.
They have had both a political and economic effect on the development of
South Africa, both during the apartheid era, and since our first democratic
elections. In this topic you will learn about trade unions and the contribution
they have made to growth and development.
2 The concept of trade unions
The term union means to come together, and the term trade refers to a
common set of skills or crafts. A trade union is therefore a group of employees
from a particular industry, trade or occupation who come together to regulate
relations between themselves and their employers. Trade unions in South
Africa have to meet certain criteria in order to register and function as a
legitimate trade union.
3 Brief historical development of trade unions
Employers and employees did not always have an agreement that employees
would work and that employers would pay for the work. In earlier years,
owners had slaves who worked for nothing more than food and lodging. The
relationship between landowners and the peasants, who lived on the land,
was much the same; the peasants were essentially owned by the landowners
and never rewarded financially for the work they did. The only exceptions
were the people who belonged to guilds. The guilds were organisations which
managed the training of artisans and defended their right to work and be
paid.
As a result of the Industrial Revolution in Europe (from the late 1700s
onwards), many people moved to towns to work in the factories. The
people from the working class lived and worked in poor conditions where
overcrowding and malnutrition were common. They soon started to organise
themselves to oppose their employers and demand better working conditions.
These early forms of trade unions were banned everywhere until the middle
of the 1800s.
Term 3 • Week 2 Topic 1 The economy
2013/04/25 9:44 PM
Trade unions started in South Africa during the 1880s. Originally, the trade
unions were almost only for white mine workers.
In 1922, the Rand Rebellion broke out in South Africa when white mine
workers protested against the mining companies importing Chinese workers
to work on the mines. They believed these workers would replace them
because they would be prepared to work for lower wages. After this event
many black mine workers also joined trade unions. In terms of the laws of the
country at that time, unions for white and black miners had to be separate.
The trade union for black miners was legal, but could not be registered. This
meant that black minors were not really represented at all.
Industrial Revolution
– when goods were
processed/made
in factories using
machinery
malnutrition – not to
have enough food to
survive
banned – unable to
exist/operate
In 1948, the National Party came into power as the government in South
Africa and introduced the policy of apartheid. In this system of government
black people had no formal political power and used their trade unions as
a political voice. The unequal treatment of people based on race continued
until the democratically elected government came to power in 1994. Workers
from all race groups now have the right to join a trade union to look after their
interests.
Rand Rebellion –
A group of miners
went on a violent
strike against
their treatment in
the mines of the
Witwatersrand (now
Gauteng)
The Congress of South African Trade Unions (Cosatu) is the biggest of South
Africa’s main labour federations. Cosatu aligns itself with the African
National Congress and together with the South African Communist Party they
form the tripartite alliance.
democratically
elected – when all
people vote
aligned – to bring
into cooperation or
agreement with a
particular group,
party or cause
tripartite alliance
– an association or
agreement with three
parties
Figure 3.1
The Industrial Revolution
Week 2 Topic 1 The economy • Term 3
EMS Gr9 LB BOOK.indb 113
113
2013/04/25 9:44 PM
Week
Topic
2
Topic 2 Financial literacy: Credit transactions
1
Introduction
In this topic you are going to post to the Debtors Ledger and General Ledger
and also see what the effects of credit transactions are on the accounting
equation.
2
Posting to the Debtors Ledger and General Ledger
When a transaction takes place between a business and a debtor, a document
with at least the following information is issued:
●●
●●
●●
●●
Name of the debtor
Date of the transaction
Nature/type of transaction
An amount
The original document issued will be handed to the debtor and the duplicate
document will be used to enter the transaction in a journal as book of first
entry:
●●
●●
If money (cash/cheque/EFT) his received from the debtor as payment on
the account – issue a receipt and use the duplicate receipt to enter the
transaction in the CRJ.
From a credit sale to a debtor – issue a credit invoice and use the duplicate
credit invoice to enter the transaction in the DJ.
2.1 Posting to the Debtors Ledger
The Debtors Ledger is a subsidiary ledger containing separate accounts
for each debtor. The individual account of each debtor summarises all
transactions related to that debtor and indicates the amount owed to the
business.
Individual entries with debtors are posted on a daily basis from the journals
to the debtors ledger.
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EMS Gr9 LB BOOK.indb 114
Term 3 • Week 2 Topic 2 Financial literacy
2013/04/25 9:44 PM
– debtors
The format of the debtors ledger is as follows:
DEBTORS LEDGER OF name of business
Name of debtor
Fol
Debit
Date Details
Name of debtor
Fol
Debit
Date Details
Credit
Fol: D1
Balance
Credit
Fol: D2
Balance
These are the important elements to remember when posting to the Debtors
Ledger:
●● The journal entry is posted to the individual account of the debtor on the
day it takes place.
●● The source document and number is indicated in the details column.
●● The folio column has the folio number of the journal from which the
transaction is posted. The relevant debtor’s folio number is entered in the
journal as reference to which account it was posted.
●● Credit purchases will increase the amount the debtor owes (assets
increase). The debtors account is debited.
●● Payments on the debtors account will decrease the amount the debtor
owes (assets decrease). The debtors account is credited.
Dr
+
●●
●●
●●
●●
Asset
Cr
–
The balance will be calculated as follows after each new entry:
●● Opening balance + Debit entry = Closing balance
●● Opening balance – Credit entry = Closing balance
If the debtor owes money to the business it is written in as an opening
balance on the first day of the month as account rendered.
On the last day of the month a list is compiled of all the end balances as
owed by debtors. This list is called the debtors list.
The total of the debtors list must equal the end balance of the debtors
control account in the General Ledger. This is done as a control measure to
make sure that all transactions have been posted.
Week 2 Topic 2 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 115
115
2013/04/25 9:44 PM
Week
2
Example 1
The debtors list of Bombay Stores indicates that Jay Pillay (D1) and Sarveshni Naidoo (D2)
respectively owe R350 and R600 on 1 June 2012. During the month, the following transaction took
place.
3 Jay purchased R400 stock on account and was issued invoice X23. The cost of sales is R250.
7 Sarveshni purchased goods on credit, R500 and was issued invoice X24. The cost of sales is
R300.
10 Jay paid R250 in part settlement of his account and was issued receipt Y21.
20 Jay purchased R600 on account – invoice X25. The cost of sales is R350.
24 Sarveshni purchased goods on credit, R700 and was issued invoice X26. The cost of sales is
R400.
30 Jay made a direct deposit of R? to pay the amount owed on the 10th. The accountant
discovered this payment on bank statement 6 and issued receipt Y22.
Sarveshni paid the amount owed on 1 June 2012 and receipt Y23 was issued.
You are requested to:
1 Enter these transactions in the journals of Bombay Stores for June 20.12.
2 Post the journals for June 20.12 to the debtors ledger.
3 Compile a debtors list on 30 June 20.12.
Suggested Solution:
DEBTORS JOURNAL BOMBAY STORES – JUNE 20.12
Debtor
DJ6
Doc
Date
X23
3
Jay Pillay
Fol
Sales
400 00
Cost of Sales
250 00
X24
7
Sarveshni Naidoo
500 00
300 00
X25
20
Jay Pillay
600 00
350 00
X26
24
Sarveshni Naidoo
700 00
400 00
2 200 00
1 300 00
CASH RECEIPTS JOURNAL OF BOMBAY STORES – JUNE 20.12
Doc
Date Details
Y21
10
Jay Pillay
Y22
30
Jay Pillay
Y23
116
EMS Gr9 LB BOOK.indb 116
Sarveshni
Naidoo
Fol
Analysis of
Receipts
250 00
600 00
Bank
Sales
CRJ6
Cost of
Sales
Debtors
Control
250 00
250 00
500 00
500 00
600 00
600 00
1 350 00
1 350 00
Sundry accounts
Amount
Fol
Details
Term 3 • Week 2 Topic 2 Financial literacy
2013/04/25 9:44 PM
DEBTORS LEDGER OF BOMBAY STORES
Jay Pillay
Date
2012
June
D1
Details
Fol
1
Account rendered
3
Invoice X23
DJ6
10
Receipt Y21
CRJ6
Debit
Credit
Balance
350 00
20
Invoice X25
DJ6
30
Receipt Y22
CRJ6
400 00
750 00
250 00
600 00
500 00
1 100 00
500 00
600 00
Sarveshni Naidoo
2012
June
D2
1
Account rendered
600 00
7
Invoice X24
500 00
24
Invoice X26
700 00
30
Receipt Y23
1 100 00
1 800 00
600 00
1 200 00
DEBTORS LIST OF BOMBAY STORES ON 30 JUNE 20.12
Date
Debtor
Fol
Jay Pillay
D1
Sarveshni Naidoo
D2
Debit
Credit
600 00
1 200 00
1 800 00
Calculation of amount owed on 10 June 20.12:
Dr
Jay Pilaay
350 00
Cr
250 00
400 00
Activity 1
Completing the Debtors Ledger
Use the information below to complete the debtors ledger account of Jo
Acutt, a debtor with Prop Stores for June 20.10.
June:
1
5
11
14
Jo owes Prop Stores R1 350.
Jo buys more goods on account – R490 (CP is R320). Inv C24
Jo pays R500 in part settlement of her account. Rec R33
Inv C33 issued to Jo for stock to the value of R890 bought on account
(CP R600)
19 A direct deposit is made by Jo of R625 – as per bank statement.
23 Jo buys R200 of stock and pays cash for this. (CP is R125)
30 Jo settles her account in full. Rec R44
(20)
Week 2 Topic 2 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 117
117
2013/04/25 9:44 PM
Week
3
Topic 1 The economy: Trade Unions
4 Roles and responsibilities of trade unions
The most important functions of trade unions are to:
●●
●●
●●
●●
●●
●●
represent the rights of employees in a particular industry
offer advice to employees on labour legislation
participate in collective bargaining (negotiations) with employers on
behalf of employees over issues such as better wages, benefits and
working conditions
negotiate on behalf of employees in the event of disagreement with
employer over wages, benefits or working conditions
represent employees in disciplinary issues
join labour action within an industry.
Trade unions have the right to:
●●
●●
●●
●●
●●
●●
picketing – the
act of protesting
outside a building by
unionised workers
who either are on, or
are trying to gather
support for, a strike
●●
negotiate with employers on behalf of its members
visit the employer’s workplace to meet with its members
ask employers to deduct membership fees from the workers’ wages
use the workplace for members to elect union representatives
give information to be used in the collective bargaining process
call a protected strike which means that striking workers cannot be
dismissed, but they do not receive pay while they are on strike
call for any other industrial action such as picketing and go-slow.
go-slow – a form of
protest by workers
in which they
deliberately slow
down in order to
reduce productivity
and thus affect
the profit of their
employers
Figure 3.2 Striking workers
118
EMS Gr9 LB BOOK.indb 118
Term 3 • Week 3 Topic 1 The economy
2013/04/25 9:44 PM
Trade unions have the responsibility to:
●●
●●
●●
●●
●●
●●
register with the Registrar of Trade Unions – only registered trade unions
may take part in industrial action
write a constitution
ensure that the constitution does not discriminate against members on the
basis of race or gender
function as non-profit-making bodies
inform members about how their membership fees are used
ensure that members know and apply rules about meetings and the
election of office-bearers.
constitution – a list
of the basic ideas
and values that
an organisation
or country uses to
determine how it
operates or runs
Activity 1 Workers’ rights
Divide into groups and role-play the following situation:
You work in the Choc-Choc factory of Mr Raymond Crunch. One day the
toffee machine breaks down and Mr Crunch blames one worker, Lungile.
He is dismissed. The next day the other workers meet with their trade
union representative and tell Mr Crunch that they will be on strike until
Lungile is re-employed.
Role-play the meeting between the workers. The trade union
representative and Mr Crunch. The final decision will be whatever
you decide in your group.
(10)
Week 3 Topic 1 The economy • Term 3
EMS Gr9 LB BOOK.indb 119
119
2013/04/25 9:44 PM
Week
3
Topic 2 Financial literacy: Credit transactions
2.2
Posting the DJ and CRJ to the General Ledger
The debtors control account in the General Ledger is a summary of all the
transactions between all the debtors and the business as posted to the
Debtors Ledger.
Debtors list:
D1
R100
R200
D2
D3
R300
R600
The debtors control account (current asset) will be opened on the first day of
the month with the balances owed by all debtors as indicated in the debtors
list.
Debtors control
Cr
Dr
Jun. 01 Balance b/d
R600 00
–
On the last day of the month the journals are totalled and the column totals
are posted to the General Ledger following the rules of the accounting
equation:
●● The sales column total in the DJ is posted to the debit side of debtors
control (A+) and to the credit side of sales (E+).
●● The cost of sales column total in the DJ is posted to the debit side of cost of
sales (E–) and to the credit side of trading stock (A–).
●● The debtors control column total in the CRJ is posted to the debit side of
bank (A+) and to the credit side of debtors control (A–).
Example 2
The following information was taken from the accounting records of ISC Stores during July 20.09:
Balances on 1 July 20.09:
Debtors control
Trading stock
Sales
Cost of sales
B7
B8
N1
N2
R10 300
R29 600
R128 000
R102 400
Debtors’ balances on 1 July 20.09:
Alfred Abrahams
B Benjamin Botha
Charlotte Caymans
120
EMS Gr9 LB BOOK.indb 120
D1
D2
D3
R3 600
R4 800
R1 900
Term 3 • Week 3 Topic 2 Financial literacy
2013/04/25 9:44 PM
– debtors
CASH RECEIPTS JOURNAL OF COMPUTER MECCA – JULY 20.09
Doc Date Details
03
09
Fol
Analysis of
Receipts
Alfred
Abrahams
1 200 00
04
Charlotte
Caymans
1 300 00
05
Benjamin
Botha
980 00
09
27
Alfred
Abrahams
380 00
10
28
Benjamin
Botha
700 00
Charlotte
Caymans
800 00
11
Bank
Sales
CRJ4
Cost of
Sales
Debtors
Control
Sundry accounts
Amount
Fol
Details
1 200 00
2 500 00
1 300 00
980 00
380 00
380 00
700 00
1 500 00
800 00
58 980 00 26 800 00 21 440 00
5 360 00
CASH PAYMENTS JOURNAL OF COMPUTER MECCA – JULY 20.09
Doc
Date Name of payee
Fol
Bank
85 880 00
Trading
stock
CPJ4
Sundry Accounts
Amount
Fol
Details
38 000 00
DEBTORS JOURNAL OF COMPUTER MECCA – JULY 20.09
Doc
Date
100
03
Alfred Abrahams
1 860 00
1 488 00
101
05
Charlotte Caymans
1 990 00
1 592 00
102
08
Alfred Abrahams
980 00
784 00
400 00
320 00
15
Gina Grové
6 400 00
5 120 00
Alfred Abrahams
1 280 00
1 024 00
103
104
Benjamin Botha
105
106
Debtor
DJ4
23
Benjamin Botha
Fol
Sales
Cost of Sales
890 00
712 00
13 800 00
11 040 00
You are requested to:
1 Open the General Ledger accounts as given with the opening balances on
1 July 20.09.
2 Post the journals of July 20.09 to the General Ledger accounts and balance the accounts at
month end.
3 Open the accounts of the individual debtors with the amounts owed by them on 1 July 20.09.
4 Post the journals of July 20.09 to the subsidiary ledger accounts
5 Compile a debtors list on 31 July 20.09.
Week 3 Topic 2 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 121
121
2013/04/25 9:44 PM
Week
3
Suggested solution:
General Ledger of ISC Stores
Balance sheet accounts
Date
Details
Fol
Dr
20.09
Jul
Amount
Date
Details
Fol
DEBTORS CONTROL
01
Balance
b/d
20.09
10 300 00 Jul
31
Sales
DJ6
13 800 00
01
Balance
b/d
18 740 00
B7
31
Dr
20.09
Jul
CRJ6
5 360 00
Balance
c/d
18 740 00
24 100 00
Trading Stock
01
Balance
b/d
20.09
29 600 00 Jul
31
Bank
CPJ6
38 000 00
B8
31
01
Balance
b/d
Cr
Cost of sales
CRJ6
21 440 00
Cost of sales
DJ6
11 040 00
Balance
c/d
67 600 00
Aug
Cr
Bank
24 100 00
Aug
Amount
35 120 00
67 600 00
35 120 00
Nominal accounts
Dr
Sales
20.09
Jul
01
N1
Cr
Balance
b/d
128 000 00
Bank
CRJ6
26 800 00
Debtors control
DJ6
13 800 00
168 600 00
Dr
20.09
Jul
Cost of Sales
01
Balance
b/d
102 400 00
Trading Stock
CRJ6
21 440 00
Trading Stock
DJ6
N2
Cr
11 040 00
134 880 00
DEBTORS LEDGER OF ISC Stores
Alfred Abrahams
Date
20.09
Jul
122
EMS Gr9 LB BOOK.indb 122
D1
Details
Fol
01
Account rendered
03
Invoice 100
DJ6
09
Receipt 03
CRJ6
Debit
Credit
Balance
3 600 00
1 860 00
5 460 00
1 200 00
4 260 00
08
Invoice 102
DJ6
980 00
5 240 00
15
Invoice 105
DJ6
1 280 00
6 520 00
27
Receipt 09
CRJ6
380 00
6 140 00
Term 3 • Week 3 Topic 2 Financial literacy
2013/04/25 9:44 PM
Benjamin Botha
20.09
Jul
D2
01
Account rendered
08
Invoice 103
DJ6
4 800 00
09
Receipt 05
CRJ6
23
Invoice 106
DJ6
28
Receipt 10
CRJ6
400 00
5 200 00
980 00
4 220 00
700 00
4 410 00
890 00
5 110 00
Charlotte Caymans
20.09
Jul
01
Account rendered
05
Invoice 101
D3
1 900 00
DJ6
1 990 00
3 890 00
09
Receipt 04
CRJ6
1 300 00
2 590 00
28
Receipt 11
CRJ6
800 00
1 790 00
Gina Grové
20.09
Jul
15
D4
Invoice 104
DJ6
6 400 00
6 400 00
DEBTORS LIST OF ISC Stores on 31 July 20.09
Date
Debtor
Fol
Debit
Alfred Abrahams
D1
6 140 00
B Benjamin Botha
D2
4 410 00
Charlotte Caymans
D3
1 790 00
Gina Grové
D4
6 400 00
Credit
18 740 00
Activity 2 Posting to the ledger accounts of Underberg
Dealers
Use the information below to complete the CRJ, CPJ, DJ and Debtors Ledger
of Underberg Dealers for May 20.10. You are also required to post to the
ledger accounts given below.
On 1 May the following balances were given for the debtors of the shop.
B Jeffers: R 840; M Mhlongo: R 1220; C Naicker: R 2100.
Bank
R18 200
Debtors control
R4 160
Trading stock
R9 450
Sales
R253 000
Cost of sales
R188000
Activity 2 continues 
Week 3 Topic 2 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 123
123
2013/04/25 9:44 PM
Week
3
Activity 2 (continued)
May:
1 Trading stock was running out, so stock to the value of R5 500 was
bought from Rhino Cash and Carry.
Paid the staff wages with a cash cheque. R1 500
3 Cash sales amounted to R3 520 (Mark up is 60%).
Sold R300 of stock to Mr Jeffers on account. (CP R200)
4 Received and deposited interest of R100 on fixed deposit.
7 Ms Mhlongo paid R750 in part settlement of her account.
Total cash sales amounted to R4 000. (CP R2 700)
8 Paid the wages with a cheque.
9 Purchased stationery from CAN for R320.
11 Mr Naicker settled the amount he owed in full by making a direct
deposit into our bank account.
Sales for the last few days amounted to R2 100. (CP was R1 300)
12 Issued a cheque to Metro for R7 800. R1 300 was for equipment and the
balance for trading stock.
14 Ms Mhlongo purchased R730 of stock on account. (CP is R420)
Mr Jeffers paid R350 in part settlement of his account.
17 Paid the wages.
Issued a cheque to Telkom for the telephone account of R630.
19 Cash sales amounted to R6 200. (CP is R4 000)
Issued an invoice to Mr Jeffers for R500. (CP R300)
21 Issued a cash cheque for stationery R320.
22 Mr Naicker purchased more stock from the store on account. R490
(CP R300)
24 Paid the wages.
27 Ms Mhlongo settled her account in full.
Cash sales amounted to R4 150. (CP is R2 500)
Rent income was received from the tenant. R2 000
30 Bank charges amounted to R90 as per bank statement
Paid for more stock from Makro by cheque. R4 100
Mr Naicker purchased a large quantity of stock for R900 on account.
He was given a 10% trade discount. (CP was R500)
(110)
124
EMS Gr9 LB BOOK.indb 124
Term 3 • Week 3 Topic 2 Financial literacy
2013/04/25 9:44 PM
Weeks 4–5
Topic 1 The economy: Trade Unions
5 The effect of trade unions in businesses
The relationship between trade unions and business has two sides.
Businesses (employers) need labour (employees) to do the work. Employees
need employers because they need money to pay for their needs. It is always
in the interest of both parties that they agree, but in the real world this does
not always happen.
Employers and employees argue about pay, hours of work and other rules
and conditions of employment. Employers would like to get the maximum
work out of their employees, while paying as little as possible for the work.
Employees, on the other hand, would like to earn as much money as possible
for the work they do. This is the tension between the two parties.
Here is an example from mining about how trade unions negotiate with
business:
●●
●●
●●
●●
●●
●●
●●
●●
●●
●●
●●
Mine workers in South African mines can join the National Union of
Mineworkers (NUM) to help them fight for their rights as workers.
If the mines offer a 5% wage increase, but workers want a 10% increase,
they call on their union to fight for better wages.
The union enters into negotiations with the employers.
This process where the two sides (employers and the trade unions) try to
agree is called collective bargaining.
The trade union puts forward a grievance or complaint from the miners.
The Chamber of Mines, who represents the mining companies, has its own
representative.
If the two sides cannot reach an agreement, both groups have other tactics
or methods they can use.
Employees can strike until there is a solution. Employers can use lockout to force workers to accept an offer. This effects both sides because
employers cannot produce any goods and employees get no money to pay
for things they need.
Strikes and lock-outs are industrial actions.
Sometimes many employees from different industries strike at the same
time.
This is called a wide-spread strike or mass action.
Week 4–5 Topic 1 The economy • Term 3
EMS Gr9 LB BOOK.indb 125
negotiate/
negotiations – two
groups discuss
possible solutions to
a problem
125
2013/04/25 9:44 PM
Weeks
Topic 44–5
–
15
Activity 2 Mining industry strikes
Read the following two extracts and answer the questions that follow.
Extract 1
On 12 August 1946, more than 60 000 mineworkers began a week-long
strike to shake the mining industry. The stoppage was one of the biggest
in South Africa until the workers’ movement took off in the 1970s. For the
first time, mineworkers used a trade union to organise their strike. They
demanded a living wage, a healthy workplace, more money for injured
workers and an end to the system of migrant workers. At the end of those
five brave days, at least 12 workers lay dead. Most of the strikers were
driven back to work at gunpoint.
1
2
3
4
Which group of workers decided to strike?
Why did they use their trade union to organise a strike?
What did the workers demand?
How did the strike end?
(2)
(2)
(2)
(2)
Extract 2
On 17 August 2012 (nearly 66 years later):
News cameras captured horrific images of riot police gunning down
dozens of striking workers at a South African platinum mine yesterday, in a
“bloodbath” that recalls some of the worst of that country’s apartheid-era
protests. Government sources confirmed that at least 34 protesters were
killed in the deadliest police incident since white rule of the country ended
almost 20 years ago.
The shooting was not the first violent incident at the Marikana mine since
about 3,000 workers went on strike a few days earlier, demanding pay
raises that they say had been promised but not received. At least ten people
had already been killed as workers who attempted to cross the lines were
attacked and two police officers were reportedly murdered by angry mobs.
The company that owns the mine had threatened to fire all the workers
unless they returned to their shifts, insisting that the strike was illegal.
1 Do some research on this incident to find out why the workers
striked.
2 Who were the parties involved in the negotiations to end the strike?
3 Why was the strike by workers regarded as an ‘illegal strike’?
4 What are similar between the two events?
126
EMS Gr9 LB BOOK.indb 126
(4)
(4)
(4)
(4)
Term 3 • Weeks 4–5 Topic 1 The economy
2013/04/25 9:44 PM
6 Contribution of trade unions to sustainable growth
and development
Since 2007, there have been many strikes throughout South Africa as workers
demand higher wages. Many people suggest that this is preventing job
growth. In 2010, trade unions organised a four-week national strike.
Over 1,3 million workers joined the strike and demanded a 8.,6% wage
increase. The majority of these workers were employed by the government
and the strike only came to an end when the government agreed to increase
wages to 7,5%. Generally, wage increases are followed by price increases so
workers find themselves no better off.
Sustainable development is measured by economic growth, human
development and environmental protection. By ensuring that employees
are treated with professional respect and are earning what they should be
earning our trade unions are setting the base for sustainable growth and
development.
Due to high levels of national unemployment, especially among the youth,
South Africa is faced with numerous challenges. The two major causes
of unemployment are the low levels of skills or a lack of skills, and the
mismatch between skills and the labour market demands. Trade unions have
taken the initiative to deal with these challenges with a specific focus on job
creation and employee training. As a result the LJCT (Labour Job Creation
Trust) was formed by Cosatu, Fedusa and Nactu.
For the country to have sustainable growth and development, more
employment opportunities for the poor are needed and the labour market has
to be transformed. The key factors to sustain growth and development are:
●●
●●
●●
●●
●●
●●
More labour-intensive production
Increased education and training of people to enable them to find
employment and have sustainable livelihoods.
Investment in housing, electricity and water.
Trade unions should continue to help workers fight against unfair
dismissals and/or retrenchment.
Farm workers and domestic workers are now protected in terms of the new
Labour Relations Act.
The most poverty-stricken population are women in rural areas and wages
in the farming areas need to be improved.
There is an urgent need to take steps to end poverty in rural areas. The very
poor are living on incomes of less than R178/month (2012).
Weeks 4–5 Topic 1 The economy • Term 3
EMS Gr9 LB BOOK.indb 127
127
2013/04/25 9:44 PM
Topic
1
Summary and questions
Summary
●●
●●
●●
●●
●●
A trade union is a group of employees from a particular industry, trade or
occupation who join forces to regulate relations between themselves and
their employers.
Trade unions have a long history in South Africa of fighting for the rights
of workers. Today all workers in South Africa have the right to join a
trade union and trade unions may not exclude people according to racial
classification.
Trade unions in South Africa have to follow roles (e.g. represent the rights
of employees), rights (e.g. enter into talks with employers on behalf of its
members) and responsibilities (e.g. register with the Registrar of Trade
Unions).
There are two sides to the relationship between trade unions and business.
Business or employers need labour or employees to work. Employees need
employers because they need paid work/jobs. It is always in the interest of
both parties if employers and employees agree.
For the country to have sustainable growth and development, there must
be more employment opportunities for the poor and the labour market has
to be transformed.
Questions
1 Are trade unions advantageous to workers/employees or bosses/
employers? Why do you say so? 2 What is the key role of a trade union? 3 What are workers able to do if negotiations fail? 4 What are employers able to do if negotiations fail? 5 Do workers receive a wage when they are on strike? 6 Are workers dismissed when they go on strike? (4)
(2)
(2)
(2)
(2)
(2)
Total marks 14
128
EMS Gr9 LB BOOK.indb 128
Topic 1 • Summary and questions
2013/04/25 9:44 PM
Weeks 4–5
Topic 2 Financial literacy:
Credit transactions – debtors
Activity 3 Posting to the ledger accounts of Waterlea Stores
Use the information below to complete the DJ, CRJ, CPJ and Debtors Ledger
of Waterlea Stores for June 20.10. You then need to post to the selected
ledger accounts given below.
The opening balances and totals on 1 June 20.10 are as follows:
Bank
Trading stock
Debtors control
Sales
Cost of sales
Wages
R6 300
R13 240
R3 400
R190 000
R135 000
R33 000
On 1 June Mr Bartho owed the shop R2 150 and Ms Lord owed R1 250.
Transactions:
1
3
4
5
Bought more stock from Tam Dealers for R10 000. (Cheque CC32)
A Lord bought R900’s worth of stock on account – Inv X55. (CP R500)
Issued a cash cheque for wages R1 000.
B Bartho paid R1 000 in part settlement of his account. (Rec R18)
Cash sales amounted to R5 000 (CP R3 000)
8 Bought stationery from CAN Stores for R240
10 Issued a cheque to Cradock Wholesalers for R3 400. R3 000 was for
stock and the balance for consumable stores.
12 A Lord paid R500 in part settlement of her account by making a direct
deposit in the business bank account.
Cash sales of R3 450 were recorded. (CP R2 000)
14 Paid wages with a cash cheque.
18 Interest on the bank account of R125 was shown on the bank statement
from Standard Bank
21 Paid wages.
23 The owner issued a cheque to Telkom for R1 200. R800 was for the
business telephone and the balance was for his private telephone.
24 Sold more goods on account to Mr Bartho for R1 250. (CP R750)
Ms Lord also purchased R1 500 of stock (CP R900) – due to the amount
she was granted a 10% trade discount.
25 An advertisement was placed in the local newspaper – a cheque for
R500 was issued to the Natal Mercury.
29 Due to the success of the advertising campaign sales amounted to
R9 000. (CP R5 000)
30 Mr Bartho settled his account in full.
(85)
Weeks 4–5 Topic 2 Financial literacy • Term 3
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2013/04/25 9:44 PM
Weeks 4–5
3 Effect of credit sales and receipts from debtors
transactions on the accounting equation
Each transaction will affect the elements of the accounting equation by
decreasing or increasing the Assets (A), Owners Equity (OE) or Liabilities (L).
When goods are sold on credit:
Assets =
Owner’s equity +
Dr + Debtors control – Cr
Dr – Sales + Cr
X
Assets =
Dr + Trading stock – Cr
Liabilities
X
Owner’s equity +
Dr + Cost of Sales – Cr
X X
Liabilities
When a debtor pays his or her account:
Assets =
Owner’s equity +
Dr + Bank – Cr
X
Dr + Debtors control – Cr
X
Liabilities
Example 3
1 Sold stock to A Thubi on account – R200 (CP 150).
2 A Thubi paid R100 in part settlement of his account.
Solution:
No.
1
2
130
EMS Gr9 LB BOOK.indb 130
A
OE
L
Reason
+ 200 00
+ 200 00
0 00
Debtors Control (A) increases
Sales (OE) increases
– 150 00
– 150 00
0 00
Trading stock (asset) decreases
Cost of sales (OE) decreases
+ 100 00
– 100 00
0 00
0 00
Bank (A) increases
Debtors Control (A) decreases
Term 3 • Weeks 4–5 Topic 2 Financial literacy
2013/04/25 9:44 PM
Activity 4
Accounting equation
Analyse each transaction according to the accounting equation A = OE + L.
1
2
3
4
Bought trading stock for R12 500 and paid by cheque.
Sold goods for cash – Selling price R5 000 and cost of sales R3 000.
Paid Telkom for the telephone, R490.
Goods sold on account to a debtor. Selling price R2 400 and cost of sales
R1 600.
5 Received R880 from a debtor in part settlement of her account.
6 Paid weekly wages, R750.
(14)
4 Posting the DAJ to the Debtors ledger and the
General Ledger
The debtors allowance journal is completed when a credit note is issued to a
debtor for goods purchased on credit returned. Entries in the DAJ are posted
daily to the individual accounts of the debtors in the debtors ledger:
●●
The debtors individual account will be credited with the debtors allowance
amount as the money owed by the debtor decreases (A decreases).
On the last day of the month the money-columns of the DAJ are totalled and
posted to the debtors control account in the General Ledger:
●●
●●
The total of the debtors allowance column will be posted to the debit side
of the debtors allowance account (OE decreases) and to the credit side of
the debtors control account (A decreases).
The total of the cost of sales column will be posted to the debit side of the
trading stock account (A increases) and to the credit side of the cost of
sales account (OE increases).
Weeks 4–5 Topic 2 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 131
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2013/04/25 9:44 PM
Weeks 4–5
Example 4
Information from the debtors journal, debtors allowance journal and the cash receipts journal of
The Big Store for June 20.10 is given. The journal entries for Jay Pillay, a debtor, are shown.
On 1 June 20.10 Jay owed R500. The total of the debtors list on 1 June 20.10 is R3 200.
DEBTORS JOURNAL OF THE BIG STORE – JUNE 20.10
Doc
Date
DJ6
Debtor
Fol
Sales
Cost of Sales
CI113
10
Jay Pillay
900 00
600 00
CI119
20
Jay Pillay
800 00
400 00
4 000 00
2 500 00
DEBTORS ALLOWANCE JOURNAL OF THE BIG STORE – JUNE 20.10
Doc
Date
Debtor
Fol
DAJ6
Debtors Allowance
Cost of sales
CN14
12
Jay Pillay
150 00
100 00
CN17
21
Jay Pillay
300 00
150 00
900 00
550 00
CASH RECEIPTS JOURNAL OF THE BIG STORE – JUNE 20.10
Doc
Date Details
CR45
7
Jay Pillay
CR48
28
Jay Pillay
Fol
Analysis of
Receipts
CRJ6
Sundry accounts
Debtors
Control
Bank
300 00
Amount
Fol
Details
300 00
700 00
700 00
14 000 00
2 000 00
Suggested solution:
DEBTORS LEDGER OF THE BIG STORE
Jay Pillay
Date
20.10
Jun
132
EMS Gr9 LB BOOK.indb 132
D1
Details
Fol
Debit
Credit
Balance
1
Account rendered
7
Receipt 45
CRJ6
500 00
10
Invoice 113
DJ6
12
Credit note 14
DAJ6
20
Invoice 119
DJ6
21
Credit note 17
DAJ6
300 00
1 450 00
28
Receipt 48
CRJ6
700 00
750 00
300 00
900 00
200 00
1 100 00
150 00
800 00
950 00
1 750 00
Term 3 • Weeks 4–5 Topic 2 Financial literacy
2013/04/25 9:44 PM
GENERAL LEDGER OF THE BIG STORE
Balance sheet accounts
Date
Details
Fol
Dr
20.10
Jun
Amount
Date
Details
Debtors Control
B7
Amount
Cr
01
Balance
b/d
20.10
3 200 00 Jun
30
Debtors allowance
DAJ6
900 00
30
Sales
DJ6
4 000 00
Bank
CRJ6
2 000 00
Balance
c/d
7 200 00
Jul
Fol
01
Balance
Activity 5
b/d
4 300 00
7 200 00
4 300 00
Debtors allowance
Use the information below to complete the DJ, DAJ and CRJ entries for
July 20.10. You must prove that your entries in the journals are correctly
posted to the debtors ledger and debtors control account
The following information was extracted from the financial records of
Prop Stores for July 20.10:
July 20.10
1 The debtors list indicates that Bro Jo owes R1 000 and Bro Mo R2 000.
5 Receive R900 from Bro Jo as partial payment on his account. Receipt
100 is issued.
10 Sold goods on credit to Bro Mo, R2 000, cost of sales R1 200. Invoice 200
is issued.
12 Bro Mo returns goods. Credit note 60 is issued for R1 000, cost of sales,
R600.
18 Sold goods on credit to Bro Jo, R3 000, cost of sales R1 800. Invoice 201
is issued.
21 Bro Jo returns goods. Credit note 61 is issued for R1 500, cost of sales,
R900.
27 Receive R400 from Bro Jo as partial payment on his account.
Receipt 101 is issued.
(30)
Weeks 4–5 Topic 2 Financial literacy • Term 3
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2013/04/25 9:44 PM
Weeks 4–5
Activity 6 General Ledger accounts and Debtors allowance
Use the information below to complete the General Ledger accounts. Then
calculate the mark-up percentage Waterlea uses on cost.
The following information was taken from the financial records of Waterlea
Stores for June 20.09:
Opening balances on 1 June 20.09
Trading Stock
Debtros control
Sales
Cost of sales
Debtors allowance
B5
B6
N1
N2
N3
R130 000
R34 000
R460 000
R237 000
R80 000
Month end totals of the journals as on 30 June 20.09:
CRJ6 Sales
Cost of sales
Debtors control
DJ6
Sales
Cost of sales
CPJ6 Trading Stock
DAJ6 Debtors allowance
Cost of sales
R90 000
R60 000
R30 000
R120 000
R80 000
R50 000
R15 000
R10 000
(50)
Activity 7 General Ledger accounts and Debtors allowance
Use the provided information to:
1
2
3
4
Calculate the missing figures A, B and C.
Open the given accounts in the General Ledger on 1 May 20.10.
Post the journal totals to the General Ledger.
Balance accounts if applicable.
Activity 7 continues 
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Term 3 • Weeks 4–5 Topic 2 Financial literacy
2013/04/25 9:44 PM
Activity 7
(continued)
The following information was taken from the Trial balance of Underberg
Dealers on 30 April 20.10 and the journals for May 20.10
Balances from the Trial balance on 30 April 20.10:
Trading stock
Debtors control
Sales
Cost of sales
Debtors allowance
B7
B8
N1
N2
N3
R64 000
R272 000
R511 000
A
R36 000
Take note! Goods are sold at cost plus 25%.
Totals and entries in the journals for May 20.10:
CRJ5
Sales
B
DJ5
Sales
R231 000
Cost of
Sales
R123 200
Cost of
Sales
C
Debtors
control
R175 000
CJ5
Trading
Stock
R412 000
CPJ5
Trading
stock
R97 000
DAJ5
Debtors
allowance
R28 000
Cost of
sales
R7 000
(50)
5 Effect of debtors allowance transactions on the
accounting equation
Debtors allowance has the following effect on the accounting equation:
1
2
3
4
Debit debtors allowance (OE–)
Credit debtors control (A–)
Debit trading stock (OE+)
Credit cost of sales (A–)
with the original selling price
of the goods returned
with the original cost price of
the goods returned
Weeks 4–5 Topic 2 Financial literacy • Term 3
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Weeks 4–5
Example 5
1 B Matthews, a debtor, purchased goods on credit, R550. Cost of sales, R350.
2 B Matthews returns goods with a selling price of R250. Cost of sales R150.
You are required to show the effect of these transactions on the accounting equation.
General Ledger
No
1
2
A
+
Cr
+
Dr
550 00
550 00
L
Account
debited
Account
credited
Debtors
control
Sales
Cost of sales
Trading Stock
350 00
350 00
Debtors
allowance
Debtors
control
250 00
250 00
Trading stock
Cost of sales
Activity 8
–
Dr
OE
150 00
–
Cr
–
Dr
+
Cr
150 00
Analyses of transactions
Use the provided information to:
1 Show the effects of the transaction given below on the accounting equation using the following
headings to analyse these transactions:
General Ledger
Account debit
A
OE
L
Account credit
2 Calculate the amount owed by Craig on the last day of the month:
Craig Dunmore owed R800 to Mega Traders on 01 February 20.08.
The following transactions took place during February 20.08:
4
9
15
17
Craig purchased goods on credit, R600; cost of sales R400.
Craig paid R700 on his account.
Craig purchased goods on credit, R500; cost of sales R300.
Craig returned some of the goods purchased on the 18th, R150 and cost R100.
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EMS Gr9 LB BOOK.indb 136
(30)
Term 3 • Weeks 4–5 Topic 2 Financial literacy
2013/04/25 9:44 PM
Topic
2
Summary and questions
Summary
●●
●●
●●
●●
●●
A debtor is someone who buys goods from a business on credit but will
only pay for them later. This is known as credit sales.
Debtors allowance is permitted when a debtor returns goods purchased.
Transactions related to debtors are journalised as follow:
●● Credit sales are recorded in the debtors journal using the duplicate
invoice as source document.
●● Money received as payment on the account is entered in the CRJ using
the duplicate receipt as source document.
●● Debtors allowance are recorded in the debtors allowance journal using
the duplicate credit note as source document.
All transactions related to debtors are posted on a daily basis to the
individual debtors accounts in the debtors ledger.
●● Credit sales as debit entries
●● Payments received as credit entries
●● Discount allowed as credit entries
●● The balance owed is calculated after each transaction is posted.
On the last day of the month the journal column totals are posted to the
debtors control account in the General Ledger:
●● DJ – Total sales to the debit side of debtors control (A+) and to the
credit side of sales (E+)
●● Total cost of sales to the debit side of cost of sales (E–) and to the credit
side of trading stock (A–)
●● CRJ – Total receipts from debtors to the credit side of debtors control
(A–) (the debit entry will form part of total receipts)
●● DAJ – Total debtors allowance to the debit side of debtors allowance
(E–) and to the credit side of debtors control (A–)
●● Total cost of sales to the debit side of trading stock (A+) and to the
credit side of cost of sales (E+).
Summary and questions • Topic 2
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2013/04/25 9:44 PM
Topic
2
Questions
Question 1
DEbtors Control
April
1
Balance
30
A
1
Balance
b/d
DJ
4 850 00 April
9 450 00
B5
30
B
CRJ
C
D
c/d
E
14 300 00
May
b/d
F
8 050 00
a Complete the account by filling in the amounts or words indicated A to F.
b In the CRJ, the sales column for April amounted to R18 400. Is this business more
dependent on cash or credit sales? Justify your answer with a reason.
c How well is the business controlling its debtors? Give two reasons for your answer.
(6)
(2)
(2)
Question 2
Complete the account of Lina Xavier in the debtors ledger of Fantastic Plastic for August
20.09. You need to fill in your own source documents and numbers. The following
transactions relate to Lina:
August 20.09
1 Amount owed by Lina, R1 600
4 Cash paid on account, R900
7 Credit sales, R700; cost of sales, R400
8 Goods returned, R350; cost of sales, R200
21 Credit sales, R800; cost of sales, R500
23 Goods returned, R100; cost of sales, R60
29 Cash paid on account, R750
(20)
Total marks 30
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Topic 2 • Summary and questions
2013/04/25 9:44 PM
Topic 3 Financial literacy:
Weeks 6–7
Credit transactions – creditors
1
Introduction
Key terms
A business needs goods and services to operate, for example cash registers,
computers, printers, stationery, consumables and trading stock. A business
has to buy these things from other businesses. These businesses are called
suppliers. If the business pays by cheque the cheque counterfoil is used to
enter the transaction in the Cash Payments Journal. Cash will flow out of
the business, thus bank (A–) will be credited and another account will be
credited, for example equipment (A+), stationery (OE-).
suppliers
creditors
overdue account
creditors allowance
Creditors Journal
Creditors Ledger
If the business does not have enough cash in the bank to pay for the goods
they can buy goods or services on account or on credit. This means the
business can buy something today but only pay for it later.
In this section you will learn how to enter credit purchases and purchases
returned in the accounting records of a business.
2
Creditors
credit purchases –
articles bought but
not paid for at that
time
When a business buys goods or services on credit from a supplier, we say that
the goods or services are bought on account. The business owes the supplier
(the creditor) money. A creditor is a current liability.
When a business buys on credit they must follow the credit terms. The
supplier will tell the business how much they can buy on account and by
when they must pay. If the business does not pay back on time, interest may
be charged on their overdue account.
Activity 1 Advantages and disadvantages of credit
purchases
In small groups of 4 or 5 learners discuss the advantages and
disadvantages of credit purchases.
3
Creditors allowances
When goods purchased on credit are returned to the supplier because the
goods are damaged or in any way incorrect, the amount owed to the creditor
decreases. This is known as creditors allowance.
Weeks 6–7 Topic 3 Financial literacy • Term 3
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2013/04/25 9:44 PM
Weeks 6–7
4 Accounting cycle
When a business purchases goods or services on credit from a supplier, the
supplier will issue a credit invoice to the business. The credit invoice will
contain the following information:
●●
●●
●●
●●
●●
●●
●●
●●
the name and contact details of the supplier
an invoice number which will follow in sequential order
the date of the transaction
the name of the business to whom goods or services are delivered
the account number
the quantity, description and unit price of goods or services purchased.
the total purchase amount
the terms and conditions of credit.
The credit invoice will be completed in duplicate. The supplier uses the
duplicate copy to complete their accounting records. The original credit
invoice is issued to the buyer (the business who buys the goods). The credit
invoice will then be used to enter the credit purchases in a Creditors Journal
(CJ) as book of first entry. Because a business can receive different credit
purchase invoices from different suppliers who use their own numbering
system, they renumber credit purchase invoices to make the entries in the
journal easy and to tracking them easier.
Each credit purchase transaction will be posted on a daily basis to the Creditors
Ledger (CL). At the end of the month the CJ will be totalled and column totals
will be posted to the relevant accounts in the General Ledger. The General
Ledger accounts will be balanced and a Trial balance will be compiled.
Activity 2
Credit purchases
“When the business buys on account, they will receive a credit invoice from the supplier.”
1 Complete the following sentences:
a The supplier is a ... from the view point of the purchasing business as ... is owed to the
supplier.
b A ... will be issued by the supplier and the ... will be handed to the purchasing business.
c The ... will explain what the conditions for repaying the amount owed are.
d The credit purchase transaction will be entered in the ... and posted to the ... on a daily
basis.
e From the perspective of the supplier the business who made the credit purchases is
called a ... .
2 Explain why a business will renumber the credit invoices received.
(10)
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Term 3 • Weeks 6–7 Topic 3 Financial literacy
2013/04/25 9:44 PM
Topic 4 Entrepreneurship:
Weeks
Topic 6–7
4
Functions of a business
1
Introduction
Key terms
In this topic you will learn about the business functions: administration,
purchasing, marketing, finances, public relations, human resources,
production and general management. You will also learn about risk
management and the characteristics, role and importance of the business
functions.
2 The business functions
Different activities need to be carried out in every business. Even in the
smallest businesses important tasks or functions must be done on a regular
basis, such as paying bills, buying stock and serving customers. All business
activities are grouped into eight functions. In a small business two or three
people would be able to handle all the different functions. In a bigger
business each function will be handled by a manager who specialises in that
particular function.
needs
manager
profit
goals
strategic decisions
tactical decisions
goods
services
suppliers
trademark
brand name
stock
skills
labour
recruit
market research
contingency plan
BUSINESS
Finance
Purchasing
Marketing
Figure 3.3
General
Management
and Risk
Management
Human
Resources
Production
Public
Relations
Administration
The eight business functions
Weeks 6–7 Topic 4 Entrepreneurship • Term 3
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2013/04/25 9:44 PM
Weeks
Topic 6–7
2.1 Administration
processing – series
of operations on
something in order to
change or protect it
storing – keep
or accumulate
something for future
use
Businesses need information to make decisions. The administration function
is responsible for handling information. This includes collecting data,
processing the data, storing information and then making it available to
management for them to make decisions.
Information and
Communication Technology
(ICT) plays a big role in this
function because technology
is used to create, store and
communicate information.
The administration function
is also responsible for
general office duties such
as paper work, keeping
records, handling mail,
answering telephones and
printing and copying.
2.2
quality – the standard
of something that is
measured against
other things of a
similar kind
quantity – specified
number or amount
maximum – the
highest amount
possible
Collecting
Data
Processing
Data
Information
Storing
information
Figure 3.4
Handling information
Purchasing
This function involves buying goods and services needed by all the other
functions or departments in the business. The business must make sure
that they buy from the best suppliers. They need to buy the right quality
and quantity goods and services at the right price and at the right time to
guarantee maximum profit.
The purchasing department must know how much stock and what type is
available in the business. We call this stock control. This will help to avoid
stock shortages. It will also prevent stock levels from being too high and stock
then becoming outdated or damaged. Many businesses use electronic stock
control systems.
A trademark and brand name help the purchasing department to buy
the right quality products. A trademark is a picture or a symbol that a
manufacturer uses to identify its products. A brand name is the name of that
product.
Activity 1 Purchasing – brands and trademarks
Find five examples of different brands and trademarks from magazines.
Paste them on a piece of paper. Prepare a short presentation to the class to
explain the brand and trademark and how they differ.
(10)
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Term 3 • Weeks 6–7 Topic 4 Entrepreneurship
2013/04/25 9:44 PM
2.3
Marketing
The marketing function is responsible for making sure that the product or the
service is sold to consumers, also called the market. It involves doing market
research and finding out what consumers want and need. You can do that by
handing out free samples of the product, handing out pamphlets or placing
advertisements on television or radio.
product – anything
that is offered in a
market that satisfies
a need or want;
includes goods and
services
The activities of the marketing function are also known as the Four Ps of
marketing. These are the elements of marketing.
P
Product policy
P
Price policy
P
Place policy
P
Promotion policy
Activity 2
The product must satisfy the needs of the
consumers. What do customers want to buy?
The product must be sold at a price that customers
are prepared to pay.
The product must be distributed to a place that is
convenient for the consumer.
The product must be promoted through
advertising, sales and publicity.
convenient – suited
to one’s comfort,
purpose, or needs
Marketing
1 Identify the important marketing elements in the picture below.
2 How does Volkswagen use each of these elements to sell their car?
(10)
Weeks 6–7 Topic 4 Entrepreneurship • Term 3
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2013/04/25 9:44 PM
Weeks
Topic 6–7
2.4
Finances
The finance of a business is the money they need and use. The financial
function includes:
●●
●●
●●
●●
planning how much money the business needs
finding the money to start, run or expand the business
managing the funds in all the other functions/departments
managing investments.
To start a business an entrepreneur needs money. Capital is the money used
to start a business. Capital can be classified as follows:
Own capital
Supplied by the owner(s) of the
business
Borrowed capital
Borrowed money from a bank or family
member
Capital needed by the business includes:
Fixed capital
Used to buy land, buildings, vehicles
and machinery
2.5
image – how
something or
someone is perceived
or believed to be
interest groups –
people or groups of
people who have
an interest in the
business such as
suppliers, employees,
customers,
community and
competitors.
Working capital
Used to buy stock and to pay for expenses
Public relations
The main aim of the public relation function is to let people see the business
in a positive light. The public relations department must make sure that the
business has a good image and good working relationships with its interest
groups.
Activity 3
Public relations
Read the letter below. Make suggestions on how you as the public relation
manager would handle this situation.
To: The editor
I want every one of your readers to know about the
terrible experience I had at Super Saver on Saturday.
When I walked into the shop I saw that a bottle of
liquid had been spilled on the floor near the cashiers. I
ignored it and went on with my shopping.
Activity 3 continues 
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Term 3 • Weeks 6–7 Topic 4 Entrepreneurship
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Activity 3
(continued)
The man at the butchery counter was picking his
nose when I arrived. To add to this appalling fact,
he also ignored me when I asked if he had any pet
mince.
I decided just to get the bread and milk I needed and
to leave but was unable to get the fridges because
three staff members appeared to have decided to
have their morning chat in the aisle.
Disgusted I left, only to almost slip on the liquid
which was still unattended to at the entrance of the
store.
I shall never return to Super Saver and recommend
that no one else does either.
Yours
Joyce Jones
vacancy – position or
job that is available
in a business
2.6 Human resources
The human resource of a business is its workers. This function has to make
sure that the right employee is selected for the right job and to ensure the
employees are well-treated. They need to decide how many workers are
needed and what level of skills is necessary in the business.
advertisement –
announcement
promoting a product,
service, or event
The human resource function also deals with all the labour requirements of
the business. When the human resources department has decide how many
workers and what skills they need, they will recruit people to fill vacancies.
Advertisements could be used to get people to apply for the position. When
workers apply for a position, the human resource manager will ask the applicant
to complete an application form and to hand in a curriculum vitae (CV).
curriculum vitae –
brief explanation of
a person’s education,
qualifications and
experience that
is sent with a job
application
Weeks 6–7 Topic 4 Entrepreneurship • Term 3
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2013/04/25 9:44 PM
Weeks
Topic 6–7
4
Activity 4 Curriculum vitae
In a few years’ time you will be applying for a job where you will need to
present a curriculum vitae (CV). Do some research about what a
CV is and design your own.
(10)
2.7
Production
Production is the process
of changing inputs (factors
of production) into outputs
(goods and services).
Capital
The production department
must:
●●
●●
●●
●●
produce or provide a
product of the best quality
produce the correct amount
(quantity) of goods or
services
ensure that products are
ready at the right time
keep the cost of production
as low as possible.
2.8
Entrepreneurs
Factors of
production
Resources
Labour
Figure 3.4
The four factors of production
General management
The manager/s of a business must do certain tasks to ensure that the goals
and objectives of the business are met. The four main management tasks are:
PLAN
Planning the
future of the
business
Drawing up goals
for the business
LEAD
Telling workers
what they need
to do
Encouraging
workers to work
ORGANISE
Organising
materials and staff
needed in the
business
Making sure that
plans are put into
action
CONTROL
Controlling all
activities in the
business to make
sure things are
going to plan
(Use the PLOC acronym to remember the tasks above)
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EMS Gr9 LB BOOK.indb 146
Term 3 • Weeks 6–7 Topic 4 Entrepreneurship
2013/04/25 9:44 PM
To plan for the future of the business the manager must make sure that the
business has a business policy which includes the following:
Business policy
Mission
describes the basic function/task of the business
Goals
long-term accomplishments that the business wants to achieve
Objectives short-term tasks the business must do to reach the long-term
goals
Strategy
plan on how the business is going to achieve the objectives and
goals
One person usually does not have enough knowledge
and experience to run a business on his/her own.
It is better to have three different levels of
management, namely top level, middle level
Top
level management
and lower level management. We show
the levels of management in the form
of a pyramid. This means there
Middle level management
are a few managers at the
top level and more at the
lower level.
Lower level management
Top level management
Chief Executive Officer
(CEO), board of directors
They make strategic
decisions. This means
they decide what must
be done. They are
responsible for the
mission and objectives
of the business.
Activity 5
Middle level management
Marketing manager, Finance manager
Lower level management
Supervisors, team leaders
Middle-level management is responsible for
specific functions in the business
They are responsible to the top-level
management and must ensure that top level
management’s plans are put into action
They link top-level management with lowerlevel management
These managers make tactical decisions.
This means they decide how things must be
done.
Lower-level management is
known as the supervisory
level.
Their duties involve
supervising day-to-day
activities
Levels of management
Draw a structure for your school showing the different levels of
management and other people in the organisation such as: the parent
governing body, principal, deputy principal, heads of department,
finance manager, teachers.
(8)
Weeks 6–7 Topic 4 Entrepreneurship • Term 3
EMS Gr9 LB BOOK.indb 147
knowledge –
information and
skills obtained
through experience
or education
experience –
knowledge and skills
obtained over time
by being exposed to
them
147
2013/04/25 9:44 PM
Week
Topic
8
Topic 3 Financial literacy: Credit transactions
5 Recording of transactions in the Creditors Journal (CJ)
Credit purchase transactions are first entered in the Creditors Journal. The
format of the Creditors Journal is as follows:
Creditors’ Journal of Name Of Business – Month & Year
Doc
Day
Creditor
Fol
Creditors
control
Fol: CJ1
Sundry Accounts
Trading Stock
Stationery
Amount
Fol
Details
The renumbered credit invoice received is entered in the document column on
the day that the transaction took place. The name of the supplier is entered
in the creditor column. The folio will be entered as a cross reference when
the individual transaction is posted to the Creditors Ledger. The invoice total
is entered in the creditors control column. The credit purchases per type are
entered in the analyses columns, for example stationery. Credit transactions
for which an analyses column was not opened are entered in the sundry
accounts column. The amount refers to the credit purchases, the folio will
be entered as cross-reference for posting the entry to the General Ledger.
The name of the account in the General Ledger will be entered in the details
column.
Example 1
HP Stores buys various goods and services on account. Record the following transactions for
October 20.10 in their CJ.
3 Bought trading stock on account from Rhino Suppliers – R2 200.
Invoice R11 is received and renumbered to 150.
6 Purchased R125 of stationery from CAN Stores and received invoice C 23.
17 The business car was serviced at a cost of R890. Received invoice AG07 from Andrew’s Garage.
26 Purchased a new computer from IT-Stores for R7 450. Invoice IT96 was received.
29 Bought goods on account from Rhino Suppliers. Invoice 187 indicated that trading stock,
R2 400 and stationery, R600.
148
EMS Gr9 LB BOOK.indb 148
Term 3 • Week 8 Topic 3 Financial literacy
2013/04/25 9:44 PM
– creditors
Solution:
Creditors Journal of HP Stores – October 20.10
Doc
Date Creditor
Fol
Creditors
control
Trading
stock
2 200 00
2 200 00
150
3
Rhino
Suppliers
151
6
CAN Stores
125 00
152
17
Andrew’s
Garage
890 00
153
26
IT Store
7 450 00
154
29
Rhino
Suppliers
3 000 00
2 400 00
13 665 00
4 600 00
CJ10
Equipment
Stationery
Sundry Accounts
Amount
Fol
Details
125 00
890 00
Vehicle
expenses
7 450 00
600 00
7 450 00
725 00
890 00
Note:
●●
●●
●●
Every transaction will be entered into the Creditors control column and one other column.
If you purchased – for example – stationery and trading stock from Rhino Suppliers, you
would allocate the purchases to the relevant columns (see 29th).
At the end of the month the columns will be totalled. The total of the creditors control column
must equal the sum of the totals of all the other columns.
Activity 3
Draw up a Creditors Journal
Complete the Creditors Journal of Deli Stores for August 20.10 using the
information provided below. Invoices received are renumbered from A100.
August:
1 Bought stock on account from Metro for R2 500. Invoice XR 21 was
received.
4 Had the car repaired at Bosch Service centre on account at a cost of
R370. Invoice BS432 was received.
7 Received invoice CJ 319 from Airbus Dealers for R2 100. R1 700 was for
stock and the balance for consumable stores.
15 Purchased R225 of stationery on account from CAN Stores – Invoice C 85
was received.
19 Issued a cheque to Makro for stock purchased, R400
23 Bought a new printer from Incredible Connection, R3 200.
(16)
Invoice ICX 821 was received.
Week 8 Topic 3 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 149
149
2013/04/25 9:44 PM
Week
8
6 Recording of transactions in the Creditors
Allowance Journal (CAJ)
When goods purchased on credit is returned a debit note is issued and
returned to the supplier with the incorrect or damaged goods. When the
supplier agrees to grant the allowance they will issue a credit note. The
original credit note received by the business will be used to enter creditors
allowance in the Creditors Allowance Journal as book of first entry. Creditors
allowance decreases the amount owed to a creditor.
The format of the creditors allowance journal is as follows:
Creditors Allowance Journal of Name Of Business – Month & Year
Doc
Day
Creditor
Fol
Creditors
control
Trading
Stock
Fol: CAJ1
Sundry Accounts
Stationery
Amount
Fol
Details
The renumbered credit note is entered in the document column on the day of
the transaction. The name of the supplier is entered in the creditor column.
The folio is entered as a cross reference when the individual transaction
is posted to the Creditors Ledger. The allowance granted is entered in the
creditors control column. The credit allowance per type is entered in the
analyses columns, for example stationery. Transactions for which an analyses
column was not opened are entered in the sundry accounts column. The
amount refers to the credit allowance granted, the folio will be entered as
cross-reference for posting the entry to the General Ledger and the name of
the account in the General Ledger will be entered in the details column. At
the end of the month the columns will be totalled. The total of the creditors
control column must equal the sum of the totals of all the other columns.
Example 2
HP Stores buys various goods and services on account. Record the following transactions for
October 20.10 in the CJ and CAJ.
3 Bought trading stock on account from Elephant Traders – R14 000. Invoice ET100 is received
and renumbered to 200.
6 Purchased stationery, R600, from The Ink Pot and received invoice CS153.
8 Goods to the value of R1 000 was returned to Elephant Traders as it was not the correct items.
The credit note received was renumbered to CN56.
150
EMS Gr9 LB BOOK.indb 150
Term 3 • Week 8 Topic 3 Financial literacy
2013/04/25 9:44 PM
17 Repairs to the building amounts to R1 800. Received invoice DB07 from DB Builders.
26 Purchased office equipment from MegaBytes for R17 000. Invoice M96 was received.
28 MegaBytes incorrectly billed HP Stores for two scanners. Only one was purchased. The price
per scanner was R3 000 and a credit note was received from them.
29 Bought goods on account from Elephant Traders. Invoice 187 indicated trading stock, R26 000
and stationery, R1 600.
31 Goods to the value of R4 000 was returned to Elephant Traders as it was not the correct items.
A credit note was received.
Creditors’ Journal of HP Stores – Oct 20.10
Doc
Date Creditor
200
3
Elephant Traders
201
6
The Ink Pot
202
17
DB Builders
Fol
Creditors
control
Trading
stock
14 000 00
14 000 00
CJ10
Equipment
600 00
Stationery
Sundry Accounts
Amount
Fol
600 00
1 800 00
1 800 00
203
26
MegaBytes
17 000 00
204
29
Elephant Traders
27 600 00
26 000 00
61 000 00
40 000 00
Repairs
17 000 00
1 600 00
17 000 00
2 200 00
1 800 00
Creditors’ Journal of HP Stores – Oct 20.10
Doc
Date Creditor
Fol
Creditors
control
Trading
stock
1 000 00
CN56
8
Elephant Traders
1 000 00
CN57
28
MegaBytes
3 000 00
CN58
31
Elephant Traders
Activity 4
Details
CJ10
Equipment
Stationery
Sundry Accounts
Amount
Fol
Details
3 000 00
4 000 00
4 000 00
8 000 00
5 000 00
3 000 00
Draw up a Creditors Allowances Journal
Complete the Creditors Allowance Journal of Megawatt Electrical Suppliers for March 20.07 and
close off on 31 March 20.07. Provide for the following columns in the CAJ: Creditors Control,
Trading Stock, Consumables, Stationery, Packaging and Sundry Accounts.
March 20.07
11
17
19
27
Receive credit note (renumbered to 15) from Copper Kettle Products for merchandise, R2 000.
A credit note is received from The Wire Guys for goods returned, R3 000.
Receive credit note from Plastic Bags Inc. for packaging returned, R1 000.
Receive credit note from Copper Kettle Products for merchandise, returned, R4 000.
(40)
Week 8 Topic 3 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 151
151
2013/04/25 9:44 PM
Week
8
Activity 5 Draw up a Creditors Journal and a Creditors
Allowances Journal
Sarveshni Naidoo started a business, Bananas in Pajamas, a children’s
décor store. Record the following transactions in the Creditors Journal of
Bananas in Pajamas for May 20.08. The Creditors Journal and Creditors
Allowance Journal must have the following columns: Creditors Control,
Trading Stock, Consumables, Stationery and Sundry Accounts. Credit
purchase invoices are renumbered from C1 onwards and credit notes
received from CN1 onwards.
May 20.08
02 Buy stationery for R3 450 from The Pen and Pencil and receive invoice
4562.
05 Buy merchandise for R132 500 from Playdough Traders and receive
invoice 4718.
07 Buy consumables for R7 600 from GR8 Traders and receive invoice
66945.
09 Return merchandise to Playdough Traders and receive credit note 333.
R16 500.
10 Consumables to the value of R1 600 is returned to GR8 Traders. A credit
note is received.
14 Buy stationery for R1 460 from The Pen and Pencil and receive invoice
4581.
18 Buy merchandise for R215 000 and consumables for R18 800 from
Playdough Traders and receive invoice 4998.
21 Return merchandise to Playdough Traders and receive credit note 342.
R23 500.
24 Receive invoice 3325 from Noir Printers. This invoice shows R2 940 for
printing of posters for advertising purposes and R3 640 for the printing
of books of invoices and books of receipts.
25 Receive invoice 3314 from The Chatter Box for placing an advertisement
in the next six editions. A placement was charged at R1 860.
29 The invoice received from The Chatter Box (see 25th ) was incorrect as a
placement is charged at R1 360. A credit note is received.
31 Buy merchandise of R46 000 from Playdough Traders and receive
invoice 4903.
(60)
152
EMS Gr9 LB BOOK.indb 152
Term 3 • Week 8 Topic 3 Financial literacy
2013/04/25 9:44 PM
Topic
3
Summary and questions
Summary
●●
●●
●●
●●
●●
●●
●●
●●
A creditor is a supplier to whom the business owes money as a result of
buying goods and services from them on credit.
When a business purchases goods on credit from a supplier, the supplier
issues a credit invoice.
The original credit invoice is handed to the business (purchaser) and the
duplicate is kept by the supplier (seller).
The original credit invoice received is used to enter credit purchases in the
Creditors Journal as book of first entry.
If there are problems with the credit purchases and they need to be
returned to a creditor, an allowance is given. This is known as creditors
allowance.
Creditors allowance decreases the amount owed to a creditor.
A credit note is issued by the supplier when goods are returned.
The original credit note received by the business will be used to enter
creditors allowance in the Creditors Allowance Journal as book of first
entry.
Questions
1 For each of the following, answer true or false and if false give
the correct answer.
a Creditors are a non-current liability
b A creditors allowance may only be given for trading stock
purchased on account.
c The source document for the CJ is a credit invoice.
d The CPJ and CJ operate in the same way except one is for cash
purchases and the other credit purchases.
e In the CJ, the source documents follow in numeric order.
2 For each of the following give an example of a transaction that
would take place in the CJ
a Bought stock
b Bought stationery
c The delivery van was serviced.
d Bought consumable stores and trading stock from Makro.
(8)
(4)
Total marks 12
Summary and questions • Topic 3
EMS Gr9 LB BOOK.indb 153
153
2013/04/25 9:44 PM
Week
8
Topic 4 Entrepreneurship: Functions of
a business
3 Risk management
Risk means there is a possibility that something bad can happen in the
future. Management must have a plan on how to handle risk. This is called a
contingency plan. A contingency plan can include:
●●
●●
●●
preventing risks – for example, letting employees wear safety gear or
having a security system .
reducing risks – for example, having emergency equipment and setting up
emergency procedures.
transferring risks – for example, taking out insurance where the insurance
company covers the business for certain losses.
4 Characteristics of the business functions
The eight business functions have the following characteristics:
●●
●●
●●
●●
●●
5
Each business function performs unique tasks.
The eight functions form a unit and depend on each other.
Most of the eight functions are carried out in every business, regardless of
the size of the business.
The need for the functions to be carried out in separate departments will
depend on the type of business.
The general management function is directly linked to the other seven
business functions.
Role and importance of the business functions
Although each function runs separately they all related to one another.
The employees in the eight functions have to work together as a team if the
business wants to be successful.
The type of business will determine the need for separate departments
for each function. For example, a manufacturing business needs a large
production department while a retail business might need a large marketing
department.
It is the responsibility of general management to combine and coordinate the
other seven functions to achieve the goals and objectives of the business.
154
EMS Gr9 LB BOOK.indb 154
Term 3 • Week 8 Topic 4 Entrepreneurship
2013/04/25 9:44 PM
Topic
4
Summary and questions
Summary
General management
helps to establish goals and make
sure that the processes to reach those
goals are in place
Production
organises the process that turns inputs into finished goods and services
Administration
responsible for collecting and processing data, storing information and then
making it available to management
Public relations
looks after the image of the business
Purchasing
buys everything the business needs
Human resources
manages the people who work in the
business
Marketing
responsible for understanding the
needs and wants of customers and
making sure they know about the
products
Finance
manages the financial resources and
reports on the financial position and
performance
Question 1
Look at the picture on the next page and answer the following questions.
1 Identify the different functions of the business.
2 Write a paragraph explaining the role of each manager in each of the
different functions.
3 Choose any three functions and point out possible risks that might
occur in these functions. Explain how management could manage
these risks.
Total marks 20
Summary and questions • Topic 4
EMS Gr9 LB BOOK.indb 155
155
2013/04/25 9:44 PM
Topic
Term
156
EMS Gr9 LB BOOK.indb 156
31
Summary and questions
Term 3 • Summary and questions
2013/04/25 9:44 PM
Question 2
Read about Hlubi’s business and answer the questions:
Hlubi does some market research in her neighbourhood and finds out that
the people would like an airtime vendor. She approaches a leading cell
phone network supplier with her business plan. After negotiating, they
agree to supply her with some airtime packages at cost price. Included
in the deal with her supplier is a container with branding to be set up
at her shop. Before Hlubi can set up her business, she must apply to the
local authority for a trading license. The trading license is granted. Hlubi
approaches a bank for a loan as start-up capital. Hlubi uses the start-up
capital to buy her stock and stationery and print leaflets for advertising.
Hlubi is very aware of the needs in her community and has decided to
sponsor the local primary school’s netball team, providing them with
sports kits and equipment. Soon, business is booming, and Hlubi employs
her sister, Thembi, to assist her with counter sales in her shop. Hlubi
can now focus her attention on recordkeeping, money matters and other
relevant business decisions.
1
2
3
4
Identify the business activities Hlubi does in the case study. (14)
Discuss how these business functions depend on each other. (8)
On which business function did Hlubi concentrate? Explain why? (3)
If Hlubi wanted to expand her business to a medium-sized
business which employees would she need to fulfil the business
functions.
(10)
5 Working in groups of three or four, make a poster with pictures
representing the eight business functions depicted in Hlubi’s
case study. (15)
Total marks 70
Summary and questions • Term 3
EMS Gr9 LB BOOK.indb 157
157
2013/04/25 9:44 PM
Weeks
Topic 9–10
5
Key terms
Creditors Ledger
Topic 5 Financial literacy: Credit transactions
1
Introduction
In this topic you will explore payments to creditors. A creditor is a business
or person to whom money is owed as goods or services were purchased on
credit. The business will receive an account statement from the creditor
showing the total amount owed, the amount that must be paid and the credit
terms. Creditors are paid by cheque or EFT and the transaction is recorded in
the CPJ.
2 Recording of payment to creditors in the Cash
Payments Journal (CPJ)
When the account statement is received and payment is due, a cheque will be
issued in the name of the creditor. The cheque counterfoil is used to record
the transaction in the CPJ as book of first entry. An analyses column (Creditors
Control) is opened and all amounts paid to creditors are recorded in the bank
column as well as the Creditors Control column. If payments were done using
EFT the same procedure is followed, but the source document used will be
either an EFT-voucher or the bank statement. On the last day of the month the
Creditors Control column will be totalled when the CPJ is closed off.
Example 1
HP Stores issued the following cheques during October 20.10 as partial payment on accounts:
October 20.10
16 Cheque 254 Rhino Suppliers
21 Cheque 255 Elephant Consumables
29 Cheque 256 Buffalo Packaging
R5 000
R2 000
R1 000
You are required to complete the entries in the CPJ for October 20.10.
Cash Payments Journal of HP Stores – Oct 20.10
Doc
Date Name of payee
Fol
Bank
Trading
stock
CPJ10
Creditors
control
254
16
Rhino Suppliers
5 000 00
5 000 00
255
21
Elephant
Consumables
2 000 00
2 000 00
256
29
Buffalo Packaging
1 000 00
1 000 00
8 000 00
8 000 00
158
EMS Gr9 LB BOOK.indb 158
Wages
Sundry Accounts
Amount
Fol
Details
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
– creditors
Activity 1
Recording payments to creditors in the CPJ
Magnolia Flowers issued the following cheques during July 20.12 as partial
payment on accounts received from suppliers:
July 20.12
10 Cheque 118 Snapdragon Plants
18 Cheque 119 Rose Flowers
31 Cheque 120 Day Lily Plants
R4 000
R5 000
R7 000
You are required to complete the entries in the CPJ for July 20.12.
3
(12)
Posting to the Creditors Ledger and General Ledger
3.1
Posting to the Creditors Ledger
A Creditors Ledger is a subsidiary ledger containing separate accounts
for each creditor. The individual account of each creditor summarises all
transactions related to that creditor and indicates the amount owed to the
creditor. Individual entries with creditor will be posted from the journals to
the Creditors Ledger on a daily basis.
The format of the Creditor Ledger is as follows:
CREDITORS LEDGER OF name of business
Name of creditor
Fol
Debit
Date Details
Name of creditor
Fol
Debit
Date Details
●●
●●
●●
●●
●●
Credit
Fol: C1
Balance
Credit
Fol: C2
Balance
The journal entry is posted to the individual account of the creditor on the
day it takes place.
The source document and number is indicated in the details column.
The folio column refers to the folio number of the journal from which the
transaction is posted. The relevant creditor folio number will be recorded
in the journal as reference to which account it was posted.
Credit purchases will increase the amount owed to the creditor (liabilities
increase), thus the creditor account will be credited.
Payments to creditor will decrease the amount owed to the creditor
(liabilities decrease), thus the creditor account will be debited.
Weeks 9–10 Topic 5 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 159
159
2013/04/25 9:44 PM
Weeks 9–10
●●
●●
●●
●●
The balance will be calculated as follows after each new entry:
●● Opening balance – Debit entry = Closing balance
●● Opening balance + Credit entry = Closing balance
If the business owes money to the creditor it is written in as an opening
balance on the first day of the month as account rendered.
On the last day of the month a list is compiled of all the end balances as
owed to creditors. This list is called the creditors list.
The total of the creditors list must equal the end balance of the Creditors
Control account in the General Ledger. This is done as a control measure to
make sure that all transactions has been posted.
Example 2
Format Stores owed the following amounts to creditors on 1 October 20.10:
●●
●●
●●
Agulhas Suppliers
R3 000
Crystal Consumables R5 000
Amkhala Packaging R2 000
The CPJ for October 20.10 were prepared as follows:
Cash Payments Journal of Format Stores – Oct 20.10
Doc
Date Name of payee
Fol
Bank
Trading
stock
CPJ10
Creditors
control
254
16
Agulhas Suppliers
5 000 00
5 000 00
255
21
Crystal Consumables
2 000 00
2 000 00
256
29
Amkhala Packaging
1 000 00
1 000 00
8 000 00
8 000 00
Wages
Sundry Accounts
Amount
Fol
Details
The CJ for October 20.10 was prepared as follows:
Creditors Journal of Format Stores – Oct 20.10
Doc
Date Creditor
Fol
Creditors
control
Trading
stock
5 000 00
200
6
Agulhas Suppliers
5 000 00
201
9
Amkhala Packaging
3 000 00
202
15
Agulhas Suppliers
4 000 00
203
11
Crystal Consumables
2 000 00
204
19
Amkhala Packaging
1 000 00
15 000 00
160
EMS Gr9 LB BOOK.indb 160
CJ10
Stationery
Packaging
Sundry Accounts
Amount
Fol
Details
3 000 00
4 000 00
2 000 00
Consumables
1 000 00
9 000 00
4 000 00
2 000 00
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
You are required to:
1 Open the individual accounts of the creditors in the creditors ledger for October 20.10.
2 Enter the opening balances of money owed to creditors on 1 October 20.10.
3 Post the CJ and CPJ for October 20.10 to the individual accounts of the creditors in the
creditors ledger.
4 Compile a creditors list on 30 October 20.10.
Suggested solution:
Creditors Ledger of Format Stores
Agulhas Suppliers
Date
20.10
Oct
Details
C1
Fol
Debit
Credit
Balance
01
Account rendered
3 000 00
6
Invoice 200
CJ10
5 000 00
8 000 00
15
Invoice 202
CJ10
4 000 00
12 000 00
16
Cheque 254
CPJ10
5 000 00
7 000 00
Crystal Consumables
20.10
Oct
C2
01
Account rendered
5 000 00
11
Invoice 203
CJ10
21
Cheque 255
CPJ10
2 000 00
2 000 00
7 000 00
5 000 00
Amkhala Packaging
20.10
Oct
01
Account rendered
C3
2 000 00
9
Invoice 201
CJ10
3 000 00
5 000 00
19
Invoice 204
CJ10
1 000 00
6 000 00
29
Cheque 256
CPJ10
1 000 00
5 000 00
Creditors list of Format Stores on 30 October 20.10
Date
Creditor
Fol
Agulhas Suppliers
C1
Debit
Credit
7 000 00
Crystal Consumables
C2
5 000 00
Amkhala Packaging
C3
5 000 00
17 000 00
Weeks 9–10 Topic 5 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 161
161
2013/04/25 9:44 PM
Weeks 9–10
Activity 2 Complete the CJ and CPJ and post to the
Creditors Ledger of Major Stores
The following information relates to Major Stores for June 20.10. Credit
invoices received are renumbered from 100601.
June
1 Major Stores owes the following amounts to suppliers:
●● Makro
R5 900
●● Mini-mart Suppliers
R7 800
4 Purchased goods on credit from Makro on account – R3 500. Invoice
M3325
7 Purchased goods on credit from Mini-mart Suppliers on account –
R4 700. Invoice 825
8 Purchased stationery from Makro at a cost of R3 400 and were issued
invoice M 3355.
11 Purchased goods on credit from Mini-mart Suppliers on account –
R3 100. Invoice 837.
12 Issued cheque CC 215 to Makro for R4 000 in part settlement of our
account.
21 Received invoice M 3388 from Makro for purchases of R7 500.
25 Purchased trading stock from Makro and paid by cheque CC 229 –
R6 000
29 Issued cheque CC 230 to Mini-mart Suppliers for R10 800 in part
settlement of our account.
30 Settled the account with Makro as on the 12th – cheque CC 232
You are required to:
1 Record these transactions in the CJ and CPJ of Major Stores for June
20.10
2 Post the journals for June 20.10 to the Creditors Ledger.
(30)
3 Compile a creditors list on 30 June 20.10
162
EMS Gr9 LB BOOK.indb 162
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
Activity 3 Complete the CJ and CPJ and post to the
Creditors Ledger of HP Stores
The following information was taken from the accounting records of HP
Stores for the month ending 31 October 20.10:
Balances on 1 October 20.10:
Creditors:
Rhino Suppliers
Elephant Consumables
Buffalo Packaging
R7 000
R9 000
R4 000
HP Stores issued the following cheques during October 20.10 as partial
payment on accounts:
October 20.10
16 Cheque 254
21 Cheque 255
29 Cheque 256
Rhino Suppliers
Elephant Consumables
Buffalo Packaging
R5 000
R2 000
R1 000
HP Stores received the following invoices during October 20.10 for credit
purchases (invoices already renumbered):
October 20.10
08 Invoice 1245
22 Invoice 1246
27 Invoice 1247
Rhino Suppliers for trading stock
R15 000
Elephant Consumables for consumables R12 000
Buffalo Packaging for packaging
R7 000
You are required to:
1 Record these transactions in the CJ and CPJ of HP Stores for October
20.10
2 Post the journals for October 20.10 to the Creditors Ledger.
(40)
3 Compile a creditors list on 30 October 20.10
Weeks 9–10 Topic 5 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 163
163
2013/04/25 9:44 PM
Weeks 9–10
Activity 4 Complete the CJ and CPJ and post to the
Creditors Ledger
You are required to:
1 Use the transactions given below to complete the CJ and CPJ of Carrie
Stores for July 20.10.
2 Post to the ledger accounts in the Creditors Ledger only. The accounts
showed the following balances on 30 June 20.10:
●● Metro
R5 000
●● Happy Cleaners
R2 000
●● UCT Stores
R1 000
3 Complete the creditors list on 31 July 20.10
July 20.10:
1 Paid the wages with a cash cheque of R1 000. CC 320
3 Purchased stock on account from Metro – R2 000. Invoice CX 33.
Invoices are renumbered from 100.
6 Bought consumable stores from Happy Cleaners for R120.
Invoice HC 123
8 Paid the wages with a cash cheque of R1 000. CC 321
9 Issued a cheque to Telkom in payment of the account of R430.
10 Purchased stock from Makro and paid with a cheque. R3 400
15 Paid the staff their weekly wages of R1 000. CC324
15 Invoice JWA received from UCT Stores for R450. This was for stock
18 Stationery to the value of R230 and consumables stores of R170 were
purchased on account from Metro. Invoice CX41.
20 Paid R 1500 to Metro in part settlement of the amount owing to
them.
22 Cashed a cheque to pay weekly wages of R1 000.
23 A cheque was issued to Home Builders for R21 400. R1 400 was for
repairs to the office and the balance was for the building of a new
garage.
28 Paid R200 to UCT in part settlement of their account.
(40)
29 Cashed a cheque to pay weekly wages of R1 000.
164
EMS Gr9 LB BOOK.indb 164
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
Activity 5 Record transactions directly in the Creditors
Ledger
Record the following transactions directly in the Creditors Ledger of Intel
Stores. The following transactions occurred during August 20.10:
August 20.10:
1 Intel Stores owed Dell Computers R4 200 and Microsoft R11 250.
4 Bought cartridges from Dell Computers for R2 500 on account.
Invoice DC 331 was received and renumbered to 350.
7 Received invoice MS 419 from Microsoft for R4 590. R4 000 was for
trading stock and the balance was for repairs to a printer.
15 Pay R5 000 per cheque 228 to Microsoft in part settlement of our
account.
19 Bought trading stock from Dell for R8 765. Receive invoice DC 351.
20 Paid R9 500 to Dell computers.
22 Invoice MS 424 was received from Microsoft for R2 100. R1 500 was
for stock and the balance for consumable stores.
28 Paid the balance owing to Dell Computers.
(16)
3.2
Posting to the General Ledger
The Creditors Control account in the General Ledger is a summary of all the
transactions between all the creditors and the business as posted to the
Creditors Ledger. The Creditors Control account (current liability) will be
opened on the first day of the month with the balances owed to all creditors
as indicated in the creditors list. On the last day of the month the journals
will be totalled and the column totals will be posted to the General Ledger
accounts following the rules of the accounting equation:
●●
●●
The Creditors Control column total in the CJ will be posted to the credit
side of the Creditors Control account (L+) and the relevant goods/services
purchase account will be debited.
The Creditors Control column total in the CPJ will be posted to the debit
side of the Creditors Control account (L–).
Weeks 9–10 Topic 5 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 165
165
2013/04/25 9:44 PM
Weeks 9–10
Example 3
Format Stores owed the following amounts to creditors on 1 October 20.10:
●●
●●
●●
Agulhas Suppliers
Crystal Consumables
Amkhala Packaging
R3 000
R5 000
R2 000
The totals for the CPJ for October 20.10 are as follows:
Cash Payments Journal of Format Stores – Oct 20.10
Doc
Date Name of payee
Fol
Trading
stock
Bank
CPJ10
Creditors
control
8 000 00
Wages
Sundry Accounts
Amount
Fol
Details
8 000 00
The totals for the CJ for October 20.10 are as follows:
Creditors Journal of Format Stores – Oct 20.10
Doc
Date Creditors
Fol
Creditors
control
Trading
stock
15 000 00
9 000 00
CJ10
Stationery
Packaging
4 000 00
Sundry Accounts
Amount
Fol
Details
2 000 00
You are required to:
●●
●●
●●
Open the creditors control account in the General Ledger.
Enter the opening balance of money owed to creditors on 1 October 20.10.
Post the CJ and CPJ for October 20.10 to the Creditors control account in the General Ledger.
General Ledger of Format Stores
Balance sheet accounts
Date
Details
Fol
Dr
Amount
Date
Details
Creditors Control
20.10
Oct
30
Bank
30
Balance
20.10
8 000 00 Oct
CPJ10
c/d
17 000 00
Fol
Amount
B9
Cr
01
Balance
b/d
10 000 00
30
Sundry accounts
CJ10
15 000 00
01
Balance
b/d
25 000 00
25 000 00
Sep
17 000 00
The opening balance on 1 October is calculated as:
R3 000 + R5 000 + R2 000 = R10 000
166
EMS Gr9 LB BOOK.indb 166
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
Activity 6 Posting to the Creditors Control account in the General Ledger
The following information was taken from the records of HP Stores for the month ending
31 October 20.10:
Creditors list on 1 October 20.10:
●● Rhino Suppliers
R7 000
●● Elephant Consumables
R9 000
●● Buffalo Packaging
R4 000
1
2
3
4
Totals for the creditors control column in the
journals on 31 October 20.10:
●● Creditors Journal
R34 000
●● Cash Payments Journal
R8 000
Open the Creditors Control account in the General Ledger of HP Stores.
Enter the opening balance of money owed to creditors on 1 October 20.10.
Post the CJ and CPJ for October 20.10 to the Creditors Control account in the General Ledger.
Explain how you would ensure that you have posted the journals correctly.
(30)
Activity 7 Posting to the Creditors Control account in the General Ledger
The following information was taken from the records of Carrie Stores for the month ending
31 July 20.10:
Creditors list on 1 July 20.10:
●● Metro
●● Happy Cleaners
●● UCT Stores
R5 000
R2 000
R1 000
Totals for the creditors control column in the
journals on 31 October 20.10:
●● Creditors Journal
R2 970
●● Cash Payments Journal
R1 700
1 Open the Creditors Control account in the General Ledger of Carrie Stores.
2 Enter the opening balance of money owed to creditors on 1 July 20.10.
3 Post the CJ and CPJ for July 20.10 to the Creditors Control account in the General Ledger.
(30)
Activity 8 Posting to the Creditors Control account in the General Ledger
The following information was taken from the records of Intel Stores for the month ending
31 August 20.10:
●● Intel Stores owed Dell Computers R4 200 and Microsoft R11 250 on 1 August 20.10
●● Total invoices received from Dell Computers for the month amounts to R11 265
●● Total payments made to Dell Computers for the month amounts to R15 465
●● Total invoices received from Microsoft for the month amounts to R6 690
●● Total payments made to Microsoft for the month amounts to R5 000
1 Open the Creditors Control account in the General Ledger of Intel Stores.
2 Enter the opening balance of money owed to creditors on 1 August 20.10.
3 Post the CJ and CPJ for August 20.10 to the Creditors Control account in the General Ledger. (30)
Weeks 9–10 Topic 5 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 167
167
2013/04/25 9:44 PM
Weeks 9
9–10
–10
4 Effect of credit transactions on the accounting
equation
Each transaction will affect the elements of the accounting equation by
decreasing or increasing the Assets (A), Owner’s equity (OE) or liabilities (L).
Credit purchases have the following effect on the accounting equation:
●●
●●
Debit: relevant expense/asset account (A+/OE–)
Credit: Creditors Control (L+)
Payments to creditors have the following effect on the accounting equation:
●●
●●
Debit: Creditors Control (L–)
Credit: Bank (A–)
Example 4
1 Bought trading stock on account from Rhino Suppliers – R2 200.
Invoice R11
2 Purchased R125 of stationery from CAN Stores and paid by cheque.
3 The business car was serviced at a cost of R890. Received the invoice from Andrew’s Garage
AG 07.
4 Purchased a new computer from Incredible for R7 450. Invoice IC96
5 Paid R3 000 to AB Dealers – a Creditor – in part settlement of our account with them.
Solution:
No.
Assets =
Owner’s equity +
Liabilities
Reason
1
+ 2 200 00
0 00
+ 2 200 00 Trading stock (asset) increases
Creditors control (liability) increase
2
– 125 00
– 125 00
0 00 Bank (asset) decrease
Stationery (expense) decreases OE
3
0 00
– 890 00
+ 890 00 Repairs (expense) decreases OE
Creditors control (liability) increase
4
+ 7 450 00
0 00
+ 7 450 00 Equipment (asset) increases
Creditors control (liability) increase
5
– 3 000 00
0 00
– 3 000 00 Bank (asset) decrease
Creditors control (liability) decreases
Total
6 525 = 00
– 1015 + 00
6 525 = 00
168
EMS Gr9 LB BOOK.indb 168
7 540 00
6 525 00
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
Activity 9 Complete the Accounting Equation
Using the transactions given below, complete the Accounting Equation of Devina’s Delightful
Store. An example has been done for you.
Example:
The owner increases her capital contribution with R10 000
No.
Example
1
2
3
4
5
6
Assets
+10 000
Owner’s equity
+ 10 000
Liabilities
0
Reason
Bank (A) increases
Capital (OE) increase
Purchased trading stock to the value of R3 000 on account from Jacob’s Suppliers
Bought consumables from AB Cleaners and receive their invoice – R250
Issued a cheque to Telkom to pay for the telephone – R770.
Sold goods for R2 000 on account, cost of sales is R1 200
Paid R1 250 to Unbelievable Bargains in part settlement of their account.
Purchased stationery on account from CAN stores, R350.
(24)
Activity 10 Complete the Accounting Equation
Use transactions dated 4–29 of Activity 2 and analyse each transaction according to the
Accounting Equation as per example:
Example:
Issue cheque 23 as payment of account statement received from CR Editor, R2 000.
General Ledger
Subsidiary Ledger
No
Account
debited
Account
credited
Account
debited
E.g.
Creditors
Control
Bank
CR Editor
Account
credited
Journal Source
document
CPJ
OE
(+/–)
Cheque
counterfoil
A
(+/–)
L
(+/–)
–2 000
– 2 000
(80)
Weeks 9–10 Topic 5 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 169
169
2013/04/25 9:44 PM
Weeks 9–10
5 Posting the CAJ to Creditors Ledger and the
General Ledger
The creditors allowance journal is completed when a credit note is received
from a creditor to whom goods/services purchased on credit, were returned.
Entries in the CAJ are posted daily to the individual accounts of the creditors
in the Creditors Ledger:
●●
The creditors individual account will be debited with the creditors
allowance amount as the money owed to the creditors decreases
(L decreases).
On the last day of the month the money-columns of the DAJ are totalled and
posted to the creditors control account in the General Ledger:
●●
●●
The total of the creditors allowance column will be posted to the debit side
of the creditors control account (L decreases).
The totals of the analysis columns will be posted to the credit side of the
relevant expense/asset account (A decreases, OE increases).
Example 5
Format Stores buys various goods and services on account. The following information was taken
from the records of Format Stores for October 20.10:
Balances on 01 October 20.10:
Agulhas Suppliers
Crystal Consumables
Amkhala Packaging
Trading Stock
C1
C2
C3
B9
R15 000
R2 000
R8 000
R13 500
The following journals were completed for October 20.10:
Creditors’ Journal of Format Stores – Oct 20.10
Doc
Date Creditor
Fol
200
3
Agulhas Suppliers
201
6
Crystal Consumables
202
17
DB Builders
Creditors
control
Trading
stock
14 000 00
14 000 00
Stationery
Sundry Accounts
Amount
Fol Details
600 00
1 800 00
1 800 00
203
26
Amkhala Packaging
17 000 00
29
Agulhas Suppliers
27 600 00
26 000 00
61 000 00
40 000 00
EMS Gr9 LB BOOK.indb 170
Equipment
600 00
204
170
CJ10
Repairs
17 000 00
1 600 00
17 000 00
2 200 00
1 800 00
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
Cash Payments Journal of Format Stores – Oct 20.10
Doc
Date Name of payee
Fol
C400
3
Agulhas Suppliers
C401
8
Crystal Consumables
C402
19
Kit Kat
C205
28
Amkhala Packaging
CPJ10
Trading
stock
Bank
Creditors
control
8 000 00
8 000 00
500 00
500 00
3 000 00
Amount
Fol
Details
3 000 00
10 000 00
21 500 00
Sundry Accounts
10 000 00
3 000 00
18 500 00
Creditors’ Allowance Journal of Format Stores – Oct 20.10
Doc
Date Creditor
Fol
Creditors
control
Trading
stock
1 000 00
CN56
8
Agulhas Suppliers
1 000 00
CN57
28
Amkhala
Packaging
3 000 00
CN58
31
Agulhas Suppliers
4 000 00
4 000 00
8 000 00
5 000 00
Equipment
CAJ10
Stationery
Sundry Accounts
Amount
Fol
Details
3 000 00
3 000 00
The totals pertaining to cost of sales of trading stock in the CRJ. DJ and DAJ is given as:
CRJ
DJ
12 000 00
DAJ
15 000 00
2 500 00
You are requested to:
1 Open the individual creditors accounts in the Creditors Ledger.
2 Post the entries from the journals to the individual creditors accounts in the Creditors Ledger.
3 Complete the creditors control account as well as the trading stock account in the General
Ledger.
4 Compile a creditors list on 31 October 20.10.
Suggested solution:
Creditors Ledger of Format Stores
Agulhas Suppliers
Date
20.10
Oct
Details
C1
Fol
Debit
01
Account rendered
3
Invoice 200
CJ10
3
Cheque 400
CPJ10
8 000 00
1 000 00
Credit
15 000 00
8
Credit note 56
CAJ10
29
Invoice 204
CJ10
31
Credit note 58
CAJ10
14 000 00
29 000 00
21 000 00
20 000 00
27 600 00
4 000 00
Weeks 9–10 Topic 5 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 171
Balance
47 600 00
43 600 00
171
2013/04/25 9:44 PM
Weeks 9–10
Crystal Consumables
20.10
Oct
C2
01
Account rendered
2 000 00
6
Invoice 201
CJ10
8
Cheque 401
CPJ10
600 00
2 600 00
500 00
2 100 00
Amkhala Packaging
20.10
Oct
01
C3
Account rendered
8 000 00
26
Invoice 203
CJ10
28
Cheque 205
CPJ10
10 000 00
17 000 00
28
Credit note 57
CAJ10
3 000 00
25 000 00
15 000 00
12 000
DB Builders
C4
20.10
17 Invoice 202
Oct
CJ10
1 800 00
1 800 00
General Ledger of Format Stores
Balance sheet accounts
Date
Details
Fol
Dr
20.10
Oct
Amount
Date
Details
Creditors Control
31
Bank
CPJ10
Sundry accounts
CAJ10
8 000 00
c/d
59 500 00
Balance
18 500 00 20.10
Oct
Fol
Amount
B7
Cr.
01
(15 000 + 2 000 + 8 000)
Balance
b/d
25 000 00
31
Sundry accounts
CJ10
61 000 00
01
Balance
b/d
59 500 00
86 000 00
86 000 00
Sep
Trading Stock
20.10
Oct
01
Balance
31
Bank
b/d
13 500 00 20.10
Oct
B10
31
Creditors control
CAJ10
5 000 00
CPJ10
3 000 00
Cost of sales
CRJ10
12 000 00
Creditors control
CJ10
40 000 00
Cost of Sales
DJ10
15 000 00
Cost of sales
DAJ10
2 500 00
Balance
c/d
27 000 00
59 000 00
Sep
01
Balance
b/d
59 000 00
27 000 00
Creditors list of Format Stores on 30 October 20.10
Creditor
Fol
Agulhas Suppliers
C1
Debit
Credit
43 600 00
Crystal Consumables
C2
2 100 00
Amkhala Packaging
C3
12 000 00
DB Builders
C4
1 800 00
59 500 00
172
EMS Gr9 LB BOOK.indb 172
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
Activity 11
Calculations
Use the given accounts to calculate the following:
1
2
3
4
5
The amount owed on 1 November 20.11.
Total credit purchases for November 20.11.
Total purchases returned for November 20.11.
Total payments for November 20.11.
The amount owed on 30 November 20.11.
The following creditors accounts were taken from the records of MK Jewelers for the
month ending 30 November 20.11:
(10)
Creditors Ledger of MK Jewelers
Gold Shop
Date
20.11
Nov
C1
Details
Fol
Debit
Credit
01
Account rendered
100 000 00
07
Invoice
CJ
11
Cheque
CPJ
13
Invoice
CJ
15
Credit note
CAJ
18
Invoice
CJ
24
Credit note
CAJ
25 000 00
195 000 00
25
Cheque
CPJ
130 000 00
65 000 00
80 000 00
75 000 00
180 000 00
105 000 00
70 000 00
15 000 00
175 000 00
160 000 00
60 000 00
220 000 00
C2
Silver shop
20.11
Nov
Balance
01
Account rendered
150 000 00
6
Invoice
CJ
45 000 00
8
Cheque
CPJ
15
Invoice
CJ
40 000 00
150 000 00
25
Invoice
CJ
50 000 00
200 000 00
26
Cheque
CPJ
125 000 00
75 000 00
28
Credit note
CAJ
25 000 00
50 000 00
Activity 12
85 000 00
195 000 00
110 000 00
Post to the Creditors Ledger and General Ledger
Use the provided information to:
●●
●●
●●
Open the individual creditors accounts in the Creditors Ledger.
Post the entries from the journals to the individual creditors accounts in the Creditors Ledger.
Complete the Creditors Control account and the trading stock account in the General Ledger.
Compile a creditors list on 31 April 20.12.
Activity 12 continues 
Weeks 9–10 Topic 5 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 173
173
2013/04/25 9:44 PM
Weeks 9–10
Activity 12
(continued)
Lancewood Stores buys various goods and services on account. The following information was
taken from the records of Lancewood Stores for April 20.12
Balances on 01 April 20.12:
Gouda Traders
Cheddar Manufacturers
R22 000
R18 000
C1
C3
The Brie Shop
Trading Stock
C2
B9
R12 000
R27 000
The following journals were completed for April 20.12:
Creditors Journal of Lancewood Stores – Apr 20.12
Creditor
Fol
Fol: CJ4
Sundry Accounts
Creditors
control
Doc
Day
Trading Stock
C90
3
Gouda Traders
28 000
00
C91
6
The Brie Shop
1 200
00
C92
17
Camembert
Shop fitters
29 600
00
C93
26
Cheddar
Manufacturers
34 000
00
C94
29
Gouda Traders
28 000
Equipment
Stationery
Amount
Fol
00
1 200
55 200
00
52 000
00
148 000
00
80 000
00
34 000
00
34 000
00
00
3 200
00
4 400
00
29 600
00
29 600
00
Equipment
Cash Payments Journal of Lancewood Stores – Apr 20.12
Doc
Day
Name of payee
Fol
Bank
Trading Stock
Fol: CP4
Sundry Accounts
Creditors
Control
Stationery
C80
3
Gouda Traders
16 000
00
16 000
00
C81
8
The Brie Shop
1 000
00
1 000
00
20 000
00
37 000
00
C82
19
Cottage Place
13 000
00
C83
28
Cheddar
Manufacturers
20 000
00
50 000
00
13 000
13 000
Amount
Fol
Day
Creditor
Fol
Details
00
00
Creditors Allowance Journal of Lancewood Stores – Apr 20.12
Doc
Details
Fol: CAJ4
Sundry Accounts
Creditors
Control
Trading Stock
CN16
8
Gouda Traders
2 000
00
CN17
28
Cheddar
Manufacturers
6 000
00
CN18
31
Gouda Traders
8 000
00
8 000
00
16 000
00
10 000
00
Equipment
Stationery
Amount
Fol
Details
2 000
6 000
00
6 000
00
The totals pertaining to cost of sales of trading stock in the CRJ. DJ and DAJ are given as:
CRJ
24 000
174
EMS Gr9 LB BOOK.indb 174
DJ
30 000
DAJ
5 000
(60)
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
6 Effect of creditors allowances on the Accounting
Equation
Creditors allowance has the following effect on the Accounting Equation:
Debit creditors allowance (L –)
Credit relevant expense/asset account (A–/OE+)
●●
●●
with the original purchase
price of the goods returned
Example 6
Trading stock to the value of R1 000 was returned to the supplier as it was broken.
Stationery originally purchased for R500 is returned to the supplier as it was not as ordered.
●●
●●
You are required to show the effect of these transactions on the Accounting Equation.
General Ledger
No
Account debited
A
1
Creditors control
Trading stock
2
Creditors control
Stationery
L
– –
Cr Dr
+
Dr
Account credited
OE
+ –
Cr Dr
1 000 00
+
Cr
1 000 00
500 00
500 00
Activity 13 Accounting Equation
Show the effect of these transactions on the Accounting Equation.
Example:
Trading stock to the value of R1 000 was returned to the supplier as it was broken.
General Ledger
A
No
Account debited
Account credited
E.g.
Creditors control
Trading stock
1
2
3
4
+
Dr
OE
– –
Cr Dr
L
+ –
Cr Dr
1 000 00
+
Cr
1 000 00
Bought stationery from The Pencil Shop and paid per cheque, R600.
Trading stock purchased on credit from The Big Supplier, R6 500
Trading stock returned to supplier, R1 500.
Cash a cheque to pay weekly wages, R2 000.
Activity 13 continues 
Weeks 9–10 Topic 5 Financial literacy • Term 3
EMS Gr9 LB BOOK.indb 175
175
2013/04/25 9:44 PM
Weeks 9–10
Activity 13 (continued)
5 Purchase a computer and printer on credit from The Computer
Shop, R10 000.
6 Pay The Big Supplier, a creditor, R8 000 as partial payment of
money owed on account.
(30)
Activity 14 Accounting Equation
Copy and complete the table below, showing the effect of the listed
transactions on the Accounting Equation.
Example: Trading stock was returned to the supplier as it was broken.
General Ledger
No
Account debited
E.g.
Creditors control
A
OE
L
Account credited
Trading stock
+
–
1
2
3
4
5
6
7
8
9
10
1
2
3
4
5
6
7
8
9
10
176
EMS Gr9 LB BOOK.indb 176
Bought stationery on credit.
Trading stock purchased and paid per cheque.
Cash sales.
Cash a cheque to pay weekly wages.
Credit sales.
Trading stock purchased on credit.
Pay a creditor as partial payment of money owed on account.
Receive money from a debtor as partial payment on her account.
Trading stock purchased on credit returned to supplier.
A debtor returns some of the stock she bought on credit.
(30)
Term 3 • Weeks 9–10 Topic 5 Financial literacy
2013/04/25 9:44 PM
Topic
5
Summary and questions
Summary
●●
●●
●●
●●
●●
●●
●●
A creditor is a current liability to a business.
The money owed to a business must be paid to the creditor according to the credit agreement.
Entries recorded in the journals will be posted to the creditors individual accounts in the
Creditors Ledger.
The journals will be closed at month end and the column totals posted to the relevant accounts.
Credit purchases will be recorded in the CJ and this will be posted to the credit side of the
Creditors Ledger and to the credit side of the Creditors Control account in the General Ledger
Cash payments to creditors will be recorded in the CPJ and posted to the debit side of the
Creditors Ledger and the debit side of the Creditors Control account in the General Ledger
Purchases returned will be recorded in the CAJ and this will be posted to the debit side of the
Creditors Ledger and the debit side of the Creditors Control account in the General Ledger.
Questions
A For each of the following choose the most correct answer.
1 Creditors Control is
a an income account
b found in the nominal accounts section of the ledger
d increases on the debit side of the ledger
c is a current liability
2 In the Creditors Ledger
a the credit column increases the balance
b a credit invoice will be recorded in the debit column
c a payment to a Creditor will go in the debit column
d option a and c
3 The Creditors Control account in the General Ledger:
a Increases on the debit side
d Option a and c
b Decreases on the debit side e Option b and c
c A payment to a Creditor will be recorded on the debit side
(3)
B For the following two instances, give a valid transaction and include the source document.
1 An entry that would take place in the CJ.
(1)
2 An entry that would take place in the CPJ involving a Creditor.
(1)
C Using the transactions given below, create the table for Malik Stores.
1 Bought petrol on account for R500.
2 Paid a Creditor R1 000 in part settlement of their account.
3 Purchased stationery from a supplier and received their credit invoice – R 225
4 Needed more consumable stores so issued a cheque to a supplier for R 300.
5 Due to a bulk purchase of trading stock for R3 750, we were granted a 10% trade
discount. This amount will be paid next month.
(20)
Total marks 25
Summary and questions • Topic 5
EMS Gr9 LB BOOK.indb 177
177
2013/04/25 9:44 PM
Term
3
Project
Formal Assessment Task (FAT): Project
In order for a business to function effectively and achieve its goals,
different activities need to be performed. These activities are grouped into
eight functional areas. Prepare a presentation in which you discuss the
following:
Part A: Primary research
1 Research the business function of your choice by interviewing a
manager.
2 Select a business and arrange to interview the manager who works in
the business function that you are interested in. Gather the following
information:
a Name of the business.
b A brief history of the business.
c A description of what the business does; what products does it
provide.
d The position of the manager you interview.
e The manager’s qualifications.
f The manager’s experience or career path.
g What the manager actually does day-to-day.
h Any additional interesting and relevant information.
3 Create a written research report of your findings.
Part B: Secondary Research
1 Research any two careers from any of the business functions and
briefly report on them.
2 Which one of the two careers would you choose. Motivate your choice.
Create a verbal presentation of your findings and choice.
Note:
●●
●●
●●
178
EMS Gr9 LB BOOK.indb 178
Your verbal presentation should not be longer than 5 minutes and not
shorter than 4 minutes.
You may do a power-point or any other visual presentation to enhance
your oral presentation.
A print out of your power-point slides (or other visual presentation)
together with evidence of your primary and secondary research must
be handed in.
Term 3 • Project
2013/04/25 9:44 PM
Formal Assessment Task (FAT): Controlled test
1
Test 3
•
•
Marks: 100 Time: 60 min.
Answer ALL the questions.
[10 marks]
Question 1 1
State the Law of Supply
(2)
2
Give two examples of industries (non-mining) in the primary sector
(2)
3
Give two examples to show the difference between the marketing function and
the public relations function in a business (2)
List two accounts (other than Capital) that usually have credit balances in a
4
Trial balance. (2)
Explain the concept ‘debtors allowance’. (2)
5
Question 2 [26 marks]
Draw a closed economy circular flow/economic cycle diagram with the
1
following components:
1.1 Three role players (3)
1.2 Lines with arrows at the end that indicate the flows of goods and services
between the role players (8)
Give each line a number and, below the diagram, briefly explain the kinds of
2
goods and services that the line represents (8)
3
More chaos as municipal strike continues
Roads were blockaded, rubbish again dumped in streets, workers intimidated
and elderly people holding a meeting in the Newton Park municipal library were
forced to leave the library as the municipal strike in Port Elizabeth continued into
its 2nd day.
The strike continued yesterday despite a new 13% wage hike offer by the employer
in response to union demands of 15%.
Economist Mike Schussler estimated the strike was costing South Africa in the
region of r15 million. “I can’t work out the damage of all the shops and the traders,
but the cost is around R15-million a day in workers’ wages, I guess, “ he said. The
longer the strike continued, the more the cost would escalate.
3.1
What was the strike all about? Formal Assessment Task (FAT): Controlled test • Term 3
EMS Gr9 LB BOOK.indb 179
(2)
179
2013/04/25 9:44 PM
Term
2
3
3.2
Explain the impact of the municipal strike on
c
Businesses in Port Elizabeth d
The South African economy (2)
(3)
Question 3 [16 marks]
The following table represents the supply and demand schedules for the Spingbok
rugby-jerseys sold at a retailer for the 2012 season.
Price of rugby jerseys
R300
R320
R340
R360
R380
1
2
3
4
Quantity demanded
500
400
300
200
100
Quantity supplied
100
200
300
400
500
Draw and clearly label the demand and supply curves for the Springbok rugby
jerseys using the information on the above table.
What do you notice about the quantity demanded as the price increases? After winning the first two games convincingly the number of rugby fans
increases. Explain what will happen to the demand curve. The manufacturer of the Springbok jerseys has purchased machine that can
knit the rugby jerseys faster and cheaper than the previous machine. Explain
how this will change the supply curve.
Question 4 The following balances appeared in the books of ICE CREAM LAND on 1 May 20.5
Capital
Equipment
Trading stock
Bank
Debtors Control
Creditors Control
Sales
Cost of Sales
Wages
Consumables
Debtors allowances
180
EMS Gr9 LB BOOK.indb 180
B1
B2
B3
B4
B5
B6
N1
N2
N3
N4
N5
(10)
(2)
(2)
(2)
[48 marks]
R25 250
R20 000
R7 000
R900 (dr)
R100
R3 050
R23 400
? (20% mark-up)
R3 970
R200
R30
Term 3 • Formal Assessment Task (FAT): Controlled test
2013/04/25 9:44 PM
3
Journal totals:
Creditors Journal of Ice Cream Land for May 20.5
Creditors Control
Trading stock
Consumables
1250 00
240 00
1490 00
CJ5
Sundry Accounts
Amount
Fol
0 00
Details
Creditors Allowances Journal of Ice Cream Land for May 20.5
CreditorsControl Trading stock
Consumables Sundry Accounts
Amount
350 00
300 00
Debtors Journal of Ice Cream Land
for May 20.5
Sales
360 00
50 00
CAJ5
Fol
Details
0 00
Debtors Allowances Journal of Ice
Cream Land for May 20.5
DAJ 5
DJ 5
Cost of Sales
?
Sales
18 00
Cost of Sales
?
Cash Receipts Journal of Ice Cream Land for May 20.5
Analysis of
Bank
Sales
Cost of
Debtors
Receipts
Sales
Control
13988 00
CRJ 5
Sundry Accounts
Amount
Fol Details
100 00 10000* 00
3888 00
?
* the owner made an additional capital contribution of R10 000 on 1 May 20.5
Cash Payments Journal of Ice Cream Land for May 20.5
Bank
Trading
Creditors
Wages
Sundry Accounts
Stock
Control
Amount
Fol
13520 00
9890 00
2550 00
1000 00
80* 00
CPJ 5
Details
* on 13 May consumables were purchased from a local wholesaler and a cheque for
R80 was issued.
1
2
3
Enter all the balances in 1 May 20.5 in the General Ledger accounts provided above.
Enter all the journal totals for May (provided above) in the appropriate General
Ledger accounts and balance the General Ledger accounts where necessary.
Prepare a Trial balance on 31 May 20.5.
Formal Assessment Task (FAT): Controlled test • Term 3
EMS Gr9 LB BOOK.indb 181
181
2013/04/25 9:44 PM

Term
41
182
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2013/04/26 1:15 PM
183
EMS Gr9 LB (4).indd 183
2013/04/26 1:15 PM

Term
41
Introduction
Topic 1 Financial literacy: Transactions – cash
and credit
In this topic you will use all the skills you have learnt in the financial literacy
section of EMS this year. You will record cash and credit transactions in the
journals, post to the ledgers and prepare a Trial balance.
Topic 2 Entrepreneurship: The business plan
In this topic you will learn about the different components and the format of a
business plan. You will also learn more detail about the financial plan which
includes fixed and variable costs, break-even points, mark-up on sales and
profit percentage.
184
EMS Gr9 LB (4).indd 184
Term 4 • Introduction
2013/04/26 1:15 PM
Term 4
Revision: Week 1
Revision exercise 1 p186
Revision exercise 2 p186
Revision exercise 3 p187
Revision exercise 4 p187
Revision exercise 5 p187
Topic 2
Financial literacy:
Transactions – cash
and credit
Weeks 2–7
1 Introduction p188
2 Recording of cash and credit
transactions of a sole trader
in the subsidiary journals;
posting to the Debtors
Journal (DJ), Creditors
Journal (CJ) and General
Ledger; preparing a Trial
balance p188
Entrepreneurship:
The business plan
Examination preparation
Term 1–4
Weeks 2–7
1 Introduction p200
2 Concept of a business
plan p200
3 Components of a business
plan p201
4 Format of a business
plan p202
Introduction • Term 4
EMS Gr9 LB (4).indd 185
185
2013/04/26 1:15 PM

Week
Revision
1
Revision exercise 1 Trade Unions
Read the following extract from Everyone’s Guide to the South African Economy by Andre Roux,
and answer the questions that follow:
“...over the last few decades the productivity of labour in South Africa has not improved as much
as it has in many other countries. As a result, more and more employers or potential employers
of labour are arguing that labour in South Africa – especially unskilled and semi-skilled labour
– is effectively becoming too expensive. Because of this, there is a growing tendency to use less
and less labour to produce goods and services, and more and more capital (that is, machinery,
equipment and technology). In effect, the South African economy is becoming more capital
intensive and less labour intensive”
1 Do you think the trade union movement in South Africa has contributed to the situation
above? Why do you say so? 2 Suggest ways in which South Africa could improve the productivity of its unskilled and
semi-skilled workers? 3 If you are a boss and every year your workforce go on strike, what would you do? 4 If you were a trade union representative, whose workers were threatened with
retrenchments, what would you do? 5 Explain the difference between a labour-intensive and a capital-intensive economy. 6 How does the above argument affect South Africa’s employment figures? (2)
(2)
(2)
(2)
(2)
(2)
Total marks 12
Revision exercise 2
Credit transactions – debtors
Below you are given an incomplete table for Rama Traders. Complete the table indicating the
source document, journal, account debited, account credited as well as the effect of the transaction
on the accounting transaction by indicating an increase with a (+) and a decrease with a (–).
No Source
Journal
document
Amount
1
1 000 00
Cash
register roll
General Ledger
Account
Account
debited
credited
Effect on accounting equation (+/–)
Assets
Owner’s Liabilities
Equity
600 00
2
DJ
1 500 00
900 00
3
Receipt
4
5
10 000 00
CPJ
Cheque
counterfoil
6
Capital
250 00 Telephone
2 000 00 Trading
stock
750 00 Bank
Debtors control
Total marks 20
186
EMS Gr9 LB (4).indd 186
Term 4 • Revision
2013/04/26 1:15 PM
Revision exercise 3 Credit transactions – creditors
Fill in the relevant information in the CJ below wherever there is a star.
Creditors Journal of Zama Zama Stores – May 20.10
Doc
Date
Creditor
Fol
Cr Control
X34
6
Ndlovo Dealers
*
CN423
9
Rhino Wholesale
*
X45
12
*
JN 651
19
4200 00
3500
CN460
23
Rhino Wholesale
30
Sandile Supplies
Sundry Accounts
Consumables
Stationery
125 00
250 00
Amount
Fol
Details
2500 00
375 00
Makro
SS39
Trading
Stock
375 00
3900 00
*
*
*
*
*
*
12000 00
375 00
Total marks 9
Revision exercise 4 Functions of a business
Which level of management would be responsible for the following tasks?
Top
Middle Lower
Deciding whether the business should employ more staff?
Deciding whether the business can afford to give its staff pay increases?
Deciding what marketing strategy to adopt to sell a new product?
Deciding when an expensive piece of equipment, essential to the running of the business,
should be serviced?
Carrying out the service or repairs on that piece of equipment?
Total marks 5
Revision exercise 5 Credit transactions – creditors
Using the information given below you are required to complete the account of Miller Trading – a
Creditor of Bobby’s Beat Shop – in the Creditors Ledger of Bobby’s Beat shop for September 20.10
Transactions:
1 Bobby owes Miller Trading R2 500.
3 Purchased stock on account from Miller Trading for R1 350. Invoice MT 321.
11 Paid R1 000 in part settlement of the account to Miller Trading (Ch BBS 22).
17 Bought more stock from Miller Trading for R1 300. Invoice MT 333.
21 Needed a few small items of stock from Miller Trading, so issued a cheque (BBS 26) for R125.
28 Paid the amount owing to Miller Traders in full – Ch BBS 31.
Total marks 12
Revision • Term 4
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Key terms
business plan
variable costs
fixed costs
break-even point
cost of sales
Topic 1 Financial literacy: Transactions –
1
Introduction
In this topic you will use all the skills you have learnt in the financial literacy
section of EMS this year. You will record cash and credit transactions in the
journals, post to the ledgers and prepare a Trial balance.
2 Recording of cash and credit transactions of a
sole trader in the subsidiary journals; posting to
the Debtors Journal (DJ), Creditors Journal (CJ) and
General Ledger; preparing a Trial balance
The following is a practical example of the accounting processes you use
when doing the above.
Example 1
Using the information given below, you are required to:
1 Complete the journals of Norma Stores for October 20.10.
2 Post to the ledger and subsidiary ledgers.
3 Complete the Trial balance as at 31 October.
Balances and totals on 1 October 20.10:
Bank
Debtors control
Capital
Sales
Stationery
R 14100
R 3900
R 58 940
R 144000
R 3 160
Trading stock
R 9980
Creditors control
R 16 200
Land
R 100 000
Cost of sales
R 88000
Debtors:
Mr Smith
Ms Naidoo
R 1 900
R 2 000
Creditors:
Makro
Boxer
R 9 200
R 7 000
The business uses a mark-up of 40% unless otherwise stated.
188
EMS Gr9 LB (4).indd 188
Term 4 • Weeks 2–7 Topic 1 Financial literacy
2013/04/26 1:15 PM
cash and credit
Transactions
1 Bought Trading stock from Makro on account. R2 450. Invoice MA22
3 Cash sales amounted to R3 850. CRT 13
Rent income was received from Jim Jones – R2 000. Rec 32
4 Sold good to Mr Smith on account – R700. Invoice NS 11
6 Issued a cash cheque to pay wages of R1 000. CC88
Bought consumables on account from Boxerfor R375. Invoice UX 12
8 Received a cheque from Ms Naidoo for R1 500. This was in part settlement
of her account.
13 Issued a cash cheque for wages
14 Bought stock from Incredible for R2 000. In addition also purchased
stationery to the value of R300. Paid by cheque.
Issued a cheque to Makro for R2 000 in part settlement of our account.
17 Sold goods with a cost price of R425 on account to Miss Naidoo
Bought more stock from Makro for R2 500 on account. Invoice MA 39
18 More cash sales of R7 700 were recorded.
19 Mr Smith made a direct deposit of R1 350 in part settlement of his account.
21 Received an account of R2 400 from Boxer (InvUX 33) – R1 900 was for
Trading stock and the balance for stationery.
Issued a cash cheque to Telkom for R550. This was to pay the Telephone
account.
22 Paid the wages
Sold goods on account to Mr Smith for R500 (CP was R300)
24 Paid Boxer R5 000 in part settlement of their account.
26 Paid R3 400 to Makro – this was in part settlement of our account with
them.
27 Paid wages after granting the staff a 10% increase.
Solution:
Creditors Journal of Norma Stores October 20.10
Cr Control
Trading
stock
Makro
2450 00
2450 00
6
Boxer
375 00
MA 39
17
Makro
2500 00
2500 00
MD 33
21
Boxer
2400 00
1900 00
7725 00
6850 00
B4
B2
Doc
Date
Creditor
M22
1
UX 12
Fol
CJ10
Consumables
Sundry Accounts
Amount
Fol
Details
N3
Stationery
375 00
500 00
375 00
500 00
Weeks 2–7 Topic 1 Financial literacy • Term 4
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–7
Debtors Journal of Norma Stores October 20.10
Doc
Date
DJ 10
Debtor
Fol
Sales
Cost of Sales
NS 11
4
Mr Smith
700 00
500 00
NS 12
17
MsNaidoo
595 00
425 00
NS 13
22
Mr Smith
500 00
300 00
1 795 00
1 225 00
B3; N1
N2; B2
Cash Receipts Journal of Norma Stores October 20.10
Doc
Date Details
CRT
13
3
R 32
Fol
Analysis of
Receipts
Bank
CRJ 10
Cost of
Sales
Sales
Cash sales
3 850 00
3 850 00
Jim Jones
2 000 00
5 850 00
R 33
8
Ms Naidoo
1 500 00
1 500
CRT
14
18
Cash sales
7 700 00
7 700 00
R 35
19
Mr Smith
Sundry Accounts
Debit
Control
Amount
2 750 00
2 000 00
Date
Name of
Payee
7 700 00
5 500 00
1 350 00
Fol
1 350
16 400 00
11 550 00
8 250 00
2 850 00
B1
N1
N2; B2
B3
2 000 00
Bank
Wages
CPJ 10
Trading
stock
Credit Control
CC 88
6
Cash
1 000 00
1 000 00
CC 89
13
Cash
1 000 00
1 000 00
CC 90
14
Incredible
2 300 00
Makro
2 000 00
CC 92
21
Cash
550 00
CC 93
22
Cash
1 000 00
CC 94
24
Boxer
5 000 00
5 000 00
CC 95
26
Makro
3 400 00
3 400 00
CC 96
27
Cash
1 100 00
1 100 00
17 350 00
4 100 00
CC 91
B1
190
EMS Gr9 LB (4).indd 190
Rent
income
1 500 00
Cash Payments Journal of Norma Stores October 20.10
Doc
Fol Details
2 000 00
Sundry Accounts
Amount
300 00
Fol
Details
N3
Stationery
2 000 00
550 00
Telephone
1 000 00
2 000 00
10 400 00
B2
B4
850 00
Term 4 • Weeks 2–7 Topic 1 Financial literacy
2013/04/26 1:15 PM
Debtors Ledger of Norma Stores
Mr Smith DL 1
Month
Oct
Date
Details
Fol
Debit
1
Balance
b/f
4
NS 11
DJ 10
19
Rec R 34
CRJ10
22
NS 13
DJ 10
700
Credit
Balance
00
1350
500
00
1 900
00
2 600
00
1 250
00
1 750
Month
Oct
00
DL 2
Ms Naidoo
Date
Details
Fol
Debit
1
Balance
b/f
8
Rec R 33
CRJ10
17
NS 12
DJ10
Credit
Balance
2 000
1500
595
00
00
00
500
00
1 095
00
Creditors Ledger of Norma Stores
CL 1
Makro
Month
Oct
Date
Details
Fol
1
Balance
b/f
Debit
MA 22
CJ 10
14
CC 91
CPJ10
17
MA 39
CJ10
26
CC 95
CPJ10
2450
2 000
00
00
2500
3 400
Balance
Credit
00
00
9 200
00
11 650
00
9 650
00
12 150
00
8 750
Boxer
00
CL 2
Month
Oct
Date
Details
Fol
1
Balance
b/f
Debit
Balance
Credit
7 000
00
6
UX 12
CJ10
375
00
7 375
00
21
UX 33
CJ10
2400
00
9 775
00
24
CC 94
CPJ10
4 775
00
5 000
00
General Ledger of Norma Stores
Balance sheet accounts
Date
Details
Fol
Dr
Oct
Nov
Amount
Date
Details
+ Bank –
1
Balance
30
Total receipts
1
Balance
b/d
14 100
00 Oct
CRJ10
16 400
00
30 500
00
13 150
00
b/d
Amount
B1
31
Total payments
Balance
Weeks 2–7 Topic 1 Financial literacy • Term 4
EMS Gr9 LB (4).indd 191
Fol
Cr
CPJ 10
17 350
00
c/d
13 150
00
30 500
00
191
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Date
Details
Fol
Nov
Nov
Cr
B2
Balance
b/d
9 980
00
Cost of sales
DJ10
1 225
00
CJ10
6 850
00
Cost of sales
CRJ10
8 250
00
Bank
CPJ10
2 000
00
Balance
c/d
9 335
00
18 830
00
18 830
00
9 335
00
CRJ10
2 850
00
c/d
2 845
00
5 695
00
Balance
b/d
1
Balance
b/d
3 900
00
30
Sales
DJ10
1 795
00
5 695
00
2 845
00
30
B3
+ Debtors control –
1
Balance
b/d
Oct
30
Bank
Balance
– Creditors control +
30
Bank
Balance
CPJ10
10 400
00
c/d
13 525
00
23 925
00
Oct
Nov
Dr
– Capital +
Dr
+ Land –
Oct
Oct
Amount
Creditors control
1
Oct
Fol
1
Dr
Oct
Details
30
Dr
Oct
Date
+ Trading stock –
Dr
Oct
Amount
1
Balance
b/d
100 000
Cr
Cr
B4
1
Balance
b/d
16 200
00
30
Credit purchases
CJ10
7 725
00
23 925
00
13 525
00
1
Balance
b/d
Cr
B5
1
Balance
b/d
58 940
00
B6
Cr
N1
Cr
00
Nominal accounts section
Dr
– Sales +
Oct
Dr
Oct
1
Total
b/f
EMS Gr9 LB (4).indd 192
88 000
144 000
00
Debtors control
DJ10
1 795
00
Bank
CRJ10
11 550
00
157 345
00
Trading stock
DJ10
1 225
00
CRJ10
8 250
00
97 475
00
+ Stationery –
1
3 160
b/f
N2
Cr
N3
Cr
00
Trading stock
Dr
192
Total
+ Cost of sales –
30
Oct
1
30
Total
b/f
00
14
Bank
CPJ10
300
00
21
Creditors control
CJ10
500
00
3 960
00
Term 4 • Weeks 2–7 Topic 1 Financial literacy
2013/04/26 1:15 PM
Date
Details
Fol
21
Bank
CPJ10
550
31
Creditors control
CJ10
375
Dr
Fol
Bank
CPJ10
4 100
Cr
N5
Cr
N6
3
Bank
CRJ10
+ Wages –
31
N4
00
– Rent income +
Dr
Amount
00
Oct
Oct
Details
+ Consumables –
Dr
Oct
Date
+ Telephone –
Dr
Oct
Amount
Cr
2000
N7
00
Cr
00
Norma Stores
Trial balance at 31 October 20.10
Balance sheet section
Debit
Bank
13 150 00
Trading stock
9 355 00
Debtors control
2 845 00
Credit
Creditors control
13 525 00
Capital
58 940 00
Land
100 000 00
Nominal Section
Sales
Cost of sales
157 345 00
97 475 00
Stationery
3 960 00
Telephone
550 00
Consumables
375 00
Rent income
Wages
2 000 00
4 100 00
231 810 00
Weeks 2–7 Topic 1 Financial literacy • Term 4
EMS Gr9 LB (4).indd 193
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193
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Activity 1
Composite exercise
Complete the CRJ, CPJ, DJ and CJ of TechClean for July 20.10 as well as
completing the debtors and creditors ledger. Mark up is 50% on cost unless
stated otherwise.
Debtors balances on 1 July 20.10:
A Freakes
L Stewart
D Pillay
R2 800
R1 500
R950
Creditors balances on 1 July 20.10:
Clifton Dealers
DHS Wholesalers
R12 890
R7 300
Balances and totals on 1 July 20.10:
Bank
Debtors control
Sales
R21 850
R5 250
R260 000
Trading stock
R16 875
Creditors control R20 190
Cost of sales
R180 000
July 20.10:
1 Issued cheque CC225 to AF Insurer for insurance – R1 200
Cash sales amounted to R1 500 (CRT 55)
3 Sold R600 of stock on account to L Stewart – Invoice D33
Paid wages with a cash cheque – R2 500
4 The owner, Mr D Nel, bought flowers for his girlfriend and paid with a
business cheque – R150.
5 Bought Trading stock to the value of R5 000 and stationery of R500 on
account from Clifton – Invoice CD 83
7 The bank statement revealed a direct deposit by D Pillay settling her
account in full.
Cash sales of R3 000 were made.
9 A Freakes purchased R1 200 of stock on account and she was granted a
10% trade discount.
The business vehicles was repaired by Dinky Cars at a cost of R450.
Received invoice DC 66.
11 Paid wages with a cash cheque, R2 500
Purchased stock to the value of R9 000 from DHS and they granted us a
trade discount of 10% – Invoice DHS 889
Activity 1 continues 
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Activity 1
(continued)
12 Sold goods on account to D Pillay – R900
14 Issued a cheque to Vodacom for R300. This was for the monthly cell
contract.
Mr Nel decided to increase his capital by making a direct deposit of
R15 000.
16 Paid Clifton dealers R7 500 in part settlement of our account.
19 Cash sales to date amount to R6 600.
L Stewart paid R625 in part settlement of her account.
Paid the wages, R2 500
22 A Freakes purchased stock with a COST price of R800.
Invoice DHS 900 was received from DHS for R4 000 worth of Trading
stock.
23 Issued a cheque to the Berea Mail for R500. This was for an advertising
campaign.
25 A payment of R500 was made to the Municipality for water and lights.
27 Bumper cash sales amounted to R15 000.
Ms Freakes paid R1 000 in part settlement of her account.
28 Paid DHS the full amount owing to them.
30 Paid wages, R2 500
Issued a cheque to Makro for R3 000 Trading stock and
R500 stationery.
(100)
Activity 2
Composite exercise
Using the transactions given below, you are required to:
1 Complete the given journals for Big Little Stores for November 20.10. as
well as the Debtors and Creditors Ledgers.
2 Post to the General Ledger after entering the opening balances and
totals give below.
3 Complete the Trial balance on 30 November 20.10
The business operates with a 60% mark-up unless stated otherwise.
Balances and totals on 1 November:
Capital
Debtors control
Trading stock
Sales
R373 690
R3 690
R11 450
R375 000
Bank
R9 800
Creditors control
R12 990
Land and buildings R450 000
Cost of sales
R250 000
Activity 2 continues 
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Activity 2 (continued)
Wages
Stationery
Rent income
Consumables
Bank charges
R40 000
R4 350
R10 000
R1 450
R940
Creditors ledger:
Data Dealers
CAN Stores
Metro
R3 300
R5 940
R3 750
Debtors ledger:
A Smith
B John
R1 300
R2 390
November
1 Invoice CR 231 received from Data Dealers for R2 300. This was for
Trading stock.
3 Paid wages of R2 000 with cash cheque CC41.
6 Sold goods on account to A Smith for R576. Invoice BL 71
9 A direct deposit was made by a debtor – B John – for R400. This was in
part settlement of her account – Rec C11.
12 Purchased R340 of stationery from CAN Stores on account –
Invoice CS 99.
Paid wages
14 Cash sales amounted to R7 200. CRT 38 issued.
Megan Smith paid the monthly rent due to Big Little stores – R2 000.
16 Issued a cheque to Makro for Trading stock to the value of R4 000 and
consumables for R450.
18 Due to some of the consumables that were purchased on 16th being
damaged, they were returned to Makro who gave us a cash refund of
R 75.
21 Sold goods to B John on account. The cost price was R300.
24 Cash sales amounted to R4 500. (mark-up was 50%)
25 Received invoice MK 314 from Metro for R8 400. R7 800 was for Trading
stock and the balance for stationery.
26 Paid wages after giving the staff a 10% increase.
27 The bank statement from Standard Bank revealed bank charges of R90.
Issued a cheque to Metro for R3 000. This was in part settlement of the
amount owing to them.
30 Sold goods on account to A Smith for R600 (CP was R400).
(120)
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Activity 3
Composite exercise
Due to an extended holiday at St Frances and Mozambique, the bookkeeper
of Delta Dealers was not able to complete the books for January 20.10, so
you have been called in to complete the task.
Delta Dealers has two creditors – Rhino cash and carry and Metro. At the
start of the month they owed them R12 340 and R22 110 respectively.
Delta Dealers has three debtors viz Ms Nene, Mrs M Stuart and Mr G Schuil
and they owed R2 100, R890 and R3 120 on 1 January 2010.
The following balances and totals for 1 January:
Capital
Trading stock
Creditors control
Equipment
Cost of sales
Consumable stores
Rent income
R75 000
R32 500
R34 450
R162 940
R180 000
R3 750
R6 000
Bank
Debtors control
Loan
Sales
Wages
Stationery
R15 650
R6 110
R20 000
R300 000
R30 000
R4 500
You are given the transactions for the month below and you need to:
1 Complete the journals for the month
2 Post to the ledger (after entering the opening balances and totals) and
3 Complete the Trial Balance at the end of the month.
January
1 Received credit invoice from Rhino cash and carry for R8 400. R7 000
was for Trading stock and the balance for consumable stores. (MS 313)
Issued a cash cheque for wages for R1 000. (CC99)
3 Sold goods on account to Mrs Stuart for R880 – mark up was 60%.
(DD 32)
4 Mr Schuil paid R2 000 of his debt. (Rec 21)
Cash sales amount to R8 000 and the cost price was R4 800. (CRT 83)
Standard Bank made a direct deposit of R20 000. This was for a loan
(BS1)
6 Bought stationery from CAN for R390 and paid by cheque
7 Issued a cash cheque for wages.
8 Paid R12 000 to Metro in part settlement of our account
Issued a cheque to May Dealers for R4 000 for Trading stock and R200
for stationery.
Activity 3 continues 
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Activity 3 (continued)
10 Bought a new printer from Rhino cash and carry on account – R2 200.
(MS 341)
Cash sales amounted to R4 500 (Mark up is 50%)
12 Paid Telkom R500 for the telephone.
14 Issued a cash cheque for wages.
15 Sold goods on account to Mr Schuil. The cost price of the goods was
R900 and mark up is 70%
16 Cash sales amounted to R11 000 (Cost – R6 500)
Sold stock to Ms Nene for R550 cash (cost R300)
17 Bought R4 980 stock from Rhino cash and carry (MS 361)
Received an invoice from Metro for R460 for consumable stores.
(Invoice 111)
19 Mr Schuil settled his account in full
The tenant – Mr Smith – paid the monthly rental of R3 400
Sold goods on account to Ms Nene for R900 (CP is R550)
21 Issued a cash cheque of R1 300 for wages and stationery.
23 Issued a cheque to Metro in full settlement of our account.
24 Bought a new printer from Rhino cash and carry on account – R6 500
(MS 388)
25 Had the car repaired at Toyota Garage. Issued a cheque for R1 200
27 Opened an account with Fiks Wholesalers and bought Trading stock to
the value of R9 340 (RCC 42)
30 Paid the wages
Issued a cheque to Standard Bank for R3 250. R3 000 was a part
repayment of the loan and the balance was interest on the loan
Sold goods on account to Mrs Stuart for R1 340 (CP 800)
31 Cash sales amount to R13 200 (mark up was 65%)
Ms Nene paid R2 000 in part settlement of her account
Issued a cheque to Rhino cash and carry for R25 000.
(125)
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Topic
1
Summary and questions
Summary
●●
●●
●●
●●
●●
●●
●●
●●
●●
The CRJ is used when the business receives money. Source documents: cash register tape for sales
(or current income) or receipts other money received.
The CPJ is used when the business pays money. Source document: cheque counterfoil or bank
statement or an EFT-voucher for electronic payments.
The DJ is used when the business sells goods on account to debtors. Source document: duplicate
credit invoice.
The CJ is used when the business buys anything from a creditor on account. Source document:
original credit invoice.
The DAJ is used to record goods returned by debtors. Source document: duplicate credit note.
The CAJ is used to record goods returned to creditors. Source document: original credit note or a
duplicate debit note.
Transactions related to debtors or creditors are posted to the subsidiary ledgers, the DL and the
CL on a daily basis.
Journals are posted to the General Ledger accounts which are balanced. Debtors and creditors
lists check the correctness and completeness of the debtors control and creditors control accounts
in the General Ledger.
Finally you complete the Trial balance.
Questions
1 Fill in the missing word(s) in the sentence given below:
a The CRJ is used to record money __________ by the business and the two main source
documents are the ________ and _________.
b The ____________ records sales to debtors and the source document is a _______________.
This is the __________ document.
c Any money that the business __________ will be recorded in the CPJ. The source document
is a _______________. These will follow in ____________ order in the journal.
d When the business decides to buy something on __________ it will be recorded in the CJ.
The source document is a ____________ and this is the _____________ document.
2 Give the rules for the following when posting from the journals to the ledger.
CPJ Accounts debited
CRJ Account debited
Accounts credited
Account credited
Exceptions
CJ
Account debited
DJ
Account debited
SP CP
Accounts credited
Account credited
SP CP
Total marks 24
Summary and questions • Topic 1
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Topic 2 Entrepreneurship: The business plan
Weeks 2–7
2
Key terms
business plan
variable costs
fixed costs
break-even point
cost of sales
1
Introduction
In this topic you will learn about the different components and the format of a
business plan. You will also learn more detail about the financial plan which
includes fixed and variable costs, break-even points, mark-up on sales and
profit percentage.
2
Concept of a business plan
Once an entrepreneur has identified and assessed a business opportunity,
the next step is to turn the idea into a workable business plan. A business
plan is a plan of action and has information about what, where, when and
how an entrepreneur aims to start a business and why that business will
be successful. It is not just a general plan of what an entrepreneur should
do before getting the business up and running, but it is a way of testing a
business idea on paper before making an investment. The main aim of the
business plan is to convince stakeholders that the business will be a success.
Stakeholders include investors, bankers, employees and suppliers.
The business plan should state the facts and be easy to read. It should include
enough information without being too long. You should provide graphs and
pictures that will support your ideas.
The business plan is important
because:
●● it encourages the entrepreneur
to arrange and put his or her
thoughts on paper
●● it is a plan of action and
provides a checklist that
the entrepreneur can use to
map out the direction of the
business
●● it will help the entrepreneur
to get finance and to make
decisions
●● it will provide a basis for future
planning and improvement in
the businesses’ performance.
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Figure 4.1 All the owners of the business
should work together to create the business
plan
Term 4 • Weeks 2–7 Topic 2 Entrepreneurship
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3
Components of a business plan
The components are the content of the business plan and should give an
overview of the proposed business. The components include:
●● Identified and defined goals of the business and how the entrepreneur
plans to turn the business idea into a reality.
●● How the business will operate and who will manage it.
●● Expected sales and how they will be calculated.
●● Expected costs and how they are calculated.
●● A SWOT analysis to assess the internal strengths and weaknesses of the
new business and the external opportunities and threats that are likely to
affect the proposed business. This will give the entrepreneur and potential
investors a good idea of the new business and will help to predict if the
business will be successful.
●● An outline of management, marketing, production/operations, and
finances strategies to achieve the goals that have been set.
●● An explanation of the amount and type of funding needed. Remember the
business plan provides the basis for a loan application, if needed.
components – parts
The business plan serves as a checklist so that you can tick off things to see if
you are heading in the right direction. This will help you to fix any things that
need to be corrected.
Case Study
Busisiwe and Joyce decided to start a small business in their community.
The first step was to decide what business to start. They looked around
in their community and realised that many people in the area have
dogs. Some are guard dogs and others are pets. Most of the people in the
community work all day and the dogs are often left inside or in small
gardens. They did some research to find out if a dog-walking business
would survive in the area.
Both girls really like dogs and so they decide that the needs of the pet
owners and their resources match well. They decide to start a dog-walking
business.
They know they will need to put together a business plan to ensure they
both know what the goals of the business are, how they plan to reach these
goals and how they will make sure the business succeeds. They also know
they will need to borrow capital to start the business and that a business
plan is essential if you want to borrow money for a business.
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Weeks
Topic 22–7
2
–7
Activity 1
Decide on a business
In groups of four or five, discuss possible business opportunities in
your community.
Decide on one possible business you would be interested in starting.
You will not actually have to start the business, but for this topic you
will work as though you are planning to.
Perhaps your business plan will be such a success you do actually
start the business!
(5)
4 Format of a business plan
A business plan should contain the following:
●●
●●
●●
●●
●●
●●
●●
●●
●●
●●
●●
cover page
contents page
description of the product or services offered by the business
goals of the business
the business owner
production plan
marketing plan
management plan
SWOT (strengths, weaknesses, opportunities, threats) analysis and
conclusion
financial plan (fixed and variable costs, break-even points, mark-up on
sales, profit percentage)
appendices – these can be supporting documents such as curriculum
vitaes (CVs) of key staff members, financial statements, diagrams, plans,
customer surveys, photographs and contracts.
4.1 The front cover
The front cover should include the name of the business, the business logo,
slogan, the type of business, important details of the entrepreneur (name,
address and contact details), date on which the business plan is presented.
4.2 Table of contents
The table of contents gives the points dealt with in the business plan. The
headings are numbered and the page number on which each heading is
discussed is shown in the table of contents.
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JB Dog Walkers
Business Plan
We walk your best friend,
BEST!
Joyce Dlamini
November 2013
Busisiwe Fulela
17 North Street
Sunrise Valley
083 555 5555
Contents
1Descriptions of the product or services
offered by the business .................. 3
2 Goals of the business ...................... 4
3 The business owner(s) .................... 4
4 Production plan .............................. 5
5 Marketing plan ............................... 6
6 Management plan .......................... 7
7 SWOT analysis ................................ 8
7.1 Strengths ................................ 8
7.2 Weaknesses ............................ 8
7.3 Opportunities ......................... 8
7.4 Threats ................................... 8
8 Financial plan ................................ 9
8.1 Fixed and variable costs .......... 9
8.2 Break-even points ................... 9
8.3 Mark-up on sales .................... 9
8.4 Profit percentage .................... 9
9 Conclusion ................................... 10
figure 4.2
figure 4.3
Example of a front cover of a business plan
Example of a table of contents of a business plan
4.3
Description of product or services offered by the business
Describe what product or service your business will offer. Explain what the
product will be used for or what service you will provide. You can insert a
picture of photograph to illustrate your product or service.
Case Study
When describing their business Busisiwe and Joyce added this to their
business plan. They described why they decided on this business as well as
the service they would be providing.
Description of business
Many people in the community have dogs but do not have time to take
them for walks every day. Dogs need daily exercise to stay healthy.
We plan to fetch the dogs from their owner’s house and to walk them
for 30 minutes twice a week.
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Weeks
Topic 2–7
2
Case Study (continued)
Market
We used observation sheets and a questionnaire to gather information.
Using an observation sheet, we discovered that in the five blocks around
our houses, there are 32 dogs in 28 homes. We also found out that only four
people used the park in the three weekends we did the observation.
We sent questionnaires to all the dog owners. 25 of the 28 dog owners
replied. 3 of them said that their dogs were too old to go for walks. This is
12% of the total. 8 dog owners said their children walk the dogs. This is
32% of the total. 4 dog owners said they used the park to walk their dogs
themselves. This is 16%.
The remaining 10 dog owners said they would be interested in using our
services. This is 40% of the dog owners we sent questionnaires to. We did
the needs analysis on the five blocks around our houses only. We believe
there are more dog owners further away who would be interested in our
services in the future.
Product or service
The service we will offer is safe and regular exercise for dogs.
If dogs are not taken on walks they get bored. People think that their dogs
are being naughty when they dig holes in the garden or chew things up.
The truth often is that the dogs are bored, not naughty. Dogs are naturally
curious creatures and keeping them inside your property all the time
means that they never get to see what is happening outside.
We will collect the dogs and use our own leashes. We will also give the dogs
water after their walk.
Activity 2 Describe your business
Work in the same groups as you did for Activity 1. Using the same business,
start your business plan. Describe your business. Include why you decided
on the business as well as what product your business will provide.
Remember – a product can be a good or a service.
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(6)
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4.4 Goals of the business
Describe what you intend to achieve by running the business, include
benefits to the community. Set dates by which you want to achieve certain
things. Give the short-term, medium-term and long-term goals you wish to
achieve.
●●
●●
●●
Short-term goals are those goals that you wish to achieve soon.
Medium-term goals are those goals that you wish to achieve soon after
starting up the business.
Long-term goals are those you wish to achieve as the business develops.
See the table below to see how the SMARTER-approach can be used to set
goals.
Goals are
S
Specific
M
Measurable
A
Achievable
Explanation
A goal must be able to be
defined
The goal should be measurable
R
Realistic
It should be possible to do. The The profit will be earned by
goals should fit in with your
selling 100 pieces of jewellery
R25 which is a market related
medium and long-term plans.
price
Need to think about a realistic … this year
timeframe, that is, when the
goal can and will be achieved.
Sales of jewellery will be
Goal should be carried out in
an ethical manner. Should not carried out in an ethical manner
break the law, damage the
without breaking any laws.
environment, misleading to
customers, etc.
The goal must be recorded, so This goal should be recorded in
that it can be reviewed.
the writing in the planning and
possibly also in the budget.
T
Time bound
E
Ethical
R
Recordable
The business should have the
ability to reach the goal.
Example
I would like to generate
R1 000 profit …
The R1 000 profit can measured
in R and c.
The profit will be earned by
selling 100 pieces of jewellery
ethical – doing what
is morally right
Figure 4.4
SMARTER-goals approach
Case Study
Using the SMARTER approach, Busisiwe and Joyce decided on the short
term, medium term and long term goals for their business.
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Weeks
Topic 22–7
2
–7
Case Study (continued)
Goals of the business
Goal:To be the best dog-walking service available.
Short term goal:To have 2 new clients every week for the first ten
weeks of the business.
Medium term goal: To maintain our client base by providing a good
service for six months.
Long term goal: To expand the business to include two additional dog
walkers in the second year of the business.
Activity 3 Goals
In your groups decide on one short term, one medium term and one
long term goal for your business.
(8)
4.5 The business owner
Describe the business owner’s characteristics and skills and what he or she
has to offer to make the business a success. Also give personal details of the
entrepreneur, such as age, education and training.
4.6 The production plan
Give a short description of the equipment you will need to produce your
products or supply your service. Describe how you will make the product.
Describe the layout of the production line (factory) and describe how you will
produce the products you are going to sell. Also say what materials you will
need to make your products and how much production will cost.
Case Study
When describing the business owner, both girls described themselves because JB Dog Walkers is
owned by both of them.
They included information about themselves including why they wanted to be dog walkers.
Because JB Dog walkers provides a service rather than a good, Busisiwe and Joyce will not have
to create a production line or describe any production process. If their business sold muffins then
in this part of the business plan they would have to describe how and where they would bake and
distribute the muffins. They would need to include who would take them to get the ingredients,
whose oven they would use and how many muffins they could make each day.
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Case Study (continued)
For JB Dog Walkers this is what Busisiwe and Joyce included:
Production plan
We will collect the dogs and use our own leashes. We will also give the dogs water after their walk.
To do this we will have four leashes and four water bowls.
We will fetch the dogs, take them for a walk for at least 30 minutes and then give them water before
returning them to their owners.
Activity 4
Owners and production plan
1 Write a short description of yourself as the business owner.
Remember to include why you the right person to own the
business you chose to start.
2 Work together to create the production plan for your business.
(4)
(10)
4.7 The marketing plan
Describe how you will market the product in detail. Explain what is unique
or different about your product or service. Describe your customers and say
where you will reach them. Say how you will advertise, package and sell your
product.
Include who the competitors are and briefly describe how the business
intends to gain the competitive edge. Explain how prices will be determined.
Give information on how many products you plan to sell and what price
you will charge. Show a calculation of your expected sales. Summarise your
competitors marketing strategies. Outline your marketing campaign/strategy
– what you will do to promote and sell your product or service.
competitive edge –
being one step ahead
of your competitors
Case Study
When creating their marketing plan Busisiwe and Joyce used the
information they gathered in their market research as well as their
knowledge of the 4Ps of marketing. They realised they had to start small,
but included plans for marketing the business once they had more money
to spend on marketing.
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Weeks
Topic 2–7
2
Case Study (continued)
They also looked at the competition. It is always a good idea to think ahead
when writing a business plan.
Had there been a business which was competition to JB Dog Walkers,
Busisiwe and Joyce would have had to research the business and decide
how they could be better than it.
Marketing plan
We will make posters and put them up at the local supermarket. We will
also ask the dog owners who have already shown an interest to recommend
us to their friends. If we get a new client because someone recommends us,
that person will get three free dog-walks.
If we need more dog-walkers, we will employ our friends. We will pay them
R2,50 for every dog they take on a half hour walk.
Future marketing plans
When the business gets bigger and we have more money, we will use an
advertising campaign to promote the business. We will create flyers to hand
out at the local supermarket, we will create posters and print t-shirts to
wear when walking the dogs.
Competition
There is no competition in the area. There is a park close by but very few
people use it. We used an observation sheet and found that over a period of
three weekends only four people took their dogs to the park.
Marketing mix
You must be aware of all four of the elements in the marketing mix if you
want your business to be successful. Busisiwe and Joyce used the marketing
mix when deciding on their business and when creating their business plan.
Product
They found a product they could supply. This product was a dog-walking
service. They found out that there was a need for this product.
Price
JB Dog Walkers charges a reasonable price for the service they provide. It is
affordable but not so cheap that dog owners would worry about the quality of
the service.
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Place
The community Busisiwe and Joyce live in has dogs in it. It also has people
who do not have time to walk their dogs. This means that this community
was the perfect place to start their business. They live in this place so their
product will be available to the people in it.
Promotion
Busisiwe and Joyce started their promotional drive by sending questionnaires
to dog owners. They then created flyers and posters. They also made T shirts
to wear which promoted their business.
Busisiwe and Joyce used all these elements of the marketing mix together.
This helped them start a successful small business from home.
Activity 5
Marketing plan
Using your knowledge of the 4Ps of marketing, create a marketing
plan for your business. Remember to include any competition the
business may have.
(30)
4.8 The management plan
State the role of the entrepreneur and provide an organogram (organisational
structure) showing the roles and responsibilities of employees.
Small businesses seldom, if ever, need a complicated management plan.
Most entrepreneurs start their business on their own and so they do all of the
management tasks. However, if there are four entrepreneurs working together
to start a business, there may need to be a plan of who will be responsible for
what. This is the management plan from Busisiwe and Joyce’s business plan.
Case Study
Management plan
We will run the business together. We will walk to the dogs together every
day. We will share the profits evenly.
We will do half the walks on the weekends and the rest after school. This
means that every dog will get a walk on the weekend and one walk during
the week.
Weeks 2–7 Topic 2 Entrepreneurship • Term 4
EMS Gr9 LB (4).indd 209
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2013/04/26 1:15 PM
Weeks
Topic 22–7
2
–7
Activity 6 Management plan
Work together to create the management plan for your business.
Because of the number of you in your group, you will need to decide
who will do what to run the business.
(10)
4.9 SWOT (strengths, weaknesses, opportunities and threats)
analysis and conclusion
This analysis gives the strengths and weaknesses of the business and
identifies the opportunities and threats in the external environment. It needs
to show how threats will be controlled, managed or avoided.
A good SWOT analysis in very important if a business is to survive. If the
owners are aware of the strengths and weaknesses in the business they
can decide how best to handle both. Also, if a business does not remain
aware of the threats and opportunities the business faces they may miss an
opportunity or be destroyed by a threat.
Busisiwe and Joyce did a SWOT analysis and conclusion and included it in
their business plan.
Case Study
SWOT analysis
STRENGTHS
●● We both love dogs
●● We have free time in the
afternoons and weekends to build
the business
●● There is no competition for the
business
●● There are lots of dogs in our
community
OPPORTUNITIES
●● The larger community
●● The SPCA and Animal Welfare
●● Possibly add grooming to the
services available
210
EMS Gr9 LB (4).indd 210
WEAKNESSES
●● There are only two of us. We both
have to work every day.
●● We can walk two dogs each at a
time only
THREATS
●● A competitor may start up
●● Bad weather would mean we could
not walk to dogs or charge the
owners
Term 4 • Weeks 2–7 Topic 2 Entrepreneurship
2013/04/26 1:15 PM
Case Study (continued)
Conclusion
●●
●●
●●
●●
The strengths and opportunities of the business are greater than the
weaknesses and threats.
We may look at having an extra dog walker if we find it too hard to run
the business alone.
We will watch for a competitor and always provide good service to our
clients so that even if there was competition, they would stay loyal to JB
Dog Walkers.
We will continue to offer our services except in very extreme weather
conditions.
Activity 7 SWOT
Do a SWOT analysis and conclusion for your business.
(10)
4.10 Financial plan (fixed and variable costs, break-even
points, mark-up on sales, profit percentage)
The financial plan outlines the finances required to start and run the business
and gives calculations to show how and why the business will make a profit.
Details of the entrepreneurs’ own capital contribution must be shown as well
as details of other funds (if applicable).
The financial plan also covers the following:
●●
●●
●●
●●
●●
●●
purchasing of stock
how much profit you hope to generate and over what time period
costing and pricing of the product or service, in more detail than the
marketing plan
mark-up and break-even point
a monthly budget
a projected income and expenditure statement (usually for three years)
Weeks 2–7 Topic 2 Entrepreneurship • Term 4
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2013/04/26 1:15 PM
Weeks
Topic 2–7
2
Activity 8 What is needed to start the business
Use the table or a copy of it to show what you will need to start your
business:
Items needed for the business
Equipment
Furniture
Have

Need to
buy 
Who will Value or
we buy
cost?
from
Cash box
Cellphone
Table
Chair
Stock
Cash
In the bank
In the cash box
TOTAL ASSETS NEEDED
(10)
Activity 9 Expected income and expenditure
Use the table or a copy of it to show the expected income and expenditure
of your business.
R
Expected sales (number of products you expect to
sell × the selling price)
minus Cost of sales (cost of products bought)
Expected GROSS PROFIT
minus Total expenses
Advertising
Travelling
R
xxx
xxx
xxx
xxx
xx
xx
Expected NET PROFIT
(8)
212
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Term 4 • Weeks 2–7 Topic 2 Entrepreneurship
2013/04/26 1:15 PM
Fixed and variable costs
Total costs refer to both fixed costs and variable costs.
Variable costs vary according to the acitvity of the business. Some variable
costs include telephone, electricity, stationery and packaging. The cost
includes what you paid for those products and the costs incurred to obtain
the products. The more good or services produced, the higher the costs.
Fixed costs remain the same every month, regardless of changes in the
volume of products or services sold. Examples of fixed costs are salaries and
rent paid.
Note: Some costs could be classified differently, depending on the type of
business. For example a manufacturer would classify electricity as a variable
cost and not a fixed cost, because the more products he or she manufactures,
the more electricity will be used.
Break-even points
Any entrepreneur would like to know how many
products he or she must sell in order to cover costs.
When total costs equal income this is known as the
break-even point. This is the point where neither a
profit nor a loss is made.
Break even: Costs = Income
The break-even point is very important because once
it has been reached, any product sold over and above
this point will start earning profit for the business.
Let’s look at this example: Joe sells chicken takeaways. He calculates his fixed expenses at R494 per
month. His production costs add up to R3,30 for one
take-away. He sells his take-aways at R10 per pack. He
would like to know how many take-aways he needs
to sell to break-even. Remember that at the breakeven point, the profit is zero. This can be calculated
mathematically as follows:
Where sales = variable costs (VC) + fixed costs (FC)
Figure 4.5
Joe’s Chicken Take-away
Weeks 2–7 Topic 2 Entrepreneurship • Term 4
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213
2013/04/26 1:15 PM
Weeks
Topic 22–7
2
–7
Let x be the number of take-aways that Joe must sell to break even.
10x = 3,3x+ 494
10x – 3,3x = 494
6,7x = 494
x = 494
6,7
x = 73,73 or 74
Therefore, Joe needs to sell 74 take-aways to ensure that he does not suffer a
loss. The break-even point would be 74 take-aways.
Check:
●●
●●
If Joe sells 73,73 take-aways at R10, his total sales will be R737,30.
The fixed costs amount to R494 and the total variable costs amount to
R243,30 (R3,30 73,73 units).
Total costs are FC + VC:
= 494 + 243,30
= 737,30
Sales = total costs
There are different ways to determine the break-even point (BEP). Another
way is to work out what the sales or turnover figure must be in order to breakeven. In other words, how much must you sell in rand value to break even?
To use this method you need to find out what your gross profit percentage is
by calculating as follows:
Gross profit %
= Gross profit (GP) × 100
Selling price (SP)
1
= 6,70 × 100
10
1
= 67%
The gross profit of R6,70 is obtained by deducting the production costs of
R3,30 from the selling price of R10.
214
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Term 4 • Weeks 2–7 Topic 2 Entrepreneurship
2013/04/26 1:15 PM
The formula to use is:
Fixed costs
Gross profit %
494
67
= 494 × 100
67
1
= 737,30
Joe must sell take-aways to the value of R737,30 to cover his production costs
and his fixed costs. We can also calculate the break-even point in units. The
formula to use is:
Fixed costs
Gross profit/unit
= 494
6,70
73,30 take-aways
So, to break even Joe must sell 73,73 take-aways at R10 each, which gives
R737,30. What can you notice about the answer here in comparison to the one
on page 214?
Mark-up on sales
There are two very important calculations which you should be able to do,
namely calculating the cost of sales (cost price) and calculating the selling
price.
For calculating cost price or selling price, the cost price is always 100%,
because under normal circumstances, the cost price is less that the selling
price:
Calculating cost of sales =
Selling price ×
100
1
100 + mark-up
Weeks 2–7 Topic 2 Entrepreneurship • Term 4
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215
2013/04/26 1:15 PM
Weeks
Topic 22–7
2
–7
Example
A bookshop sold books for cash to the value of R200 each. The mark-up
(gross profit) was 25% on cost. The cost price would be calculated as:
200
1
×
100
100+25
= 200 × 100
1
125
= R160
To calculate the selling price:
Cost price × 100 + mark-up
1
100
Example
The same bookshop sold books for cash. The cost price was R500. The
mark-up (gross profit) was 50% on cost. The selling price is calculated as:
500
1
×
100 + 50
100
= 500 × 150
1
100
= R750
4.10.4 Profit percentage
The profitability and efficiency of a business can be tested by doing various
calculations, two of which are gross profit percentage and net profit
percentage.
Gross profit percentage on sales is calculated by:
Gross profit
×
Sales
100
1
=%
Remember that Sales minus cost of Sales equals Gross Profit.
216
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Term 4 • Weeks 2–7 Topic 2 Entrepreneurship
2013/04/26 1:15 PM
Example
Choice Traders had sales of R200 000 for the year and the Cost of Sales
was R160 000, therefore the Gross Profit is R40 000.
The calculation for gross profit percentage would be:
40 000
×
200 000
100
1
=
20%
If Choice Traders decides beforehand that they want to add a profit mark-up
of 25% to the cost price and the results show 20% (as seen above), then the
owner will have to investigate the reasons for the difference. Some reasons
might include theft, too much discount offered to customers, or mistakes
made in the recording of the sales, etc.
Net profit percentage on cost of sales is calculated by:
Net profit ×
Cost of Sales
100
1
=%
If we use the example of Choice Traders again, the calculation would be:
×
40 000
160 000
100
1
= 25%
A profit mark-up of 20% on sales is similar to a profit mark-up of 25% on
cost of sales. This result can also provide the owner with information about
control of trading stock. If this percentage drops drastically from one year to
another, the owner will have to investigate possible theft of stock.
Net profit percentage on sales is calculated by:
Net profit ×
Sales
100
1
=%
Remember that Sales minus cost of Sales equals Gross Profit.
Example
Choice Traders had sales of R200 000 for the year and the Cost of Sales
was R160 000, therefore the Gross Profit is R40 000.
Weeks 2–7 Topic 2 Entrepreneurship • Term 4
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2013/04/26 1:15 PM
Weeks 2–7
The calculation for gross profit percentage would be:
40 000
×
200 000
100
1
=
20%
Here, we are calculating how much profit was made on every R1,00 earned
from sales. For example, Choice Traders showed the following amounts for
the year:
Sales of R200 000; Cost of Sales R160 000; income of R25 000 and expenses
of R35 000.
The calculation would be:
35 000
×
200 000
100
1
=
15%
This percentage need to be compared with the previous years. If the
percentage keeps on dropping from one year to another, the owner might
have to look at increasing the profit-mark-up he or she adds to the cost price.
This calculation shows that higher sales do not necessarily mean more profits.
Activity 10
Calculations
For this activity you will have to assume your business sells a good and not a service.
If your group decided on a service business work with another group that decided on a business
which sells good.
1
2
3
4
Calculate the cost price of each product offered for sale.
Using a 25% mark up calculate the selling price for each product.
Calculate the likely fixed and variable costs for the business for one month.
Work out break-even-point for the business using the figures you calculated in questions 1, 2
and 3.
5 Work out the gross profit percentage if the business sold twice as many items as
calculated for break point.
(15)
Activity 11 Finalising the business plan
Finalise your business plan using all the information in this unit. Check to make sure
you have not forgotten anything or left anything out.
218
EMS Gr9 LB (4).indd 218
(100)
Term 4 • Weeks 2–7 Topic 2 Entrepreneurship
2013/04/26 1:15 PM
Topic
2
Summary and questions
Summary
A business plan is a plan of action which contains information about
what, where, when and how an entrepreneur aims to start a business and
why that business will be successful.
Variable costs are those costs which vary according to the activity of the
business. Some variable costs include telephone, electricity, stationery
and packaging.
Fixed costs are those costs in a business that remain the same every
month, regardless of changes in the volume of products or services sold.
Examples of fixed costs are salaries and rent paid.
When total costs equal income this is known as the break-even point. This
is the point where neither a profit nor a loss is made.
Cost of sales is the cost of buying the products.
Sales minus cost of Sales equals Gross Profit.
●●
●●
●●
●●
●●
●●
Questions
1
2
3
4
5
6
Explain the term ‘business plan’.
List five components of a business plan.
What is the purpose of a SWOT-analysis?
Give two examples of threats a business could face.
What factors will influence the competitiveness of a business?
Assume that the cost of making a toy is R15. What will the selling
price be if you use a mark-up percentage of 30%.
7 How will your business be affected by your competitors if they
sell the same toy if they sell the product at: R17,00/R25,50?
8 a A computer shop buys one notebook computer for R5 500. If
their mark-up is 33%, what would the selling price?
b What would their total sales figure be if they sold 25 of these
notebook computers?
(4)
(5)
(4)
(2)
(2)
(3)
(4)
(3)
(3)
Total marks 30
Summary and questions • Topic 2
EMS Gr9 LB (4).indd 219
219
2013/04/26 1:15 PM
Weeks 8–9
Examination preparations
Term 1 Topic 1 Financial literacy: Cash Receipt Journal
and Cash Payments Journal (sole trader)
Analyse the following transactions using the basic accounting equation.
1 Paid R500 to the staff for their weekly wage
2 The owner bought R125 of stationery for own use and paid with a business
cheque.
3 Sold goods with a cost price of R500 for cash. Mark-up is 50%.
4 Received current income from a customer of R375
5 Received a loan of R5 000.
6 Cash sales amounted to R7 220. Mark-up is 90%.
7 Bought trading stock for R4 500.
8 The owner increased his capital by depositing R5 000 into the business
bank account.
Term 1 Topic 2 The economy: Economic systems
1 What are the three most important questions that a country asks in
order to provide goods and services to satisfy the needs of its people? 2 How do the three economic systems find answers to the three
questions above? 3 Read the list below and state whether they are advantages or
disadvantages in a market system.
a Individual ownership of land
b Workers receive low wages
c Wastage occurs
d There is free trade
e Individuals make profits 4 Name five characteristics of a global economy and mention whether
these characteristics help rich or poor economies in the world today.
5 Explain how your life is affected by global technology.
220
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Term 4 • Examination preparations
2013/04/26 1:15 PM
Term 1 Topic 3 Financial literacy: General Ledger and
Trial balance (sole trader)
You are required to:
1 fill in the opening balances and totals of Milly’s Monster Shop on 1 April
20.10
2 post from the cash journals at the end of the month and balance and
pencil foot the accounts
3 draw up the Trial balance on 30 April 20.10.
(55)
Balances and totals on 1 April 20.10:
Capital
Trading stock
Cost of sales
Telephone
R66 000
R28 000
R100 000
R5 000
R95 000
R180 000
R18 000
Bank
Sales
Wages
Given below are the cash journals for April 20.10:
Doc
CRT 215
Date Details
6
Rec 38
Rec 39
12
Analysis of
Receipts
Cash sales
5940 00
John Smith
2000 00
Standard Bank
CRT 216
17
Cash sales
Rec 40
24
Milly
Rec 41
29
Metro
CRT 217
31
Cash sales
Doc
Fol
Date Name of Payee
2700 00
150 00
9000 00
Fol
Bank
CC45
1
Telkom
220 00
CC46
3
Makro
1500 00
CC47
11
CAN Stores
2000 00
CC48
15
Cash
1200 00
CC49
21
AF Insurance
company
CC50
25
Metro
4350 00
CC51
28
Makro
600 00
CC52
30
Cash
1200 00
CC53
Makro
Bank
Sales
Cost of
Sales
5940 00
3300 00
Amount
7940 00
2000 00
20000 00
20000 00
2700 00
2700 00
9000 00
150 00
150 00
9000 00
9000 00
5000 00
48790 00
17640 00
9800 00
Rent income
Loan
Wages
Trading
stock
Sundry exp
Capital
Trading stock
31150 00
Sundry Accounts
Amount
Fol Details
220 00
Telephone
2000 00
Equipment
1500 00
1200 00
600 00
200 00
Drawings
4350 00
600 00
1200 00
5400 00
5400 00
2400 00
11250 00
1200 00
2420 00
Examination preparations • Term 4
EMS Gr9 LB (4).indd 221
Fol Details
1500 00
9000 00
800 00
17270 00
Sundry Accounts
221
2013/04/26 1:15 PM
Weeks 8–9
1
Term 1 Topic 4 The economy: The circular flow
1 How will the circular flow of income be affected (disrupted) by the
following actions:
a Workers go on strike.
b Unemployment in the country increases.
c The government increases taxes.
d A storm damages the vineyards of the Western Cape.
e The petrol price increases.
2 Draw a diagram to illustrate the circular flow of income of Mr and Mrs Katt
and their children, Kate and Karl.
Mr and Mrs Katt and their children form a household. Mr Katt works for a
business that makes furniture and Mrs Katt is a housewife. Kate and Karl
attend the local primary school. Mr Katt earns R12 000 per month. He pays
R2 000 in taxation to the government and their household expenses are
exactly R10 000 per month. They struggle from month to month to cover
their expenses and have no money left to save.
222
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Term 4 • Examination preparations
2013/04/26 1:15 PM
Term 2 Topic 1 Financial literacy:
Credit transactions – debtors
The owner of Nu-Ware Stores, Ms Bhola has approached you for help with
some Accounting tasks. She asked you to complete the Debtors Journal and
Cash Receipts Journal for May 20.10 as her bookkeeper is on leave. She only
has the list of transactions for the month.
May 20.10
2 Sold goods on account to Mr Du Toit for R750 (CP is R450) –
invoice NW 425
5 Cash sales for the last few days amounted to R4 500 (Mark-up is 50% on
cost) – CRT 99
11 The tenant, Ms Zondo paid the monthly rent of R1 000. Issued receipt R44
Further cash sales amounted to R7 800 (CP R5 000)
13 Sold goods on account to Mr Smith with a cost price of R800
(mark-up is 60%)
17 The owner made a direct deposit of R10 000 to increase her capital.
20 Ms Roux bought some goods on account – SP was R800 and CP was R540
23 Ms Du Toit paid R500 in part settlement of her account.
Cash sales amounted to R3 300 (CP was R2 200)
28 Mr Smith made a direct deposit in full settlement of the amount he owed.
30 Sold more goods to Ms Roux for R1 200 (CP was R750)
31 Ms Roux returned the goods purchased the previous day for R1 200
(CP was R750).
Question
Ms Bhola has asked you how much Ms Roux owes the business. Briefly
explain how you arrived at the amount.
Examination preparations • Term 4
EMS Gr9 LB (4).indd 223
223
2013/04/26 1:15 PM
Weeks 8–9
1
Term 2 Topic 2 The economy: Price theory
Study the tables below and answer the questions that follow.
Price per pair of jeans
R1 000
R800
R500
R300
Quantity demanded
50
100
200
300
Quantity supplied
300
200
100
50
1 Draw a demand and supply curve. This graph will show the quantity
supplied and the quantity demanded.
2 Mark the point on the graph where the two curves intersect (meet).
3 Answer the questions below.
a What does this point tell you about the demand and supply (at that
point)?
b What is this point called?
c What is the quantity demanded and supplied at that point? d At what price will the pairs of jeans be sold for at this point?
e Explain what a market price is.
f What would happen to the demand if the supplier increases the
price of the jeans?
g What would happen to the demand if the supplier reduces the
price of the jeans?
h Mention two factors affecting demand.
i Define the law of supply.
224
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Term 4 • Examination preparations
2013/04/26 1:15 PM
Term 2 Topic 3: Entrepreneurship: Sectors of the
economy
1 Identify the economic sector to which the following belong:
a manufacturing
b agriculture
c e-communication
d tourism
e electricity
f banks
g restaurants
h car manufacturers
i clothing factories
j sanitation
2 Explain how one of the following goods could go through the process of
production involving all three sectors of the economy:
a a gold bracelet
b a cereal
c a woollen jersey
Examination preparations • Term 4
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225
2013/04/26 1:15 PM
Weeks 8–9
1
Term 3 Topic 1: The economy: Trade unions
Read the following extract from Vukani Makhosikazi South African Women
speak by Jane Barrett et al and answer the questions that follow:
“Domestic work is tedious and tiring. Workers start early and finish late. If
they live-in, they may always be on call. They can be asked to babysit, make
tea or run up to the shops even when they are not on duty. The job usually
includes cleaning, washing, ironing, cooking as well as looking after the
children.”
Pretend that you are a domestic worker. Explain how you would start a trade
union to improve the working conditions and pay of you and other domestic
workers.
Term 3 Topic 2: Financial literacy:
Credit transactions – debtors
You are required to complete the ledger accounts that follow for
May 20.10.
Bank
Trading stock
Debtors control
Sales
Cost of sales
(20)
R5 860
R9 500
R3 500
R23 500
R15 000
Take note: Some information has already been filled in for you, but you need to
enter the opening balances and totals and post from the DJ and CRJ given on the
next page.
226
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Term 4 • Examination preparations
2013/04/26 1:15 PM
Cash Receipts Journal of Nu-ware stores – May 20.10
Doc
Date Details
Fol
Analysis of
Receipts
CRT
99
5
Cash sales
4500
00
R 44
11
Ms Zondo
1000
00
Cash sales
7800
00
CRT
100
Bank
4500
00
8800
00
10000
00
R 45
17
Ms Bhola
R 46
23
Ms Du Toit
500
00
Cash sales
3300
00
3800
00
800
00
800
00
CRT
101
R 47
28
Mr Smith
27900
Cost of
Sales
Sales
4500
7800
3300
00 15600
00
00
00
3000
00
3000
00
5000
00
2200
00 10200
Sundry Accounts
Debtors
control
Amount
Fol Details
1000
00
Rent
income
10000
00
Capital
00 11000
00
500
00
800
00
00
00
1300
Debtors Journal of Nu-ware stores – May 20.10
Doc
Date
Debtor
Fol
Sales
Cost of Sales
MW 425
2
Ms Du Toit
750
00
450
00
MW 426
13
Mr Smith
1280
00
800
00
MW 427
20
Ms Rout
800
00
540
00
MW 428
30
Ms Rout
1200
00
750
00
4030
00
2540
00
Term 3 Topic 3 Financial literacy:
Credit transactions – creditors
From the transactions given below, you are required:
1 State which journal each transaction will be recorded in and
2 For all entries in the CJ, complete the CJ of Percy Traders. (Use own
document numbers)
Below is a list of transaction from Jules Wholesalers for:
August 20.10
2
5
8
11
Sold goods on account to a debtor – SP R500 and CP was R300
Paid the staff their wages – R1 000
Bought goods on account from Small Wholesalers – R3 000
Paid the telephone account of R300 with a cash cheque
Examination preparations • Term 4
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2013/04/26 1:15 PM
Weeks 8–9
1
15 Cash sales amounted to R10 000 (CP – R6 000)
18 Bought stationery (R200) and trading stock (R2 200) from Makro on
account
23 Had the vehicle serviced by Ant’s garage on account – R525
27 Received R500 from a debtor in part settlement of her account.
30 Bought trading stock from Metro for R2 500 less 10% trade discount on
account.
(25)
Term 3 Topic 4 Entrepreneurship: Functions of a
business
Match the statement given to the function of the business enterprise.
Marketing
Finance
Production
General Management
Public Relations
Administration
Human Resources
Purchasing
1 Keeps in touch with the public and promotes the image of the business.
2 To achieve the goals of the business, management plans, organise and
control activities to make the business successful.
3 Ensures that goods and raw materials are purchased at the best possible
prices.
4 Uses the Four factors of production to produce goods.
5 Assist in the running and handling of information in the business.
6 Manages the recruitment, training and payment and staff in the business.
7 Ensures that goods and services are delivered from the producer to the
consumer by using market research, advertising and sales.
8 Keeps all the records of the financial activities of the business.
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Term 3 Topic 5 Financial literacy: Credit transactions
– creditors
Using the CJ and CPJ given below you are required to:
1 Post to the following ledger accounts (Trading stock – R9 700 and
Creditors Control – R6 250) and balance them.
2 Answer the questions that follow.
(30)
Creditors Journal of Bafana Sports Stores – July 20.10
Doc
Date Creditor
Fol
Creditors
Control
Trading
Stock
3300 00
Consumables
X34
4
Smith Dealers
3300 00
CN423
11
Rhino Trading
625 00
X45
15
Smith Dealers
JN 651
21
Metro
5000 00
4500 00
CN460
23
Rhino Trading
3750 00
3250 00
500 00
SS39
29
Solly Sports
11050 00
1125 00
Stationery
Sundry Accounts
Amount
Details
625 00
775 00
775 00
Equipment
500 00
450 00
13900 00
Fol
450 00
950 00
775 00
Cash Payment Journal of Bafana Sports Stores – July 20.10
Doc
Date
Name of payee
Fol
Bank
Trading
stock
1250 00
CC 35
8
Cash
1250 00
CC 36
15
Rhino Trading
1750 00
CC 37
23
Manny Minders
2000 00
CC 38
30
Smith Dealers
Sundry Accounts
Amount
Fol
Details
1750 00
2000 00
625 00
5625 00
Creditors
Control
625 00
3250 00
2375 00
Questions:
a Does the business buy more trading stock on account or for cash?
Justify your answer with a reason
b Does the business sell more stock on account or for cash? Justify your
answer with a reason.
c How well is the business managing their trading stock? Explain your
answer briefly.
d How well is the Creditors clerk controlling the businesses Creditors?
Give two reasons for your answer.
Examination preparations • Term 4
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Weeks 8–9
1
Term 4 Topic 1 Financial literacy: Transactions – cash
and credit
Below are the month end totals of Vida Stores journals for October 20.10.
Cash Receipts Journal of Vida Stores – October 20.10
Doc
Date
Details
31
Totals
Fol
Analysis of
Receipts
Sundry Accounts
Bank
Sales
Cost of
sales
Debtors
control
28750 00
21250 00
15000 00
3500 00
Trading
stock
Creditors
control
12350 00
5500 00
Amount
Fol
Details
4000 00
Cash Payments Journal of Vida Stores – October 20.10
Doc
Date
Name
of
Payee
31
Totals
Fol
Bank
Wages
24600 00
5000 00
Stationery
625 00
Sundry Accounts
Amount
Fol
Details
1125 00
Creditors Journal of Vida Stores – October 20.10
Doc
Date
Creditor
31
Totals
Fol
Cr Control
Trading
stock
26025 00
23000 00
Stationery
875 00
Sundry Accounts
Amount
Fol
Details
2150 00
Debtors Journal of Vida Stores – October 20.10
Doc
Date
Debtor
31
Totals
Fol
Sales
Cost of
Sales
9500 00
6300 00
Opening balances and totals of selected ledger accounts of Vida Stores on
1 October 20.10:
Bank
R23 100
Trading stock
R8 850
Creditors control
R12 400
Debtors control
R6 000
R85 500
Cost of sales
R47 250
Sales
Stationery
R1 320
Wages
R20 000
You are required to:
1 Complete the General Ledger:
●● Fill in the opening balances and totals given below in the ledger
accounts of Vida Stores and
●● Post to the ledger accounts given.
●● Balance/pencil foot the ledger accounts.
230
EMS Gr9 LB (4).indd 230
Term 4 • Examination preparations
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2 Using the information given below, you are required to complete the
account of Spiho Dlamini who is a debtor of Vida Stores.
(45)
October 20.10
1 Sipho owes Vida Stores R940
3 Issued Cr invoice V62 to Sipho for goods sold with a selling price of R680
(mark up is 70%)
11 Sipho paid Vida Stores R600 – receipt VS 32
17 Sold more goods on account to Sipho. The cost price was R350 (mark up is
70%) VS 70
22 Sold goods to Sipho for R200 (cost price was R120) – issued CRT 98
30 The bank statement revealed a direct deposit by Sipho of R750 in part
settlement of her account.
Term 4 Topic 2 Entrepreneurship: Business plan
Vusi wants to start a business selling fudge at school. When planning for the
business he determines the following:
●●
●●
●●
●●
●●
●●
Fixed costs per month to rent the kitchen and equipment
Variable cost per dozen of 2,5 × 2,5 cm piece of fudge
He will be able to sell 80 dozen pieces of fudge per month
Minimum profit he would like to make per month
Competitors are sell their fudge at R15,00 per dozen
Vusi’s selling price will be R12,00 per dozen
R250
R5,50
R250
1 Calculate his profit or loss for 38 dozen, 39 dozen and 80 dozen
pieces of fudge.
2 What would the break-even point for Vusi’s business be?
3 What is the unit cost per dozen if Vusi makes 38, 39 and 80 dozen
pieces of fudge?
(12)
(12)
(12)
Examination preparations • Term 4
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Term
1
4
Formal Assessment Task (FAT):
Final examination
•
•
Marks: 200
Time: 2 hours
Instructions
•
This question paper consists of FOUR SECTIONS.
•
Answer ALL the questions.
•
Read the instructions for each question carefully and answer only what is
required. Use the mark allocation to determine the length of answers.
•
Questions must be answered on the ANSWER SHEET provided.
Section A
Question 1 Choose the correct answer from the ones given and circle the correct one on the
ANSWER SHEET.
[12 marks]
1.1
An open economy includes...
a Households and Firms
b Government
c Foreigners
d All the above
1.2
Which one of the following statements does NOT tell us more about the global economy?
a The world is getting smaller
b South Africa is less independent on other countries
c Is a result of improved communications technology
d Chinese products are for sale in South Africa
1.3
The double entry and influence on the accounting equation of the following
transaction:
‘bought stationery on credit’ is
a Dr Creditors (L–); Cr Stationery (O+)
b Dr Stationery (O–); Cr Creditors (L+)
c Dr Creditors (L+); Cr Stationery (O–)
d Dr Stationery (O–); Cr Creditors (L+)
232
EMS Gr9 LB (4).indd 232
Term 4 • Formal Assessment Task (FAT): Final examination
2013/04/26 1:15 PM
Final examination
2
1.4
Economic ……………… is the ability of a country to improve the standard of
living of its people.
a growth
b import
c production
d sustainability
1.5
Which one of the following would NOT be included in a financial plan for a
new business?
a Break-even points
b Mark-up on sales
c Business opportunities
d Variable costs
1.6
The GDP refers to
a Government Diplomatic Process
b Gross Domestic Product
c Government Democratic Purpose
d General Domestic Prices
Question 2 [12 marks]
Fill in the missing word for the spaces indicated. Use the ANSWER SHEET.
2.1 In a diagram that shows circular flow of income there will be factors of
production flowing in one direction and ........ flowing in another direction
2.2 A trade union is an association of workers and it fights for ........ .
2.3 Capital consists of own capital and ........ capital.
2.4 The ........ states that, the higher the price of a good, the more suppliers are
willing to sell that good or service.
2.5 Adam Smith, the “father of economics”, supports ........ enterprise in a
market economic system.
2.6 Office blocks, houses, roads, airports and dams are part of South Africa’s ........ .
Formal Assessment Task (FAT): Final examination • Term 4
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Term
3
4
Question 3 [6 marks]
Choose the concept in Column B that matches a description in Column A. Write only the
chosen letter to the question in the grid provided on the ANSWER SHEET.
COLUMN A
3.1 make strategic decisions
3.2 make sure that the supplier can
provide after-sales support
3.3 usually function in the secondary sector
3.4 study Curriculum Vitaes
3.5 make sure people are aware of the products
3.6 fix negative images
COLUMN B
A
Production
B
Marketing
C
D
E
F
G
Human Resources
Public Relations
Finance
Purchasing
General Management
(6 × 1) [6]
Section B
Question 4 [47 marks]
4.1 Differentiate between the following concepts/terms:
4.1.1
Market economic system and a planned economic system. (4)
4.1.2
Primary sector and Secondary sector (4)
Fixed capital and Working capital (4)
4.1.3
4.2
Explain (using one sentence for each) the following terms:
4.2.1
Closed economy 4.2.2
Source document 4.2.3
Equilibrium quantity 4.2.4
Debtor (16)
4.3
234
EMS Gr9 LB (4).indd 234
(2)
(2)
(2)
(2)
Term 4 • Formal Assessment Task (FAT): Final examination
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4
Study the following activities and locate them in the circular flow diagram.
Write the number (in circle) on the circular flow next the question number
on the ANSWER SHEET.
4.3.1
John Vermaak is a detective in SAPS (South African Police Services).
4.3.2
Tandiwe Hlobo bought shares on the JSE Securities Exchange.
4.3.3
Shane Blom pays Shamrock Painters for painting his house.
John Finch and his partner made R5 000 profit in their business.
4.3.4
4.3.5
Isaac Samuels decides to open a small take-away shop in Bellville.
4.3.6
The payslips of workers show that one of the deductions was for
income tax purposes.
4.3.7
The Boksburg Volkswagen dealership sold five new cars to
customers this week.
4.3.8
Joan Geswint receives a monthly old-age pension.
4.4
4.4.1Draw a demand and supply graph on the same plane with x and
y-axes. With the y-axis indicating 10, 20, 30, 40, 50, 60, 70, 80, 90
and 100 Rand and x-axis t-shirts 20, 40, 60, 80, 100, 120.
Use the graph paper printed on the ANSWER SHEET. Points A, B, C must be incorporated in the set of graphs, with
A (70:60), B (100:70), C (60:40).
Point A must be the equilibrium point.
Study the graphs produced and answer the following questions:
4.4.2
a At a price of R60, how many t-shirts would consumers want to
buy? Why are producers not prepared to sell at this price? b How many t-shirts are suppliers willing to sell at R70? c How many t-shirts are suppliers willing to sell at R100? Why
are buyers not prepared to buy at this price?
d What is the equilibrium price (in Rand) and quantity (in
number of t-shirts)? e What would be the effect on the demand curve if the price of
the t-shirts changes from R60 to R80? f
Give two reasons why the whole supply curve will move
+/– 1 cm to the right? Formal Assessment Task (FAT): Final examination • Term 4
EMS Gr9 LB (4).indd 235
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(1)
(5)
(3)
(1)
(3)
(1)
(2)
(4)
235
2013/04/26 1:15 PM
Term
5
4
Section C
Question 5 [18 marks]
5.1 Read the case study below and answer the questions. (14)
Vusi Simanga is the owner of Siko Clay Bricks. The business employs 20 workers and
many of them perform unskilled labour. The workers are currently unhappy about
their working conditions and salaries. After a meeting amongst themselves the workers
decide to go on a protected strike. Workers at a nearby cement factory decided to also go
on strike in sympathy of the workers at the brick manufacturer. The owner, Mr Simanga,
decides to consult a lawyer who specialises in labour legislation.
What were the lawyer’s answers to the following questions from the owner?
5.1.1
Which law will you consult to deal with this situation at my business? (2)
5.1.2
Are the workers allowed to strike? (motivate your answer) (2)
5.1.3
What is it called when workers at other related businesses also
start striking?
(2)
People say the workers and management should do ‘collective
5.1.4
bargaining’ – what does that mean? (2)
5.1.5
What can happen if the workers and management cannot come to
an agreement? (2)
5.1.6
The workers said they are going on a ‘protected strike’ – what
does that mean? (2)
5.1.7
I’ve heard that I can ‘lock-out’ the workers. What does that mean?
(2)
5.2
List, in full sentences, one RIGHT and one RESPONSIBILITY that trade unions have. (4)
Section D
Question 6 [58 marks]
Using the transactions given below, you are required to:
6.1 Complete the CPJ, CJ and CAJ for Hanno’s Hardware December 20.1. (20) + (8)
Note: You are not required to prepare the CRJ, DJ and DAJ.
The business operates with a 40% mark up.
6.2
236
EMS Gr9 LB (4).indd 236
Prepare the following accounts in the General Ledger with the opening
balances and totals given below:
Balances and totals on 1 December 20.10
Bank
B11
R5 320
Debtors control
B16
R12 788
Creditors control B18
R18 186
Trading stock
B9
R16 030
(5)
(5)
(4)
(7)
Term 4 • Formal Assessment Task (FAT): Final examination
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6
Sales
Stationery
N2
N6
R525 000
R5 600
6.3
Post the completed CPJ, CJ and CAJ, as well as the summarised CRJ, DJ and
DAJ(given below) to the accounts prepared above in the General Ledger.
6.4
Balance the balance sheet section accounts at the end of the month
Transactions: December 20.10
1
Invoice BY 456 received from Kassim Distributors for R3 800. This was
for trading stock.
3
Paid wages of R3 500 with cash cheque CC25 (this is the standard weekly wage).
Sold goods on account to B. Hlomo for R924. Inv HH 52
6
9
A direct deposit was made by a debtor – B. Kani – for R690. This was in
part settlement of her account – Rec R09.
10
Purchased R560 of packing material from BEAR BOX cc on account –
Invoice BF 77. We have not done business with BEAR BOX cc before.
Paid wages.
14
Cash sales amounted to R13 440. CRT 83 issued
J. Du Preez paid the monthly rent due to Hanno’s Hardware – R3 200
16
Issued a cheque to Jumbo Wholesalers for trading stock to the value of
R6 600 and stationery for R590.
17
Paid wages.
Customer, B. Hlomo returned goods bought on the 6th as they were not
what she ordered. The cost price of the returned goods was R110.
21
Sold goods to S. Kluw on account. The cost price was R500
24 Cash sales amounted to R7 500.
Paid wages after giving the staff a permanent 10% increase.
Received invoice MX 432 from Zoom Bulk Ltd for R14 000. R13 000 was
25
for trading stock and the balance for stationery.
26 The bank statement from ABSA Bank revealed bank charges of R150.
Bought trading stock for R5 500 from Finro Cash &Carry and issued a
cheque for R5 000. Cash discount of R500 was awarded.
30 Sold goods on account to D. Xalipi for R1 000 (CP was R667)
Some of the packing material received from BEAR BOX cc on the
10th was not what was ordered and was returned without being
replacement. BEAR BOX cc issued a credit note (CN9) for R90.
31
Paid weekly wages.
Issued a cheque to BEAR BOX cc to settle the account.
Formal Assessment Task (FAT): Final examination • Term 4
EMS Gr9 LB (4).indd 237
(3)
(3)
237
2013/04/26 1:15 PM
Term
7
41
The CRJ, DJ and DAJ for December have been summarised as follows:
Cash Receipts Journal of Hanno’s Hardware – December 20.10
Analysis of
Bank
Sales
Cost of
Debtors
Sundry Accounts
Receipts
Sales
Control
Amount
Fol
17 330 00
13 440 00
9 600 00
?
CRJ12
Details
3 200 00
Debtors journal of Hanno’s Hardware – December 20.10
Sales
2 624 00
Debtors allowances journal of Hanno’s Hardware – December 20.10
Debtors allowances
154 00
DAJ12
Cost of Sales
1 827 00
DAJ12
Cost of Sales
110 00
Question 7 The owner of KAY WAY Stores hired a new bookkeeper and received the following
incorrect Trial balance at the end of the month. The bookkeeper also made the
following mistakes:
•
the total of the Stationery account is incorrect – it should be R4 400.
•
the Bank column in the CPJ was over casted by R1 000.
•
Prepare a corrected Trial balance in the correct format.
Kay Jay Stores’ Trial balance on 30 October 20.20
General Ledger
Bank (overdraft)
Trading stock
Stationery
Rent income
Land
Capital
N accounts
Advertising
Consumables
Cost of Sales (33 1/3 % on CP)
Debtors control
Creditors control
Sales
Telephone
Wages
Debit
2 700
9 360
4 200
11 200
Credit
00
00
00
00
160 000 00
120 000 00
1 780 00
2 110 00
126 500 00
13 710 00
24 600 00
290 500 00
238
EMS Gr9 LB (4).indd 238
[19 marks]
182 000
6 440
6 200
290 500
00
00
00
00
Term 4 • Formal Assessment Task (FAT): Final examination
2013/04/26 1:15 PM
8
Question 8 [28 marks]
Prepare the accounts for A. Brown and XYZ Warehouse in the books of John’s Juice
Store as on 31 January 20.30
Balances on 1 January 20.30:
A. Brown
R4 300 (dr)
XYZ Warehouse R13 500 (cr)
Transactions: January 20.3
Bought trading stock on account from XYZ Warehouse – R4 900. Invoice X111
2
5
Mr Brown, paid John’s Juice Store R900 in part settlement of his account. Rec R33
15
Purchased stationery from XYZ Warehouse – R745 and paid by cheque. CC12
18
Received invoice X 319 from XYZ Warehouse for R2 100. R1 700 was for stock
and the balance for packing material.
20 Returned all the packing material received from XYZ Warehouse on the 18th
as it was of inferior quality. XYZ Warehouse issued a credit note HG9.
21
Mr Brown purchased more goods on account. SP of R430 and CP of R265. Invoice JFS23.
25
Issued a cheque for R9 000 to XYZ Warehouse. CC 22 (Receipt received, H321)
26 Mr Brown returned goods bought on the 21st with a CP of R53. Credit note MM4.
30 Delivered stock at a selling price of R400 to Mr Brown’s house. It was a CODsale (cash-on-delivery). Rec 56 was issued to him.
31
Bank statement reflects a deposit from A. Brown in full settlement of his
account. Sent him receipt R45.
Formal Assessment Task (FAT): Final examination • Term 4
EMS Gr9 LB (4).indd 239
239
2013/04/26 1:15 PM
Glossary
account – an
arrangement between a
business and a customer
where the business sells
goods or services to the
customer on credit.
brand name – word(s)
that identify a product
and its manufacturer or
producer
break-even point – the
point at which total costs
equal income; the point
where neither a profit nor
a loss is made.
business activity –
inputs are converted to
outputs by adding value
business plan – a plan
of action which contains
information about what,
where, when and how
an entrepreneur aims
to start a business and
why that business will be
successful
chain of production – the
process whereby raw
material is used (primary
sector) to make a product
(primary sector) and
then sold to consumers
(tertiary sector)
change in quantity
demanded – a movement
240
EMS Gr9 LB (4).indd 240
along the demand curve
that is caused by a
change in price.
change in quantity
a
supplied –
movement along the
supply curve that is
caused by a change in
price
constitution – a set of
rules/laws.
contingency plan – a
plan developed to handle
risky situations
cost of sales – the cost of
buying the products that
are sold to customers
circular flow – the
circular movement of
income
cost price – the amount
paid by the retailer for
stock purchased
closed economy –
goods, services and
money flow between the
households, businesses
and government within
a country and excluded
trade into and out of
the country (the foreign
sector)
credit sales – a business
sells goods on credit or
on account.
collective bargaining
– employers and
trade union officials
meet to find solutions
to problems in the
workplace.
communism – a political
orientation that supports
a system of social
organisation in which
all economic and social
activity is controlled by
a government that only
allows a single political
party in the country
credit term – maximum
period of time debtors
have to pay back
outstanding debt
creditors – an entity the
business owes money to
creditors allowance –
when goods purchased
on credit are returned
to the supplier because
the goods are damaged
or the incorrect size or
colour, the amount owed
to the creditor decreases.
Creditors Journal – a
book of first entry in
which credit purchases
are entered and grouped.
Glossary
2013/04/26 1:15 PM
Creditors Ledger – a
subsidiary ledger
containing separate
accounts for each
creditor.
creditors ledger – a
subsidiary ledger
containing individual
accounts for each
supplier.
creditworthy – safe to
give credit to
Das Capital – a book
written by Karl Marx and
Friedrich Engels against
the capitalist system and
promoting state control
of the economy.
Debtor – an entity that
owe the business money
debtors allowance – the
value (selling price) of
goods bought on credit
by a debtor and which
is now returned by the
debtor.
Debtors Allowance
Journal – the book of first
entry in which goods
returned by a debtor is
entered.
Debtors Ledger – a
subsidiary ledger with
individual accounts for
each debtor indicating
transactions between the
debtor and the business.
develop an economy for
the world
goals – desired results
demand – the quantity
of goods and services
bought at a particular
price at a given time
period.
goods – physical
products that satisfy
wants or needs of a
consumer
economic system – the
organising principle of
a countries economic
activity
government – the
political party that
is elected to rule the
country
equilibrium point – the
point at which the price
and quantity where the
demand and supply are
equal
grievance – complaint.
factor market – the
market at which buyers
and sellers of factors of
production meet and
prices are determined
fixed costs – those costs
in a business that remain
the same every month,
regardless of changes in
the volume of products
or services sold.
foreign – outside the
country
globalisation – the
system of interaction
among the countries
of the world in order to
households – a
collection of people
living under one roof
who make consumer
decisions together
industrial action – all
workers in one type
of work strike against
employers.
Interrelated – related or
connected to one another
labour – people who do
work for payment
labour federations
– large trade union
organisations to which
many smaller local trade
unions are connected
Glossary
EMS Gr9 LB (4).indd 241
241
2013/04/26 1:15 PM
lock-out – employers
do not allow workers to
enter the workplace.
manager – the person
responsible for planning
and directing the work of
a group of individuals
market economy – an
economic system with
private ownership of the
means of production i.e.
and land, factories and
houses.
market research – the
gathering of information
that is used by managers
to plan marketing
activities
mark-up – the amount
the retailer adds to
the cost price so as to
determine the selling
price
mass action – workers
from many types of
employment join forces
against employers.
mixed economy – the
government and private
people own the means of
production.
needs – things that is
necessary for someone to
live a healthy life
242
EMS Gr9 LB (4).indd 242
NUM – the National
Union of Mineworkers,
the trade union which
represents most of
miners in the country.
office-bearers – a person
chosen to represent
others.
open economy –
economic activity in
which the foreign sector
is included
overdue account – an
account of which the
payments are in arrear
planned economy – an
economic structure in
which the government
owns the means of
production
product market – the
market in which buyers
and sellers of final goods
and services meet and
prices are determined
profit – the positive
increase from an
investment after
subtracting all expenses;
the opposite of loss.
protected strike – a
strike for which workers
cannot be dismissed
quantity demanded –
the amount of a product
people are willing to buy
at a certain price.
quantity supplied – the
amount of a certain good
or service producers are
willing to supply at a
certain price
recruit – the process of
identifying and hiring
the best-qualified
candidate from within or
outside an organisation
for a job position
registered – this is a
legal requirement set
by the government
to make sure that all
organisations agree with
its policies.
retailer – a business that
buys products and sells
them at a higher price to
customers
retrenchment – workers
are offered a sum of
money to leave the
business.
sales – the selling price
of stock sold
selling price – the price
the customer pays the
retailer for a product
Glossary
2013/04/26 1:15 PM
shift – refers to a change
in position of the
demand or supply curve
skills – ability to do
something well
socialism – a planned
economic system
source document – a
document that is used
to record transactions
in journals; it is proof of
the transaction and gives
details of the transaction
specialisation – a
producer concentrates
on making a small
number of products, or
on providing a narrowly
defined service.
stock – goods kept on
the premises available
for sale or distribution
strategic decisions –
plans for the future of
the business
strike – workers refuse to
work for a period of time
until their demands are
met.
suppliers – the
businesses/persons
from whom goods and
services are bought
supply – the quantity
of goods and services
offered for sale at a
particular price and at a
given time
sustainable development
– development in which
the basic needs of people
today are met without
ruining the chances of
future generations to do
the same.
balances and totals from
the general ledger for
that month
United Nations
Organisation – a world
organisation formed to
promote peace.
variable costs – those
costs which vary with the
activity of the business
The Wealth of Nations –
a book written by Adam
Smith, who proposed
that prices of goods and
services are determined
by market forces
trade union – an
organisation formed
by a group of workers
with common goals who
come together to achieve
goals such as better pay
and improved working
conditions.
trademark – symbol,
word, or words legally
registered to represent a
company or product
trading stock – the stock
the retailer buys and will
then sell to customers
trial balance – completed
at the end of the month
and shows all the
Glossary
EMS Gr9 LB (4).indd 243
243
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EMS Gr9 LB (4).indd 244
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The picture on the cover of this book is inspired by Grade 9
learner, Ricardo da Silva.
learned many practical things about business.
And since I definitely want to run my own business
one day, what I’m learning now goes hand in hand
with my plans for the future, giving me many of the
tools I need to make a success of my life.
Grade 9 Learner’s Book
I’ve really enjoyed EMS this year because we’ve
Via Afrika
Economic and
Management Sciences
Grade 9 Learner’s Book
P. Bean, S. De Bod, B.D. Houghton, M. Kleyn, T. Kotze,
E.L. Llewellyn, A. Marx, J.N.T. Mbotho, B. Ndlovu, C.S.F. Trollip
www.viaafrika.com
Via Afrika Economic and Management Sciences
Building on everything you’ve learned in EMS, this book will help you
understand many new things about money and business. You’ll explore
different types of economies and how they work. You’ll also get useful
advice on how to create a business plan, as well as the opportunity
to apply your theoretical knowledge of accounting. The more you
discover, the more you might think about a career in the world of
finance. You might want to work for a large company as an accountant,
actuary or stockbroker. Whatever your dream may be, you’ll see that
a good understanding of EMS makes anything possible – especially if
your dream is to start your own successful business.