Stage 5 Commerce Students learn about: Methods of payment. ◦ Cash, credit, cheque, direct debit, lay-by, electronic funds transfer, book up. Methods of keeping records. Changes over time and the impact of technology. Students learn to: Identify the criteria that should be considered when determining methods of payment for different suppliers. Research the criteria to determine the most appropriate methods of payment in a range of contexts. Identify the advantages and disadvantages of book up. Propose options that could be taken to improve financial services available to Aboriginal and Torres Strait Islander peoples and remote communities. Develop and use spreadsheets and databases to maintain effective records and monitor monthly transactions including running totals of cash, direct debit and credit purchases. Identify how technology has impacted on the payment process of businesses and consumers. Cash – money in coins and notes Credit – money loaned at a point in time to complete a purchase with the intention it is paid back with interest or extra fees. Direct debit –A prescribed amount of money taken directly from your bank account on a regular schedule to pay another company or bank account Lay-by – a service that allows you to purchase goods when you do not have the money to buy them upfront. Electronic funds transfer – (EFPTOS) all types of financial transactions that are carried out electronically. Cash Advantages Disadvantages Immediate payment is possible A bulky way to pay for expensive things All shops accept Not very secure Credit Advantages Disadvantages Money stays in the bank earning interest until you pay your bill. Easy to overspend and get caught in a ‘debt trap’ Safer. Can be cancelled if lost. Can have high interest so should be used with caution Cheques Advantages Disadvantages Convenient and easy to use. Some retailers do not accept. Added security – can be stopped when lost. When deposited into an account you need to wait for it to be cleared. Direct debits Advantages Disadvantages A convenient way to pay for household services. You need to have sufficient funds in your account to cover. Can be paid regularly automatically. Amounts paid may not always be the same. Lay-by Advantages Disadvantages No interest charges. Buy goods not needed. Protects you against future increases in the price of the product. Good must stay in the store until full payment has been made. Electronic funds transfer Advantages Disadvantages Cash free so minimises security concerns. Significant increases in fraud cases recently. Widely accepted. Allows personal information to be passed onto others. Use the ASIC booklet on book up or go to www.fido.asic.gov.au . Click on ‘Financial Tips’, then ‘Loans and Credit’. Research to what “book up” is and where it is practiced Discuss its ethical and legal implications. Buying a newspaper Paying for a haircut Paying the monthly electricity bill Purchasing a formal dress Paying for a car Buying groceries Paying your bus fare Paying off a mortgage (housing loan) or personal loan. Read the yellow box. Brainstorm and develop a mind map showing measures that could be used by industry, government and indigenous organisations to improve the banking services available to these people in remote areas. Compare the amounts on withdrawals, cheques and deposits with the amounts on your receipts or cheque butts. Check off all canceled cheques and deposits. Insert the last balance shown on your bank statement Add deposits. Deduct all cheques and withdrawals. Your adjusted balance should agree with the balance in your record book. If it doesn’t check your addition and subtraction, then check to be sure you have entered all the numbers correctly. Date Detail s 28/09/04 O/Bal 01/10/04 Deposit s Wdls 405.93 590.93 03/10/04 298.64 07/10/04 100.00 12/10/04 154.00 15/10/04 58.90 17/10/04 230.00 21/10/04 127.80 23/10/04 450.00 26/10/04 240.00 27/10/04 127.80 28/10/04 45.75 29/10/04 24.30 30/10/04 C/Bal Balance There are several financial statements that are normally prepared by businesses. The most common ones are: ◦ The profit and loss statement ◦ The balance sheet. ◦ The cash flow statement The profit and loss statement tells owners the difference between revenue (income) and expenses for a period of time and whether they have made a profit or loss. The balance sheet is like a set of scales that weighs the assets on one side and liabilities and owner’s equity on the other. Owner’s equity is basically what the business owes its owners. A cash flow statement summarise the details contained in a cash book. It summarises the inflows (income or deposits) and outflows (cheques or withdrawals) during a period of time. This when added to the bank balance at the start of the period enables the bank balance at the end of the period to be determined. Cash Receipts Less Cash Payments = Cash surplus (deficit) Add Bank Balance (start of period) = Bank Balance (end of period) Date Item Amount $ April 1 Received cash from Joe Blow 40 April 3 Paid electricity bill 200 April 4 Received cash from Y Xeric 20 April 5 Received cash from L Montague 80 Paid wages to G Jones 250 April 6 Received donation from A Smith 100 April 7 Paid Telstra (phone bill) 350 April 8 Received payment from A Sims 450 April 9 Received cash from L Hewitt 400 April 10 Paid Energy Australia (Electricity bill) 50 April 13 Received cash from M Forces 200 April 14 Paid Telstra (phone bill) 80 April 25 Received donation from J Walker 100 April 26 Paid wages to G Jones 250 Definition – an estimate of income and expenses for a set period of time. Reasons for making a budget ◦ To track money when you are working to a plan. ◦ To work out how to best use the money you earn. ◦ To plan for your changing needs and wants. Go to https://www.moneysmart.gov.au/managingyour-money/budgeting/how-to-do-abudget Use the budget-planner document on SIMB to help plan out a budget for your household You can start in class and finish for homework Using the steps below and other relevant internet sites, develop a brochure for teenagers on the steps in budgeting. 1. Determine money coming in (income). 1. Work out your fixed and variable expenses. 1. Write down your weekly cash flow. 1. Work out how much you can save. 1. Identify how to cut back. 1. Develop a cost benefit analysis to work out how to save for new wants. 1. Shop around to find the best deal for the goods and services you need and want. 1. Choose a suitable bank account. 1. Learn how to record your pay slip. 1. Decide how to keep records. 1. Develop a weekly, monthly and annual budget. 1. Monitor and change your budget at least once a month. Activity Describe how a selfcheckout works. Outline the advantages and disadvantages of selfcheckout supermarkets. Technology in retailing and payment options is continually developing and changing. Recent developments include: ◦ ◦ ◦ ◦ Online and internet shopping EFTPOS and debit and credit cards Smart cards Self-checkout supermarkets Activities 1. Develop a collage in word of recent technological developments in retailing. 2. Use Microsoft publisher or word to create a newspaper article titled ‘Shopping in 2050’. Include words and illustrations.