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Full text of "Economic and Management Sciences Grade 9"

Economic and Management Sciences

Grade 9



By:

Siyavula Uploaders



Economic and Management Sciences

Grade 9



By:

Siyavula Uploaders



Online:

< http://cnx.Org/content/colll074/l.l/ >



CONNEXIONS

Rice University, Houston, Texas



This selection and arrangement of content as a collection is copyrighted by Siyavula Uploaders. It is licensed under

the Creative Commons Attribution 3.0 license (http://creativecommons.Org/licenses/by/3.0/).

Collection structure revised: September 15, 2009

PDF generated: February 6, 2011

For copyright and attribution information for the modules contained in this collection, see p. 144.



Table of Contents

1 Term 1

1.1 The flow of money, production factors and goods (revised) 1

1.2 Explaining business enterprises 3

1.3 The economic cycle and markets 5

1.4 The foreign sector in the economic cycle 7

1.5 Price-fixing through supply and demand 12

1.6 The influence of trade unions 16

1.7 The national budget, growth and economical equalities 19

2 Term 2

2.1 Reconstruction and development programme 23

2.2 Regional and international agreements 27

2.3 Savings and investment 30

2.4 Productivity 31

3 Term 3

3.1 An idea for an enterprise 35

3.2 Develop a business plan 40

3.3 Ownership of a business 43

4 Term 4

4.1 Difference between an income statement and a balance sheet 47

4.2 Social and environmental responsibilities of businesses 60

4.3 Recording cash transactions of service and commercial enterprises 62

4.4 Recording credit transactions of commercial and service enterprises 77

4.5 Recording payments received from debtors 82

4.6 Recording payments to creditors 87

4.7 Ledger entries 98

4.8 Transferring the auxiliary journals to the ledger 106

4.9 Drawing up a trial balance 121

4.10 Analysing financial statements 139

4.11 Forms of credit purchases and methods of payment 141

Attributions 144



IV



Chapter 1

Term 1



1.1 The flow of money, production factors and goods (revised) 1

1.1.1 ECONOMIC AND MANAGEMENT SCIENCES

1.1.2 Grade 9

1.1.3 THE ECONOMIC CYCLE

1.1.4 Module 1

1.1.5 THE FLOW OF MONEY, PRODUCTION FACTORS AND GOODS

1.1.5.1 ASSESSMENT STANDARD 1.1:

1.1.5.2 THE FLOW OF MONEY, PRODUCTION FACTORS AND GOODS

ON COMPLETING THIS SECTION YOU WILL BE ABLE TO DESCRIBE THE FLOW OF MONEY,
PRODUCTION FACTORS AND GOODS AND SERVICES IN THE ECONOMIC CYCLE OF THE
SOUTH AFRICAN ECONOMY.

In order for us to understand the economic cycle, we need to analyse the participants in the economy,
who are naturally also the participants in the cycle:

The first participants are the CONSUMERS or the HOUSEHOLDS.

Consumers have certain NEEDS that have to be met in order for them to survive, namely the need
for FOOD, CLOTHING, HOUSING and SAFETY. In order to satisfy these basic needs, the consumers
or households will have to use or apply their means or FACTORS OF PRODUCTION. In other words,
they must use / apply their LABOUR, CAPITAL, LAND and ENTREPRENEURIAL TALENT in order
to produce the necessary products.

Activity 1: HUMAN NEEDS

SELF:

Make a list of human needs and give good examples in each case. (Hint: Start off by making a list of
your own needs.)

1.

2.

3.

4.

5.

Activity 2: HUMAN NEEDS



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2 CHAPTER 1. TERM 1

GROUP:

Which of the previously mentioned needs are the most compelling ones?

1.

2.

3.

4.

5.

The consumers will thus have to "sell" their factor of production to the second participant in the cycle,
the PRODUCER or the BUSINESS ENTERPRISE, who will then organise and arrange to produce products
that will meet the needs of the consumers. The producer will "remunerate" the consumer for the use of his
/ her factors of production (in the following way) :

• A WAGE is paid for the use of LABOUR;

• INTEREST is paid for the use of CAPITAL;

• RENT is paid for the use of LAND; and

• The consumer is paid a share of the profit for the use of his / her ENTREPRENEURIAL TALENT.

• This compensation is used by the consumer to purchase products from the producer (his supply of
goods and services) in order to satisfy his needs.



1.1.6 Assessment

Learning Outcomes (LUs)
LO 1
the economic cycle

The learner will be able to demonstrate knowledge and understanding of the economic cycle within the
context of "the economic problem."
Assessment Standards(ASs)
We know this when the learner:

1.5 explains the different flows of money, factors of production, goods and services in the economic cycle
within the South African economy;

1.6 discusses the role of the foreign sector in the economic cycle;

1.7 illustrates by means of a graph and discusses how demand and supply influence prices;

1.8 critically assesses the influence and actions (strikes and stayaways) of trade unions in general and
during the apartheid era on:

• the South African economy;

• political, economic and social transformation;

• labour issues;

1.9 discusses the effect of the national budget on the economy (e.g. taxation and expenditure on education,
social welfare, health and security.)

1.1.7 Memorandum

ACTIVITY 1: Human needs
SELF:

A list of the needs of people:

Food, clothing, housing, protection, recreation, music, love, power, etc.

ACTIVITY 2: Human needs



GROUP:

The most urgent needs:

Food, clothing, housing, protection, recreation

1.2 Explaining business enterprises 2

1.2.1 ECONOMIC AND MANAGEMENT SCIENCES

1.2.2 Grade 9

1.2.3 THE ECONOMIC CYCLE

1.2.4 Module 2

1.2.5 EXPLAINING BUSINESS ENTERPRISES
1.2.5.1 Activity l:PRODUCTION ACTIVITIES

SELF:

Classify, with relevant examples, the different activities of the industries / business enterprises.

1.

2.

3.

4.

Activity 2: PRODUCTION FACTORS

GROUP:

Picture a household / family in which all the factors of production are present. Explain the role of each
member to show how he / she participates in the production process. The members of each group must
explain their examples to the rest of the class and also describe them fully.

Therefore the economic cycle could be presented as follows in its simplest form:

PRODUCERS / BUSINESS ENTERPRISES

On analysing the cycle, one can see very clearly that there are TWO streams, namely a MONEY STREAM
and a GOODS STREAM. These two streams flow in opposite directions and will be equal in a "closed"
economy. The reason for this is simply that the businesses cannot spend more than what they have received
as "income". Note that their "income" is equal to the value of the goods and services that they have produced
and sold on the markets for consumer goods. On the other hand the households can also spend only the
"money" that they have received as compensation for the services of their production factors.

1.2.6 Assessment

Learning Outcomes (LUs)
LO 1
the economic cycle

The learner will be able to demonstrate knowledge and understanding of the economic cycle within the
context of "the economic problem."
Assessment Standards(ASs)
We know this when the learner:

1.5 explains the different flows of money, factors of production, goods and services in the economic cycle
within the South African economy;

1.6 discusses the role of the foreign sector in the economic cycle;

1.7 illustrates by means of a graph and discusses how demand and supply influence prices;



2 This content is available online at <http://cnx.Org/content/m21444/l.l/>.



CHAPTER 1. TERM 1



1.8 critically assesses the influence and actions (strikes and stayaways) of trade unions in
general and during the apartheid era on:



• the South African economy;

• political, economic and social transformation;

• labour issues;

1.9 discusses the effect of the national budget on the economy (e.g. taxation and expenditure on education,
social welfare, health and security.)

1.2.7 Memorandum

ACTIVITY 1: Production activities
SELF:

Activities of industries / business enterprises

primary industries, e.g. agriculture, stock farming, forestry, mining, fisheries, etc.
Secondary industries, e.g. processing industries involving fish factories, abattoirs, etc.
Tertiary industries, e.g. distributing industries involving transport, shops, cafes, etc.
Service industries, e.g. doctors, lawyers, hairdressers, etc.
ACTIVITY2: Factors of production
GROUP:
Family representing all the factors of production (example)



Father:


Farmer and landowner(primary
industry)


• Entrepreneurial talent and
owner of production factor,
land.


Mother:


Doctor in private practice(service
industry)


• Entrepreneurial talent and
labour


Son:


Cabinet maker(secondary indus-
try)


• Labour


Daughter:


Owner, cash loans bank(tertiary
industry)


• Provider of capital



Table 1.1



1.3 The economic cycle and markets 3

1.3.1 ECONOMIC AND MANAGEMENT SCIENCES

1.3.2 Grade 9

1.3.3 THE ECONOMIC CYCLE

1.3.4 Module 3

1.3.5 THE ECONOMIC CYCLE AND MARKETS

1.3.5.1 Activity 1: ECONOMIC CYCLE

SELF:

Draw your own version of the economic cycle so that both the participants and the flow are clear. Insert
the diagram on a separate sheet.

1.3.5.2 Activity 2: MARKET FOR FACTORS OF PRODUCTION

GROUP:

Classify all the factors of production factors that will be available on the market for factors of production
and indicate what remuneration will be paid to each.

1. FACTOR OF PRODUCTION

2. EXAMPLE

3. COMPENSATION

1.3.5.3 Activity 3: MARKET FOR CONSUMER GOODS

GROUP:

Classify the products that are traded on the market for consumer goods. Give two appropriate examples
in each case.

1. TYPE OF PRODUCT

2. EXAMPLES

In a "closed" economy the STATE also plays an important role, seeing that the state is also a consumer (e.g.
state hospitals that purchase food products and medical supplies on the market for consumer products) . In
addition, the state is also a producer (hospitals supply medical services to consumers).

Furthermore, the consumers pay taxes to the state and from these "funds" certain services that are of
national interest are delivered, for example education and police services. In this way, when the state pays
for the use of the services of the factor of production, for example salaries, the "tax money" flows back to
the consumers.

1.3.5.4

1.3.5.5 Activity 4: ECONOMIC CYCLE THAT INCLUDES THE STATE

SELF:

Draw your own version of the economic cycle (that includes the state) so that both the participants and
the flow are clear. Insert the diagram on a separate sheet.



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CHAPTER 1. TERM 1



1.3.5.6 Activity 5: SERVICES OFFERED BY THE STATE [LO 1.1]

GROUP:

Classify the services that are delivered by the state and give appropriate examples of each:

1. SERVICES DELIVERED BY THE STATE

2. EXAMPLES



1,3.6 Assessment



Learning Outcomes (LUs)



LO 1



the economic cycleThe learner will be able to demonstrate knowledge and understanding of the eco-
nomic cycle within the context of "the economic problem."



Assessment Standards(ASs)



We know this when the learner:



1.5 explains the different flows of money, factors of production, goods and services in the economic cycle
within the South African economy;



1.6 discusses the role of the foreign sector in the economic cycle;



1.7 illustrates by means of a graph and discusses how demand and supply influence prices;



1.8 critically assesses the influence and actions (strikes and stayaways) of trade unions in general and
during the apartheid era on:



the South African economy;



political, economic and social transformation;



labour issues;



1.9 discusses the effect of the national budget on the economy (e.g. taxation and expenditure on education,
social welfare, health and security.)



Table 1.2



1.3.7 Memorandum

ACTIVITY 1: The economic cycle
SELF:

Diagram illustrating economic cycle.
ACTIVITY 2: Market for production factors
GROUP:
Classification of production factors



Natural resources - Landowner - Rent

Capital - Loan from bank - Interest

Labour - Working as cabinet maker - Wages / salary

Entrepreneurial talent - Owner/manager - Profit

ACTIVITY 3: Market for consumer goods

Classification of products in market for consumer goods

1. Durable goods, e.g. cars, furniture, equipment, etc. (long-term use)

2. Semi-durable goods, e.g. a pen, pencil, etc.

3. Non-durable goods, e.g. foods, fuel, etc. (once-only use)

4. Services, e.g. medical services, etc.

ACTIVITY 5: Services provided by the state
Classification of services provided by the state

• Ensuring security:

SAPS, SANDF, Correctional Services.

• Ensuring social services:

Hospitals, pensions, schools, low-cost housing.

Regulating relations in business: Legislation with regard to labour, pollution, etc.
Financial organisation by means of the Land Bank, SARS, etc.
Research by means of the CSIR, SABS, etc

• Supplies economic infrastructure:
Electricity, roads, traffic control, etc.

1.4 The foreign sector in the economic cycle 4

1.4.1 ECONOMIC AND MANAGEMENT SCIENCES

1.4.2 Grade 9

1.4.3 THE ECONOMIC CYCLE

1.4.4 Module 4

1.4.5 THE FOREIGN SECTOR IN THE ECONOMIC CYCLE

1.4.5.1 ASSESSMENT STANDARD 1.2:FOREIGN SECTOR IN THE ECONOMIC CYCLE

UPON COMPLETING THIS SECTION YOU WILL BE ABLE TO INDICATE THE ROLE OF THE
FOREIGN SECTOR IN THE ECONOMIC CYCLE.

Up to now we have assumed that all economic activities of a country occur solely within its borders.
However, with present-day technological developments in the field of communication and transport, as well
as the benefits that arise from the use of large-scale production, we find that product markets are exploited
not only domestically, but also internationally. Consider in this regard South Africa's export trade in coal
and other minerals, as well as agricultural products such as wine, sugar and wool, and also the imports of
technological products and machinery that are imported from foreign countries.



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8 CHAPTER 1. TERM 1

The aim of international trade as explained in the previous paragraph, is mainly to satisfy the needs of
the citizens of the country more effectively. In this way, a country can reach a stage where it is no longer
dependent solely on its own resources / production, but where it can also utilise other countries' products.
That means, for example, that we in South Africa can now import sophisticated computers, while there are
other countries that will want to purchase iron ore and gold from South Africa.

This international trade between countries has two components, namely:

• The flow of goods and services that are dispatched and received (also known as international trade);
and

• The mutual payment for these goods and services in the monetary unit of each country (also known
as currency transactions).



• International trade takes place because:

• certain countries have an excess of certain resources; for instance, South Africa has an abundance of
gold and other minerals that can be exported, while there are no natural oil resources;

• climatic conditions vary from country to country. As a result of the erratic rainfall in South Africa
there are certain agricultural products that cannot be cultivated here, and that have to be imported,
for example coffee;



• the level of technological development varies; for instance, the Japanese are renowned for their expertise
in computer technology;

• transport and communication have improved drastically. For example, fresh flowers from South Africa
are supplied to markets throughout Europe on a daily basis.



1.4.5.2 Activity 1:

1.4.5.3 FOREIGN SECTOR

SELF:

Draw your own version of the economic cycle (that includes the foreign sector) so that both the partici-
pants and the flow are evident. Insert the diagram on a separate sheet.

1.4.5.4 Activity 2:

1.4.5.5 REASONS FOR FOREIGN TRADE

GROUP:

Refer to the reasons for foreign trade supplied below, and in each case give examples that could explain
the South African situation.



REASON


RSA EXAMPLES


1. Availability of resources:




continued on next page



1. Differing climatic conditions:




1. Level of technology:




1. Transport and communication:





Table 1.3

The inclusion of the foreign sector as the fourth participant in the economic cycle is also linked by way of
two streams, namely the goods stream and the monetary stream, as explained above. The inclusion of the
foreign sector has resulted in the fact that the economy is no longer "closed", but that it has become more
"open", because imports and exports have caused "more" goods and money to flow into / flow out of the two
streams as indicated earlier.

1.4.5.6 Activity 3:

1.4.5.7 FOREIGN TRADE

SELF / GROUP:

Make a list of goods that are exported from and imported to South Africa. Indicate, as far as possible,
where the goods are exported to and from where these goods are imported.



RSA EXPORTS AND ITS DESTINATION


RSA IMPORTS AND ITS ORIGIN























Table 1.4



1.4.5.8 Activity 4:

1.4.5.9 FOREIGN TRADE

SELF/GROUP:

Name the monetary unit of each country that has been listed in the table below:



10



CHAPTER 1. TERM 1



COUNTRY


MONETARY UNIT


1. Japan




1. Russia




1. USA




1. Britain




1. Botswana




1. India




1. Germany




8. France





Table 1.5



1.4.5.10 Activity 5:

1.4.5.11 GRAPH OF FOREIGN EXCHANGE

GROUP:

On every Wednesday for at least eight weeks, indicate what the exchange rate is between the South
African Rand and the following monetary units: (Divide the class into four groups for this purpose.)



Week:



(Group

1) Rand/USA

Dollar



(Group
2)Rand/Euro



(Group

3) Rand/Pound



(Group
4)Rand/Pula



continued on next page



11



1.










2.










3.










4.










5.










6.










7.










8.











Table 1.6

GROUP:

At the end of the eight weeks each group must indicate their findings on a graph and then explain to the
rest of the class what tendency prevailed in the course of the eight weeks.

1,4,6 Assessment

Learning Outcomes(LUs)
LO 1
the economic cycle

The learner will be able to demonstrate knowledge and understanding of the economic cycle within the
context of "the economic problem."
Assessment Standards(ASs)
We know this when the learner:

1.5 explains the different flows of money, factors of production, goods and services in the economic cycle
within the South African economy;

1.6 discusses the role of the foreign sector in the economic cycle;

1.7 illustrates by means of a graph and discusses how demand and supply influence prices;

1.8 critically assesses the influence and actions (strikes and stayaways) of trade unions in general and
during the apartheid era on:

the South African economy;

political, economic and social transformation;

labour issues;

1.9 discusses the effect of the national budget on the economy (e.g. taxation and expenditure on education,
social welfare, health and security.)



1,4,7 Memorandum

ACTIVITY 2: Reasons for foreign trade
Provide reasons for foreign trade

Availability of resources: The RSA has a variety of minerals, but no natural oil.
Differing climatic conditions: The RSA produces maize, oranges, etc, but no coffee, rubber.
Level of technology: The RSA has to import watches, computers, etc.

1. Transport and communication: RSA has good transport and communications facilities.

ACTIVITY 3: Foreign trade

List of goods that are imported and exported.



12



CHAPTER 1. TERM 1



EXPORTS


IMPORTS


Maize (African countries)


Computers (USA)


Wine (Europe)


Watches (Switzerland)


Iron ore (Japan)


Cars (Japan)



Table 1.7

ACTIVITY 4: Foreign exchange (means of payment)

Provide the monetary unit of the following countries

JAPAN: yen

RUSSIA: rouble

USA: dollar

BRITTAIN: pound sterling

BOTSWANA: pula

INDIA: rupee

ACTIVITY 5: Graph illustrating foreign exchange

Collect data relating to rates of exchange and draw the graph with the help of the information obtained.

1.5 Price-fixing through supply and demand 5

1.5.1 ECONOMIC AND MANAGEMENT SCIENCES

1.5.2 Grade 9

1.5.3 THE ECONOMIC CYCLE

1.5.4 Module 5

1.5.5 PRIECE-FIXING THROUGH SUPPLY AND DEMAND

1.5.5.1 ASSESSMENT STANDARD 1.3:

1.5.5.2 PRICE-FIXING THROUGH SUPPLY AND DEMAND

In order to make bartering and business transactions possible, it is necessary that the value of a product be
expressed by the dealer in terms of a monetary amount, or as we know it, a price. It is common for us to
walk into a shop and compare the prices of products on the shelves in order to decide which product (s) we
want to buy. However, the question is: How are these prices determined?

The price that is given to a product by a dealer depends on (1) the price that he paid for the product
and (2) the price at which he is prepared to sell the product. This raises the principle of DEMAND for a
product or products at a specific price, in a specific quantity or number (of the product) and at a specific
time. As a simple example one can refer to the municipal fresh produce market or an auction where livestock
is sold. Note that at such markets the sellers and the prices that they ask for their products, as well as the
number of products available, can differ from day to day.

The following data are given concerning the SUPPLY of cabbages on the municipal fresh produce market:



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13



PRICE PER CABBAGE


NUMBER SUPPLIED


R0.80


400


R0.70


350


R0.60


300


R0.50


200


R0.40


100



Table 1.8



1.5.5.3 Activity 1: SUPPLY CURVE

Make use of the data supplied in the table above and draw the supply curve. Insert it on a separate page.

From this the LAW OF SUPPLY can be deduced, which states that "the number / quantity of goods that
are offered will rise in proportion to rises, in the price and vice versa, namely that the number / quantity
supplied will fall when the price shows a decline".

1.5.5.4 Activity 2: SUPPLY

Draw up a list of the factors that will influence the number / quantity supplied.



1


.6






2.


7.


3.


8.


4.


9.


5.





Table 1.9

The price that a consumer is willing to pay for a product depends mainly on (1) how urgent his need is
and (2) the amount of money that the consumer has available. Here we have to do with the DEMAND for
a product or products that is / are valid at a specific price, in specific numbers / quantity and at a specific
time. Once again it is possible that the indicated prices and numbers / amounts may differ from day to day.

The following data concerning the DEMAND for cabbage on the municipal fresh produce market on 14
January are also supplied:



PRICE PER CABBAGE


NUMBER SUPPLIED


R0.80


150


R0.70


200


R0.60


300


R0.50


450


R0.40


650



Table 1.10



14 CHAPTER 1. TERM 1

1.5.5.5 Activity 3: DEMAND CURVE

Make use of the data supplied in the table above and draw the demand curve. Insert it on a separate page.

From this the LAW OF DEMAND can be deduced, which states that "the number / quantity demanded
will rise in proportion to the decline in price, and vice versa, namely that the number / quantity demanded
will fall when the price shows an inclination to rise".

Draw up a list of the factors that will influence the number / quantity demanded.



1


.6.






2.


7.


3.


8.


4.


9.


5.





Table 1.11

When the above-mentioned supply and demand curves are drawn on the same axis, we see that the two
curves meet at a specific point, namely when the price is R0,60, the sellers are prepared to supply 300 heads
of cabbage and the buyers are prepared to purchase 300 heads of cabbage at that price. This price is known
as the MARKET EQUILIBRIUM PRICE

and it represents the price at which the buyer and the seller are prepared to barter. At any other price
the parties will not be able to agree and they will not be prepared to conclude a transaction.

1.5.5.6 Activity 4: SUPPLY AND DEMAND CURVE

Use the data that are supplied above and draw the Supply and Demand Curve on the same axis system:
(Insert a separate page.)

Now read the following data from the graph:

1. The market equilibrium price:

2. The quantity demanded / supplied:



1,5.6 Assessment



Learning Outcomes (LUs)



LO 1



the economic cycleThe learner will be able to demonstrate knowledge and understanding of the eco-
nomic cycle within the context of "the economic problem."



Assessment Standards(ASs)



We know this when the learner:



continued on next page



15



1.5 explains the different flows of money, factors of production, goods and services in the economic cycle
within the South African economy;



1.6 discusses the role of the foreign sector in the economic cycle;



1.7 illustrates by means of a graph and discusses how demand and supply influence prices;



1.8 critically assesses the influence and actions (strikes and stayaways) of trade unions in general and
during the apartheid era on:



the South African economy;



political, economic and social transformation;



labour issues;



1.9 discusses the effect of the national budget on the economy (e.g. taxation and expenditure on education,
social welfare, health and security.)



Table 1.12



1.5.7 Memorandum

ACTIVITY 1: Supply curve

Draw the graph according to the information supplied in the table.

ACTIVITY 2: Supply

Factors that will affect the amount that is supplied

Cost of production - the greater the cost, the longer it takes to establish a supply.

Price of products - the higher the price, the greater the quantity offered.

Production techniques - better techniques at lower prices can increase the quantity offered.

Competition - when there is little competition, the producer will limit the supply in order to increase
the price.

Market conditions - if there are more sellers than buyers, the producer will lower prices in order to sell
the supply.

Tax levies - increase the price, which decreases the demand, as well as the supply.

Climatic conditions - if the rainfall is insufficient, production will decrease, which will also lower the
supply.

ACTIVITY 3: Demand curve

Draw the graph according to the information supplied in the table.

Factors that will affect the quantity that is demanded

Price - if prices increase, the demand will probably decrease.

Tastes and custom - changes can result in price fluctuations.

Change in income - if incomes increase, the demand may increase.

Substitution goods - a cheaper substitute will cause a decrease in the demand.

Tax - the price increases, which lowers the demand for the product.

Economic conditions - in times of prosperity, the demand, especially for luxury goods, will increase.

ACTIVITY 4: Supply and demand curve

Draw the supply and demand curve from the above data and provide the answers to the following:



16 CHAPTER 1. TERM 1

The market equilibrium price: 60c

The demand and supply amount: 300 heads of cauliflower

1.6 The influence of trade unions 6

1.6.1 ECONOMIC AND MANAGEMENT SCIENCES

1.6.2 Grade 9

1.6.3 THE ECONOMIC CYCLE

1.6.4 Module

1.6.5 THE INFLUENCE OF TRADE UNIONS

1.6.5.1 ASSESSMENT STANDARD 1.4:

1.6.5.2 THE INFLUENCE OF TRADE UNIONS

The Labour Relations Act of 1997 provides for the right (1) to fair labour practice, (2) to establish a trade
union and to become a member of it, (3) to organise for joint bargaining, and (4) to strike and to be locked
out.

Trade unions are the mouthpiece of the workers that they represent, seeing that they represent the
workers in a certain sector in order to establish good relations between the employees and the employers.
The relevant trade union should therefore strive towards promoting the social, economic and political interests
of the employees. It is important to note that an employee is free to join a trade union and he / she may
neither be prevented from doing so, nor be dismissed by the employer when he / she joins a trade union.

According to the Labour Relations Act trade unions have the following rights:

ACCESS TO THE WORKPLACE: The trade union has the right to canvass members within the work-
place and to hold meetings during off hours.

MEMBERSHIP FEES: Contributions towards membership fees may be deducted from employees' wages
/ salaries.

ELECTIONS: Representatives of the trade unions may be elected within the workplace.

SERVICE TO THE TRADE UNION: Trade union members are entitled to taking paid leave in order to
perform their duties as trade union representatives and also for the purpose of undergoing training.

DISCLOSING INFORMATION: The trade union is entitled to any information that has a bearing on
issues that concern the employees within the workplace.

According to the Labour Relations Act (1997) employees have the right to STRIKE (i.e. refusal to
work, to work at a slower pace, and an embargo on working overtime), while employers have the right to
LOCK OUT employees (i.e. physically preventing employees from entering the workplace). The two actions
could, amongst other things, result from (1) an insistence on a wage or salary increase, (2) an insistence on
recognising a trade union, or (3) an insistence on changing conditions in the workplace.

In general it is fair to expect that the activities of trade unions should be of such a nature that not only
are the employees' social, economic and political interests served, but that the interests of the South African
economy as a whole should be fostered.

Judge the following translated extract from a report that appeared in Die Burger during October 2002,
and evaluate the impact that strikes, in other words trade union action, had during 2001.

'Last year strikes more than doubled and the country lost 1,25 million working days as a result of strikes,
but it was a one-time occurrence and strike figures will drop again significantly in the next two years,' allege
Andrew Levy and Associates in their latest annual report on labour relations. Last year 1,25 million working
days were lost as a result of strike action, as opposed to 5 000 000 the previous year.



6 This content is available online at <http://cnx.Org/content/m22933/l.l/>.



17

In view of the recent changes to the Labour Relations Act that allow strike action, labour cut-backs
could give rise to more strikes this year. 'This could lead to conflict in the public sector on the matter
of privatisation, but it will probably be a brief strike after which the government will continue with its
privatisation programme,' declares Levy.

Labour cut-backs as a result of the decline in the world economy will also place job opportunities in
greater jeopardy this year as compared to last year, Levy believes. The average wage / salary increase
that was negotiated in central bargaining forums was 7,8% and the average rate for wage increases in other
negotiations was 7,4% as opposed to the average inflation rate (CPI) of 5,7% last year. The highest agreement
was 9% in the car production industry, where a drawn-out strike in August last year lasted for 15 working
days. That led to a loss of 315 000 working days. Mr Andrew Levy who wrote the annual report, expects
that average wage agreements will be between 8,2% and 8,5% this year. There is no fear that wage increases
will lead to inflation pressure this year, but in the next two to three years it could be cause for concern
because real wages increase very slightly while imported inflation pressure increases steadily. Levy predicts
that the number of HIV positive people will increase from approximately 4 million at present to 6 million
within two years. 'Organisations can expect to lose more than 4% of their labour force in the following ten
years.'

Trade union membership has again begun to increase after a slight drop in 2000 and presently it stands
at 3,5 million. COSATU, the country's largest federation of trade unions, has 1,883 million members. The
membership has increased since last year despite severe labour cut-backs. FEDUSA, the second largest
federation of trade unions, represents 503 241 members, and NACTU, the third largest, represents 398 106
employees.

Source: Die Burger, October 2002

1.6.6 Activity 1: STRIKES

Judge the influence of the strikes from the following table:



Influence of:


Social conditions


Economic conditions


1. Working days lost






1. Labour cut-backs






1. Wage increases






1. HIV/ AIDS







Table 1.13



The political role played by trade unions in South Africa is clearly to be seen in the activities of the
CONGRESS OF SOUTH AFRICAN TRADE UNIONS (COSATU), an organisation that was established as
early as 1985. COSATU is a federation of a group of South African trade unions. In 1985 COSATU joined
the UNITED DEMOCRATIC FRONT (UDF) in the MASS DEMOCRATIC MOVEMENT and actively



18 CHAPTER 1. TERM 1

supported the movement in its fight against apartheid. Conditions in the workplace were politicised through
strikes, stay-aways and the so-called "go-slows" that had a severely negative effect on production.

Their active participation in the struggle for political and economic change in South Africa led to the
fact that COSATU joined the African National Congress (ANC) and the South African Communist Party
(SACP) as a partner in the 1994 election campaign. This partnership won the election with an impressive
majority. Today COSATU is still part of the three party partnership that governs South Africa. As an equal
partner in the alliance it is thus possible that COSATU, which represents a great mass of the workers in
South Africa, could offer a significant contribution and exert a profound influence on economic and political
policy.

1.6.7 Activity 2: TRADE UNIONS

Explain the following abbreviations and indicate which occupations are represented by these federations of
trade unions:

1. FEDUSA:

2. NACTU:

3. NUM: NUMSA:



1.6.8 Assessment



Learning Outcomes (LUs)



LO 1



the economic cycleThe learner will be able to demonstrate knowledge and understanding of the economic
cycle within the context of "the economic problem."



Assessment Standards (ASs)



We know this when the learner:



1.5 explains the different flows of money, factors of production, goods and services in the economic cycle
within the South African economy;



1.6 discusses the role of the foreign sector in the economic cycle;



1.7 illustrates by means of a graph and discusses how demand and supply influence prices;



1.8 critically assesses the influence and actions (strikes and stayaways) of trade unions in general and
during the apartheid era on:



the South African economy;



continued on next page



19



political, economic and social transformation;



labour issues;



1.9 discusses the effect of the national budget on the economy (e.g. taxation and expenditure on education,
social welfare, health and security.)



Table 1.14



1.6.9 Memorandum

ACTIVITYl: Strikes
Effect of strike action





Social conditions


Economic conditions


Work days lost


loss of income - poorer


production decreases - losses


Labour cuts


loss of employment opportunities- poorer


production decreases - losses


Wage increases


improvement in expendable income


input costs increase - inflation


HIV/ AIDS


greater pressure on health services


work force diminished - losses



Table 1.15

ACTIVITY 2: Unions
Identify labour unions

1. FEDUSA: Federated Unions of South Africa - General

2. NACTU: National Congress of Trade Unions - General

3. NUM: National Union of Mineworkers - Mineworkers

4. NUMSA: National Union of Metalworkers of SA - Workers in the automobile industry



1.7 The national budget, growth and economical equalities 7

1.7.1 ECONOMIC AND MANAGEMENT SCIENCES

1.7.2 Grade 9

1.7.3 THE ECONOMIC CYCLE

1.7.4 Module 7

1.7.5 THE NATIONAL BUDGET

1.7.5.1 ASSESSMENT STANDARD 1.5:

1.7.5.2 THE NATIONAL BUDGET

• The national budget is a document that is drawn up annually by the Minister of Finance, and in
which a forecast is made of the government's expected income and expenditure for the coming year.



7 This content is available online at <http://cnx.Org/content/m21498/l.l/>.



20



CHAPTER 1. TERM 1



The national budget is regarded as the planned framework within which the state must operate, and
therefore it has the following two main objectives:

• the announcement of expected government expenditure and tax income; and

• an indication of government strategy to keep the economy on a specific course.

In planning the national budget the first important step is that the different state departments must compile
their own budgets in which an indication is given of their needs / expenditure. When all the departments
have submitted their budgets, these are processed in order to obtain a complete view of all state expenditure.

• GOVERNMENT EXPENDITURE can be distinguished in the following four groups of functions that
are fulfilled by the state and for which funds are needed (also called the FUNCTIONAL CLASSIFI-
CATION):

• GENERAL OR COLLECTIVE SERVICES are services such as defence, maintenance of law and order
and general state administration.

• COMMUNITY SERVICES are services that are provided where a great number of people live together
(for example services such as road construction, sanitation and refuse removal).

• SOCIAL SERVICES such as health care, education and housing that are covered mainly by taxes.

• ECONOMIC SERVICES such as expenditure on direct production and research.

Hereafter planning is done to find the necessary funds to cover the expenses. These funds are mainly
generated by levying TAXES such as DIRECT TAXES (for instance personal income tax that is levied on
an individual's income) and INDIRECT TAXES (for instance customs and excise tax, and value added tax
or VAT).



A brief summary of the annual budget for the fiscal year 1999-2000 is given below:



ANNUAL BUDGET (1999 -
2000)


ALLOCATED AMOUNT


PERCENTAGE OF TOTAL
EXPENDITURE (%)


Total income:


190,3




Total expenditure:






Transport and communication


8,2


3,7


Interest (on loans)


48,5


22,1


Salaries (government service
staff)


86,5


51,0


Education


48,5


22,1


Health


24,0


10,9


continued on next page



21



Community security and welfare
services


19,8


9,0


Housing and community develop-
ment


9,6


4,5


Police


15,3


7,0


Defence


35,5


5,5


Prison services (Correctional ser-
vices)


5,4


2,7


Justice (administration of jus-
tice)


2,8


1,3


Agriculture, Forestry and Fish-
eries


3,6


1,6


Deficit


25,1





Table 1.16

1.7.5.3

1.7.5.4 Activity 1: NATIONAL BUDGET

Refer to the table above and answer the following questions:

1. Which expenditure is expected to be the greatest?

2. Which expected expenditure is the greatest: on Defence or on Education?

1.7.5.5 Activity 2: NATIONAL BUDGET

The last column indicates the percentage of the total expenditure for each department.

Use the information to draw a bar graph in order to indicate how much is spent on each category. Insert
the graph on a separate sheet.

1.7.5.6 Activity 3: RANKING ORDER OF EXPENDITURE

Refer to the graph and indicate in order from the highest to the lowest expenditure how the expenses (in
order of importance) are prioritised.

1.7.5.7 Activity 4: ASSESSMENT OF RANKING

Do the group members agree with the priority list as presented in the table above?

Decide how your group will spend the available funds according to your own priority list and then redesign
the column graph according to your division.



1.7.6 Assessment

Learning Outcomes (LUs)
LO 1
the economic cycle

The learner will be able to demonstrate knowledge and understanding of the economic cycle within the
context of "the economic problem."



22 CHAPTER 1. TERM 1

Assessment Standards(ASs)

We know this when the learner:

1.5 explains the different flows of money, factors of production, goods and services in the economic cycle
within the South African economy;

1.6 discusses the role of the foreign sector in the economic cycle;

1.7 illustrates by means of a graph and discusses how demand and supply influence prices;

1.8 critically assesses the influence and actions (strikes and stayaways) of trade unions in general and
during the apartheid era on:

• the South African economy;

• political, economic and social transformation;

• labour issues;

1.9 discusses the effect of the national budget on the economy (e.g. taxation and expenditure on education,
social welfare, health and security.)

1.7.7 Memorandum

ACTIVITYl: National budget
SELF:

Answers related to the table:
Salaries of civil service employees.
Education 22,15% compared to the 5,5% of Defence.
ACTIVITY 2: Graphic representation of budget figures

Draw a column graph to show the percentage of the contribution to the budget with regard to each kind
of expenditure.

ACTIVITY 3: Ranking of expenditure

SELF:

Evaluate the learners' priorities.

ACTIVITY 4: Evaluation of ranking

GROUP:

Evaluate the group's classification and their priorities



Chapter 2
Term 2



2.1 Reconstruction and development programme 1

2.1.1 ECONOMIC AND MANAGEMENT SCIENCES

2.1.2 Grade 9

2.1.3 SUSTAINABLE GROWTH AND DEVELOPMENT

2.1.4 Module 8

2.1.5 THE RECONSTRUCTION AND DEVELOPMENT PROGRAMME
(RDP)

In order to counteracting the deep-rooted inequalities of south african society, which were established through
colonization, racism, sexism and repressive labour and other legislation, the present ANC-led government for-
mulatedthe RECONSTRUCTION AND DEVELOPMENT PROGRAMME (RDP) in 1994. The realisation
of the programme was to be achieved throughFIVE programmes.

1. The FIRST PROGRAMME would focus on PROVIDING THE BASIC NEEDS OF THE POP-
ULATION to ensure that everyone has access to the following "basic necessities":

a) Creation of EMPLOYMENT OPPORTUNITIES by means of co-ordinated government plans that
would also ensure maximum participation by women and young job seekers.

b) LAND REFORM, with redistribution of land and resettlement of formerly disadvantaged people as
key components;

c) HOUSING AND SERVICES, as the responsibility of the democratic government, to ensure secure
dwelling places for all;

d) WATER AND SANITATION to meet the health and functional needs of all for cultivating products,
and to support economic development;

e) PROVISION OF POWER AND ELECTRIFICATION for all households to increase the capacity for
production and to provide services to schools, clinics and providers of water;

f) TELECOMMUNICATION to ensure universal access to basic services, particularly for disadvantaged
communities;

g) TRANSPORT that makes provision for safety, affordability and availability and is in the interest of
society in general;

h) ENVIRONMENTAL CONSERVATION that could ensure a "good life" for all by means of sustainable
use of natural resources, particularly with regard to access, safety, health and participation in decision making



lr This content is available online at <http://cnx.Org/content/m21501/l.l/>.



23



24 CHAPTER 2. TERM 2

i) NUTRITION, by which is meant that all persons should gain access to feeding programmes as soon as
possible (within three years) to ensure that there will be no fear of famine;.

j) HEALTH CARE that would be affordable and would lead to improvement in physical and mental
health, while attending to combating disease, also in the southern african region;

k) COMMUNITY CARE AND PROSPERITY, which has the aim of achieving communal rights for all,
eradicating the inequalities of the past through affirmative action and the empowerment of communities to
participate in local, provincial and national initiatives.

2.1.5.1

2.1.5.2 Activity 1: Providing basic needs

Discuss and do research on successes that have been achieved in the above programmes since 1994. Also
evaluate the shortcomings of the programmes and the reasons for failure to realise objectives. NB:Evaiuate
conditions in your immediate environment.

• Prepare your presentation thoroughly so that you can report your findings to the class for discussion
of each aspect. The written presentation should be presented in folio format and a summary must be
presented.

2. The SECOND PROGRAMME was to focus on the development of human resources, to ensure that
each person would be enabled to attain his or her full potential at the following levels of society:

a) EDUCATION AND TRAINING, in which equal opportunities were to be made available to all,
independent of race, colour, gender, language, age, religion, geographical background, political or other
orientation, so that the necessary knowledge and skills can be developed to provide quality products and
improved quality of life for all.

b) ART AND CULTURE that would promote freedom of expression and creativity so that all might
gain access to resources and facilities to be able to satisfy their need for artistic and cultural expression and
literacy and escape the cultural impoverishment of the past.

c) SPORT AND RECREATION that would promote representative participation and full availability of
facilities and training from grassroots level.

d) YOUTH DEVELOPMENT PROGRAMMES that would focus on education, training and job creation
to empower the youth to attain their full potential for participating in their communities.

2.1.5.3 Activity 2: Development of human resources

Discuss and do research on successes that have been achieved in the above programmes since 1994. Also
evaluate the shortcomings of the programmes and the reasons for failure to realise objectives. NB: Evaluate
conditions in your immediate environment.

• Prepare a thorough presentation so that you can report your findings to the class for discussion of
each aspect. The written presentation should be presented in folio format and a summary must be
presented:

3. The THIRD PROGRAMME was to focus on the development of ThE economy, so that strengths, such
a mining, manufacturing, agriculture, commercial and financial services and the well-developed infrastructure
could be utilised to benefit everyone with regard to:

a) INTEGRATION OF RECONSTRUCTION AND DEVELOPMENT, with the aim of having the public
sector playing a leading role in development planning, because it was expected that

the market mechanism by itself would not be able to make the structural adjustment benefit the wider
population.

b) MANUFACTURING, TRADE AND INDUSTRY which attempts to utilise public sector and govern-
ment interests and support to enhance investment possibilities, in particular with regard to manufacturing,
job creation and satisfaction of basic needs



25

c) RESOURCE-BASED INDUSTRIES like mining, agriculture, fisheries and forestry which were previ-
ously dominated by the white minority, are to be utilised to the advantage of the whole population in terms
of ownership, job creation and empowerment.

d) UPGRADING OF INFRASTRUCTURE, like electricity, telecommunication and transport, so that
this will lead to improved satisfaction of basic needs, as well as new and effective economic activity.

e) REFORM OF THE FINANCIAL SECTOR, which, at present, is centred in a number of dominant
financial groups, so that the aspirations of new sectors of the economy and the needs of informal and micro-
enterprises can be met satisfactorily.

f) LABOUR AND WORKER RIGHTS that would ensure that organised labour is empowered to effective
as a force in the reconstruction and development of the country.

g) Southern african regional poliCy which signifies that reconstruction and development in South Africa
have to be realised in relation to developments, conditions and planning for Africa as a whole to make use
of the mutual advantages.

2.1.5.4 Activity 3: Growing the economy [LO 2.3]

Investigate the following initiatives that were initiated, mainly from South Africa, in an effort to co-ordinate
and expand economic development in Africa:

1. The establishment of the African Union (AU)

2. NEW ECONOMIC PROGRAMME FOR AFRICAN DEVELOPMENT (NEPAD)

• Provide a report of (at most) two pages per initiative and format each report to fit the following
framework: Introduction, Objectives, Functions, Advantage for South Africa, Sources of Reference.

4. The FOURTH PROGRAMME was to focus on the democratisation of state and society and aimed
at opening the way to a new democratic order in South Africa by means of democracy, development and a
people-centred approach.

The programme set out the role of the Constitution and the Charter of Human Rights, the role of National,
Provincial and Local government, administration of justice, the private sector, semi-state organisations, the
police and security services, community services, non-governmental organisations (NGOs) and a democratic
information system for facilitating socio-economic development.

2.1.5.5 Activity 4: Democratisation of state and society

Group 1:

Do research into the basic content of the Constitution and the Charter of Human Rights and provide a
comprehensive report of at least two pages on each. This must also be used for the presentation to the class.
Provide your own summary of the information contained in the presentation.

Group 2:

Do research on the structure (in organogram format) of National, Provincial and Local Government.
Provide three posters showing the different government structures. These posters must also be used for
presentation to the class.

Group 3:

Do research on the semi-state organisations (including those of the previous government) and provide a
report of three pages (at most) which indicates the name and function of each. This must also be used for
presentation to the class.

Group 4:

Do research into TWO non-governmental organisations (NGOs) that operate in South Africa and provide
a report of two to three pages on each. The reports must indicate the names and functions of the NGOs and
must also be used for presentation to the class.

5. The FIFTH PROGRAMME was to focus on the implementation of the RDP and involved the
establishment of effective RDP structures at national, provincial and local government levels to monitor the
progress of the programmes. The important aspects of the programme involved:



26 CHAPTER 2. TERM 2

a) FRAMEWORKS FOR PLANNING that would take place within a comprehensive national framework
guided by provincial governments endowed with specific authority and functions

b) FINANCING FOR THE RDP that is regarded as a national priority to be funded accordingly. Alloca-
tions to be made from national sources with acknowledgment of existing inequalities between the provinces,
as well as factors such as population size, development handicaps, etc.

2.1.5.6 Activity 5: The Reconstruction and Development Programme (RDP) [LO 2.2]

Do critical evaluation of the development of the different Reconstruction and Development Programmes
since 1994. Refer to successes and shortcomings and offer your own recommendations for eliminating such
shortcomings. Present this in

the form of a 2 to 3 page report. Provide your own summary of the information contained in the
presentation.

2.1.5.7 Source:

• ANC, 1994: THE RECONSTRUCTION AND DEVELOPMENT PROGRAMME: A Policy Frame-
work. Umanyano Publications, PO Box 3851, Johannesburg, 1994



2,1,6 Assessment



Learning outcomes (Los)



LO 2



SUSTAINABLE GROWTH AND DEVELOPMENTThe learner will be able to demonstrate an
understanding of sustainable growth, reconstruction and development, and to reflect on related processes.



Assessment standards (ASs)



We know this when the learner:



2.1 discusses how the national budget, regional and international agreements can be used to facilitate
sustainable growth and development;



2.2 investigates and debates the successes and shortcomings of the RDP;



2.3 explains the role of savings and investments in economic prosperity and growth;



2.4 discusses productivity and growth and its effects on economic prosperity, growth and global competi-
tion.



Table 2.1



2,1,7 Memorandum

ACTIVITY 1: PROVIDING BASIC NEEDS

Let learners examine instances of "better" satisfaction of basic needs in their own environment. Failures
should also be discussed, together with possible reasons for the lack of success of programmes.

ACTIVITY 2: DEVELOPMENT OF HUMAN RESOURCES

Let learners examine programmes aimed at improving training in their own environment. They also need
to evaluate failures and provide possible reasons to explain why projects failed

ACTIVITY 3: GROWING THE ECONOMY



27

Let learners investigate the AU (African Union) as replacement for the OAU (organisation FoR African
Unity) and the objectives that are pursued.

Learners also have to research the NEW ECONOMIC PROGRAMME FOR AFRICAN DEVELOP-
MENT (NEPAD) to gain clarity concerning the planned objectives of the programme.

ACTIVITY 4: DEMOCRATISATION OF STATE AND SOCIETY

Let the groups do research into:

1. The basic content of the Constitution and the Charter of Human Rights

2. The structure of National, Provincial and Local government structures (poster format)

3. The semi-state organisations, e.g. SASOL, ISCOR, KRYGKOR, etc.

4. Two non-governmental organisations (NGOs) that operate in South Africa.
ACTIVITY 5: RECONSTRUCTION AND DEVELOPMENT PROGRAMME (RDP)

Following from the above research, the learner has to undertake critical evaluation of the RDP, with
particular reference to its successes and shortcomings. Encourage the learners to offer their own recommen-
dations.

2.2 Regional and international agreements 2

2.2.1 ECONOMIC AND MANAGEMENT SCIENCES

2.2.2 Grade 9

2.2.3 SUSTAINABLE GROWTH AND DEVELOPMENT

2.2.4 Module 8

2.2.5 REGIONAL AND INTERNATIONAL AGREEMENTS

The existence of definite inequalities between the different regions is a characteristic of the South African
economy. These inequalities are mainly attributable to the ethnic divisions that formed the basis of regional
development policy during the previous political dispensation. Ethnic groupings were localised in particular
regions in which so-called "homelands" were allocated to each group. Any particular group had to facilitate its
social, political and economic development within the homeland allocated to it. This enforced segregation or
separation and industrial decentralization placed whole communities in areas where their economic existence
was threatened by disadvantageous results like poverty, underfeeding, overpopulation, crime, etc. Close to
half of the black population were forced to remain in the homelands where the per capita income was less
that a quarter of the national average.

2.2.5.1 Activityl: Homelands Policy [LO 2.1]

Identify the so-called former independent and self-governing states that existed under the previous dispen-
sation and indicate the ethnic groups that had to find their political, social and economic refuge in each
"homeland".

• Present the information that you have gathered:

The results of the above-mentioned regional development policy was stagnation of economic growth, a con-
siderable decrease in investments and considerable lowering of real income over a number of decades. The
economy was mainly dependent on exportation of minerals and the manufacturing sector was unable to pro-
vide the required employment opportunities that would supply the needs of the population. Because of the
apartheid policies, there was very little economic co-operation with other African states and South Africa
found itself in a situation of isolation.



2 This content is available online at <http://cnx.Org/content/m21503/l.l/>.



28 CHAPTER 2. TERM 2

The following was suggested to achieve and extend regional and international co-operation against this
background, and in accordance with RDP objectives for a strong, dynamic and balanced economy:

a) Elimination of poverty, low wages and the extreme inequalities in wages and prosperity that resulted
from the policies of the previous government;

b) Easing of economic imbalances and unequal development opportunities within and among the different
South African regions;

c) Development of a progressive and balanced regional policy based on the principles of equity and mutual
benefit; and

d) Integration into the international economy in such a way that viable and effective local manufacturing
capacity and increased potential for exportation of manufactured goods would be sustained.

Sustainable growth and development are only possible if the above principles are incorporated in policy
and budget structures. The democratic government will play a leading role in this and it is expected that
a dynamic balance between government initiatives, the private sector and community development will
be consistently pursued. Broadly representative institutions that will plan strategies for job creation and
community development must be established to assist growth in local economies. Examples would include the
raising of community development funds in the private sector, investment strategies, training, small business
enterprises, agricultural development, etc. If necessary, the government could make subsidies available for
job creation and development projects. The ultimate goal is that projects must eventually be individually
sustainable.

Local development should aim towards a land reform plan that will attempt to transfer ineffective, debt-
ridden, ecology-threatening farm ownership to those who want to earn an income from farming in a more
sustainable manner. Improved access to affordable services and infrastructure is a prerequisite, especially in
the former "homelands".

2.2.5.2 Activity 2: Land Reform

Discuss land reform and make suggestions about what can/should be done to effect land reform in South
Africa in a manner that will allow "better" distribution of available land without running the risk of doing
damage to production or economic development. (Refer to the present situation in Zimbabwe.)

• Provide a report of two pages, at most, for presentation to the class, and summarise the report.

It is accepted that sustainable reconstruction and development in South Africa presupposes sustainable
reconstruction and development in Southern Africa as continued joblessness and under-employment in one
region can result in migration to other regions, with detrimental results for those economies. That is
why continuous negotiation with neighbouring states remains important for finding a common basis for co-
operation, co-ordination and integration. In spite of the fact that present trade patterns between South Africa
and the rest of Africa are relatively unbalanced (South African exports to the rest of Africa exceeds those
of the rest of Africa to South Africa by five to one) , fresh negotiations in this area should focus on achieving
a better balance. There should be an attempt to improve possibilities for manufacturing in neighbouring
states, so that the possibility of exportation can improve accordingly. The development of regional and
industrial strategies for specific sub-sectors, e.g. mineral enrichment, motorcar parts and textiles can be
mentioned as examples. The development of combined and mutually advantageous projects with regard, for
instance, to water sources, electricity and power supply, transport and communication, and agriculture and
food production for the region should also be encouraged.

2.2.5.3 Activity3: Regional Co-operation

Do research on the ways in which regional co-operation occurs with regard to the use of water sources in
Southern Africa. Refer to existing projects and provide a brief description of each.



29

2.2.5.4 Activity4: States in Southern Africa

Provide (or draw) a map of Southern Africa to show the states that border on South Africa. Also show the
products that South Africa exports to its neighbours and the products that are imported from them.

2,2,6 Assessering



Learning outcomes (Los)



LO 2



SUSTAINABLE GROWTH AND DEVELOPMENTThe learner will be able to demonstrate an
understanding of sustainable growth, reconstruction and development, and to reflect on related processes.



Assessment standards (ASs)



We know this when the learner:



2.1 discusses how the national budget, regional and international agreements can be used to facilitate
sustainable growth and development;



2.2 investigates and debates the successes and shortcomings of the RDP;



2.3 explains the role of savings and investments in economic prosperity and growth;



2.4 discusses productivity and growth and its effects on economic prosperity, growth and global competi-
tion.



Table 2.2



2,2,7 Memorandum

ACTIVITY 1: HOMELANDS POLICY

Identify the former independent and self-governing states that existed under the previous dispensation.

Independent states:VENDA, BOPHUTHATSWANA, TRANSKEI EN CISKEI

Self-governing states:QwaQwa, KwaNDEBELE, KWAZULU, LEBOWA, GAZANKULU, KaNGWANE

ACTIVITY 2: LAND REFORM

The groups are to state their points of view with regard to land reform in South Africa, and should be
encouraged to discuss the issue in regard to the present situation in Zimbabwe.

ACTIVITY 3: REGIONAL CO-OPERATION

The learners are required to do research on the Lesotho Highland Project and on the Cabora Bassa
project and should be encouraged to point out the value of the projects as examples of regional co-operation.

ACTIVITY 4: STATES IN SOUTHERN AFRICA

Each learner has to design and present a map of South Africa on which imports and exports are indicated
(the main products only).



30 CHAPTER 2. TERM 2

2.3 Savings and investment 3

2.3.1 ECONOMIC AND MANAGEMENT SCIENCES

2.3.2 Grade 9

2.3.3 SUSTAINABLE GROWTH AND DEVELOPMENT

2.3.4 Module 10

2.3.5 SAVINGS AND INVESTMENT

If the savings of individual people and of investors are made available for the expansion of the production
capacity, the idea is to produce more goods and services. This also has the effect that people are employed,
which, in turn, leads to improvement in the standard of living of the population. The savings are used for
INVESTMENT in capital goods (like buildings, equipment and machinery for production).

When the volume of investments increases, the potential for further investment expands and this eventu-
ally increases the economy's capacity for growth in terms of an increase in goods and services. This can help
to improve the standard of living, provide more job opportunities and greater prosperity, which is indicative
of improved economic growth.

When the volume of investments DEcreases, the potential for further investment decreases and this
means that fewer goods and services will be available for satisfying needs, which will result in the eventual
shrinking of possibilities for economic growth. Communities in which this happens will eventually become
poorer and the possibility of further savings might be eliminated, with catastrophic results for investment
and any capacity for economic growth, increasing poverty, unemployment, etc.

The above makes it clear that economic growth is a process by which a country's capacity to provide goods
and services increases in such a manner that there will be an increase in real compensation/remuneration.
(Real compensation/remuneration signifies the compensation after changes in price rises have been calcu-
lated.) The increase signifies that the physical compensation or wealth of the population has improved, with
an accompanying improvement in the standard of living and improved economic growth.

While ECONOMIC GROWTH has to do with an increase in the production capacity of the economy
(i.e. the possibility to deliver more goods and services), ECONOMIC DEVELOPMENT signifies an increase
in economic growth accompanying an improvement in the quality of life which relates to improved access to
education, housing, and other basic infrastructure. Economic development therefore is a more comprehensive
concept that includes economic growth.

2.3.5.1 Activity 1: Economic Growth and Development

Provide your own explanation of the following:

• SAVING is:

• INVESTMENT is:

• ECONOMIC GROWTH is achieved when:

• ECONOMIC DEVELOPMENT therefore has to do with:

• Assessment



Learning outcomes (Los)



continued on next page



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31



LO 2

SUSTAINABLE GROWTH AND DEVELOPMENTThe learner will be able to demonstrate an
understanding of sustainable growth, reconstruction and development, and to reflect on related processes.



Assessment standards (ASs)



We know this when the learner:



2.1 discusses how the national budget, regional and international agreements can be used to facilitate
sustainable growth and development;



2.2 investigates and debates the successes and shortcomings of the RDP;



2.3 explains the role of savings and investments in economic prosperity and growth;



2.4 discusses productivity and growth and its effects on economic prosperity, growth and global competi-
tion.



Table 2.3

2.3.6 Memorandum

ACTIVITY 1: ECONOMIC GROWTH AND DEVELOPMENT

The learner has to complete the following (in her or his own words):

SAVING is the postponement of satisfying personal needs.

INVESTMENT is capital that is invested to make production possible.

ECONOMIC GROWTH is achieved when the increase in the production of a country is larger than the
increase in population, which means that the increase in the amount of available goods has created wealth.

ECONOMIC DEVELOPMENT therefore has to do with the fact that the greater prosperity made
possible by economic growth has also improved the general quality of the lives of the population, which
involves improved access to education, water, housing, etc.

2.4 Productivity 4

2.4.1 ECONOMIC AND MANAGEMENT SCIENCES

2.4.2 Grade 9

2.4.3 SUSTAINABLE GROWTH AND DEVELOPMENT

2.4.4 Module 11

2.4.5 PRODUCTIVITY

Productivity can be described as the amount of goods and services produced per worker per hour. This
refers to the ratio between real production and the number of inputs that are needed to manufacture it; the
productivity of labour increases, for example, if the output (the number of units that are produced) increases
by 10% while the input (number of working hours) remains the same.

There is an important relationship between productivity and economic growth in the sense that improved
productivity always is a prerequisite for economic growth.

For the effect of productivity on economic growth to be understood, it is necessary to distinguish between
the following concepts:



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32 CHAPTER 2. TERM 2

1. EXTENSIVE ECONOMIC GROWTH refers to the extension of total production of goods and services
irrespective of whether there is increased productivity per person. According to this, extensive economic
growth is possible even though there may be no increase in production per person

2. INTENSIVE ECONOMIC GROWTH refers to the increase in production per person (or per capita).
When intensive economic growth occurs, total production increases more rapidly than the population. Per
capita growth (or income) therefore is an indicator of economic growth.

When a community's production of goods and services expands more rapidly than the population in-
creases, real per capita income rises. This generally means that the economic prosperity of the population
will increase, which reflects economic growth.

Therefore: growth in production that is larger than growth in population leads to:

• rise in real per capita income, which leads to

• increased economic growth and

• economic prosperity

Inversely, a decrease in real per capita income will occur if the population increase is greater than the increase
in production. Economic decline, the opposite of intensive growth, will therefore occur.
Therefore: growth in production that is smaller than growth in population leads to

• decline in real per capita income, which leads to:

• economic decline and

• decline in economic prosperity (rising poverty)

With increased productivity, the products of a country become more competitive on international markets
and this can lead to increased exports. The reason for this is that

increased productivity can absorb wage increases, which makes it possible for business enterprises to keep
the prices of their products stable.

2.4.5.1 Activity 1: Productivity of Labour

Identify TEN factors that could lead to improvement in labour productivity. Provide a full explanation of
each one.

• Also provide a report for presentation to the class.

2.4.5.2 Activity 2: Labour Productivity in South Africa [LO 2.4]

Do you think labour productivity in South Africa is of a standard that makes it possible to compete effectively
on international markets? Motivate your answer so that points of view can be debated in the class.

2.4.5.3 Sources:

• Gwartney, James D ECONOMICS, Private and Public Choice, Sixth Edition

• Stroup, Richard L The Dryden Press, Harcourt Brace College Publishers, Orlando, 1992



2,4,6 Assessment



33



Learning outcomes (Los)



LO 2



SUSTAINABLE GROWTH AND DEVELOPMENTThe learner will be able to demonstrate an
understanding of sustainable growth, reconstruction and development, and to reflect on related processes.



Assessment standards (ASs)



We know this when the learner:



2.1 discusses how the national budget, regional and international agreements can be used to facilitate
sustainable growth and development;



2.2 investigates and debates the successes and shortcomings of the RDP;



2.3 explains the role of savings and investments in economic prosperity and growth;



2.4 discusses productivity and growth and its effects on economic prosperity, growth and global competi-
tion.



Table 2.4



2.4.7 Memorandum

ACTIVITY 1: PRODUCTIVITY OF LABOUR

Factors that could lead to improvement in labour productivity (the concepts should be defined clearly
and explained adequately).

1. Climate

2. Own culture

3. Renumeration of wages

4. Working hours

5. Working conditions

6. Health and strength

7. Intelligence

8. Training and education

9. Social attitude

10. Organisation of labour

ACTIVITY 2: LABOUR PRODUCTIVITY IN SOUTH AFRICA

Groups are to state their points of view regarding labour productivity in South Africa, taking note
particularly of conditions or situations in their own environment where contractors do not operate effectively
and workers do not provide maximum input to benefit their employers.



34 CHAPTER 2. TERM 2



Chapter 3

Term 3



3.1 An idea for an enterprise 1

3.1.1 ECONOMIC AND MANAGEMENT SCIENCES

3.1.2 Grade 9

3.1.3 ENTREPRENEURSHIP

3.1.4 Module 12

3.1.5 AN IDEA FOR AN ENTERPRISE

Activity 1:

To discuss the value of entrepreneurship for the community, and generate business ideas by means of a
SWOT analysis

[LO 4.5, 4.1]

Read the following report from Die Burger of 5 July 2003 about the efforts of an entrepreneur in Cape
Town:

A LONG WIRE FROM POVERTY TO A BETTER LIFE

Nellie Brand

Mr Unite Chimbadzo has come a far way from the streets of Johannesburg and Cape Town to the
showroom in a building in Kloof Street where interesting wire art can be seen through dusty windowpanes.

On Tuesday evening his wire art took pride of place at the dazzling rugby dinner of the new Springbok
team in the Cape Town international conference centre that was held to raise money for injured rugby
players.

It is in the showroom and workshop in 8 Kloof Street where Loxionwires, the close corporation which was
established by him and five other artists, is run. Previously their wire ornaments were made and displayed
in the city streets.

He made 60 wire balls for the Springbok dinner, and this is the kind of order that the close corporation
would like to get more of.

According to him they established Loxionwires so that they would be able to get larger projects. "We
want to give our clients the confidence to place orders with us. If we keep on working in the streets we will
never get big orders," he says.

He has an intense desire to train other unemployed people and to save them from the morass of poverty,
crime and drugs - a commonplace phenomenon in Khayelitsha where he lives. He says that the decision to
establish the close corporation was driven by this desire.



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36 CHAPTER 3. TERM 3

The name of the concern is pronounced in the way that the ordinary township people say "location" -
"the dwelling-place of those for whom we want to create work," he says.

At present Loxionwires employs 42 people.

He says unemployed people are trained to ensure that the day they get a big order, they will be able to
produce high quality products which will satisfy their clients.

He expects that business will improve towards the end of the year when they will be making wire
Christmas trees.

He talks about unemployed young people who turn to crime in order to survive.

"It isn't safe for me to be the only one in my township who goes home at night with money in my pocket,"
he says. "I know that I will encounter danger somewhere along the way."

He hopes that his example will convince such people that there are other ways of earning an income. "If
I can do it, others can too. All I use is my hands and my brains to make an ornament that will sell and on
which I won't make a loss," he says.

It has taken him 10 years since he came to South Africa from Zimbabwe in search of a better life to earn
a reasonably fixed stream of income from his craft.

As a 19- year-old who had passed matric with five distinctions - amongst others in maths and science -
but who was unable to get a fixed job since 1993, he saw how people in Johannesburg were able to survive
on their earnings from wire art.

He has set his hopes on getting assistance from a financier who will help them to get their business in
order so that they can open a training workshop.

Chimbadzo can be contacted at 083 752 9806.

(Source: Die Burger, 5 July 2003)

1. What are the qualities of an entrepreneur that you recognise in Mr Chimbadzo?

2. What contribution is Mr Chimbadzo making towards the upliftment of the community?

3.1.5.1 Research assignment

Undertake research of entrepreneurial activities in one or more poor communities and use the information
to write a report of about 900 words (three to four A4 pages) on the following topic:

Entrepreneurs play an important role in the upliftment of the standard of living of a community.

See to it that through your research you become acquainted with SMMEs: (Small, Medium and Micro
Enterprises). Select the best examples of successful initiatives about which you were able to get information
and explain in each case why the initiative was successful and how it contributes (contributed) to the
upliftment of the community. Add your report to your portfolio immediately after this page.

3.1.5.2 Class discussion 1: A SWOT-analysis of Chimbadzo's initiative.

• A SWOT analysis is a handy instrument with which to evaluate the viability of an initiative. It is an
analysis of the strengths, weaknesses, opportunities and threats related to the initiative. This is where
the word SWOT comes from. Read the report on Chimbadzo carefully again and then as a class do a
SWOT analysis of his initiative. Write down the points on which the class agrees here:

• Strengths

• Weaknesses

• Opportunities

• Threats



3.1.5.3 Class discussion 2: SWOT-analysis of possible business ideas.

Have a class discussion on possible business ideas in your area. Identify possibilities in manufacturing, service
provision and tourism. Pay specific attention to the positive impact that each initiative could have on the
needs and upliftment of the community, e.g. in terms of creating job opportunities.
Make a list of the ideas:



37

Ideas with a focus on manufacturing (at least one with a focus on tourism)
Ideas with a focus on service provision (at least one with a focus on tourism)

As a class, do a SWOT analysis of each of the ideas and choose the three best ones in each of the two
groups. Underline them in the list.

3.1.5.4 Activity 2:

3.1.5.5 To test the viability of an identified business idea

3.1.5.6 [LO 4.2, 4.3]

Choose one of the business ideas that were identified as the six best ones in Activity 1. It must be the one
you like best and one you think you will make a success of.

Test the viability of the idea that you chose in the following way:

1. Read the following guidelines on how to develop a business idea:

Three basic elements of a business: The following can always be applied to a business and must be taken
into account when a business idea is considered:

A specific product (or number of products) or service must be offered.

The manufacturing or sourcing of the product (s), or provision of the service, must be sustained.

There must be buyers who want the product(s) or service, and who can pay for it.

Creative thinking is essential: An entrepreneur does not imitate, but does something new or improves
on something that already exists.

The actions taken by an entrepreneur can be divided into different groups. The following is a broad
division within which further subdivisions can be made:

Something that already exists and is readily available and plentiful could be used for something else (new
purpose). For example: Someone decided to buy the pieces of broken brick that could not be used on a
building site and used it for paving at a price which no other paving businesses could match. It was a great
success.

Something that already exists can be altered by way of an improvement (improvement) . The development
of the microchip in computer technology is a good example. Another example is the reduction in size of
huge computers that filled a whole room, to personal computers (desktops) and later to laptops. A totally
different example is where a shop owner decides to diversify by expanding his range of products. He improves
upon his existing service.

Something new can be developed that altogether replaces something that is available on the market
(substitution). At present plastic lenses for spectacles are replacing the older type of glass lenses.

2. Research and describe the idea fully. Make rough notes first and then write down the final description
here. Do this thoroughly, because you are going to use this idea for the rest of the module.

My business idea

• Product or service (indicate whether it is a new purpose, improvement or replacement)

• Manufacturing and/or sourcing

• The market (who is going to buy, why, and why they will be able to afford it)

• Marketing strategy

3. Now you must test the financial viability of the business idea. Up to now we have looked at the business
idea in terms of product, manufacturing and sourcing, the market (buyers) and the way in which we are
going to get the buyers to buy the product (marketing strategy). However, now we must make sure that the
idea is actually financially viable. A business is only a business if it shows a profit. That means that we
should not sell our product or service at a loss and that the breakeven point (the number of items or service
contracts that we have to sell in order to break even) is realistically attainable.
To be capable of doing that, we need to look at the following:



38 CHAPTER 3. TERM 3



• the selling price;

• the direct cost of providing the product or service;



• the costs involved in running the business (e.g. transport and marketing)

The selling price

The selling price is determined provisionally beforehand on the basis of market research. The research is
used to determine which similar products or services exist and what they cost.

The cost of the product

A product cannot easily be created without any costs. For example, even if spring water is drawn and
sold, the containers (bottles) still cost money.

Operating costs

Operating costs include anything that is needed to keep the business going, such as transport, salaries,
marketing, postage, telephone costs, and so on. Let us do a calculation to determine the viability of a specific
business idea. Let us assume that we are going to sell hot dogs at an athletics meeting. It will be only a
small meeting and we think we'll be able to sell 100 hot dogs. After doing some research we decide that
R6,00 is an acceptable price. The frankfurters cost R3,00 each and the rolls are R0,60 each. The various
sauces that we'll need cost R25,00. We find out that we'll have to rent a stall at R50,00 and that we'll need
20 posters at R8,00 each to market the stall.

This is what our calculation will look like:

Sales: 100 hot dogs @ R6,00 each = R600,00

Cost of products: 100 hot dogs @ R2,75 each, and sauce @ R25,00 = R300,00

Gross profit as first indicator (sales less cost of product) = R300,00

Operating costs: Stall @ R50,00 and 20 posters @ R8,00 each = R210,00

Operational profit = R 90,00

It seems, therefore, that the enterprise will be profitable. The selling price, as provisionally determined
by taking the market indicators into account, can thus remain unchanged. If the calculation did not show a
profit, we could have considered adjusting the selling price upwards.

There are important tests that have to be done to ensure that the project is truly viable: we have to
determine where the breakeven point is in case we are not able to reach the goal of selling 100 hot dogs.

3.1.5.7 ASSIGNMENT:

Determine the financial viability of your business idea by carrying out the above-mentioned steps, using your
data.

3.1.6 Assessment



Learning Outcomes (LOs)



LO 4



Business, Consumer and Financial Knowledge and SkillsThe learner is able to apply, in a respon-
sible manner, a range of business, consumer and financial skills.



Assessment Standards(ASs)



continued on next page



39
We know this if the learner:



4.1 generates, through SWOT analysis, possible business ideas to meet the need for manufactured goods
or services;



4.2 develops a business plan (including a budget) for a manufacturing, service or tourism concern based
on the best business opportunity from the ideas generated;



4.3 engages in the business activity planned and discusses the reasons for choosing a particular form of
ownership;



4.4 conducts a marketing campaign to promote a product and discusses the self-selected advertising media;



4.5 researches the role of small, medium and micro enterprises in wealth and job processes.



Table 3.1



3.1.7

3.1.8 Memorandum
ACTIVITY 1

1. Seek and utilise new opportunities

Perseverance
Dedication

Takes chances (moved from Jhb to Cape Town)
Quality

1. Job creation

Improvement of quality of life
Training

• The aim of the research assignment is to make the learners realise that support opportunities do
exist and that one does not necessarily have to fall back on one's own resources. Learners must also
realise that the government regards successful small business initiatives as important, and supports
such initiatives.

The purpose of the class discussions is to make the learners

realise that opportunities exist where one does not expect to find them or that there are opportunities
one might not have thought of before;

become accustomed to lateral thinking;

understand that ideas should be tested properly right from the start; that one cannot embark on some-
thing, and spend time and money on an enterprise just to realise later that it isn't working.

A further aim is to generate work of a high quality in the classroom. Otherwise learners could easily keep
themselves occupied with ideas that are not suitable for exercises later in the module.

ACTIVITY 2

• This activity has been set out in such a way that the learners can work through it on their own with
some support from you. You do not need additional guidelines.

• A major part of the activity is the same as the work covered in Grade 8. However, it must be done
again, seeing that it is the preamble to the following activity.



• The comments to the Grade 8 teacher are repeated here as they are very important:



40 CHAPTER 3. TERM 3

• Testing the viability of the business idea allows the learner to deal with important concepts in the field
of financial business management and you must make sure that they fully understand the concepts.
The difference between product costs and operational costs and the meaning of gross profit must be
fully understood. If the product cost is too high in relation to the selling price, the gross profit will be
too low to be able to afford essential operational necessities such as salaries and marketing.

• The examples in the module can be used to check whether the learners' calculations are correct.



3.2 Develop a business plan 2

3.2.1 ECONOMIC AND MANAGEMENT SCIENCES

3.2.2 Grade 9

3.2.3 ENTREPRENEURSHIP

3.2.4 Module 13

3.2.5 DEVELOP A BUSINESS PLAN AND BUDGET

3.2.5.1 Activity:

3.2.5.2 To turn a business idea into a business plan

3.2.5.3 [LO 4.4]

Once the business idea has passed the viability test it must be developed into a business plan.

A business plan is a core document in terms of which a business is managed.

Business plans can be set out in a variety of ways. The following framework was based on a business
plan of a company that has been using it for the past few years. It has been tested in practice.

BUSINESS PLAN

1. Vision of the enterprise

The vision of an enterprise says in a few words how the enterprise would like to see itself now as well as
in the medium to long term. It does not change much from one year to the next.
Example:
To be the leading supplier of garden services in the Ermelo urban area.

2. Mission

The mission briefly states how the enterprise will go about pursuing its vision. The mission is adapted
according to the changes that take place both within and outside the enterprise, and can therefore change
from one year to the next.

Example:

Gardens are kept weed-free and neat and the soil is cultivated to increase fertility.

3. Organogram

The organogram explains the structure of an organisation in terms of the functions and employees, and
it indicates who reports to whom.

4. The market

4.1 Potential clients

It is important to give as much information as possible about potential clients. Market research is
essential. It can be done by way of questionnaires, interviews and telephone calls, as well as by studying the
newspapers and any documents that contain information about the community.

4.2 Competitors



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41

It is essential to have information about competitors. There should be an indication of who the com-
petitors are and what their strengths are, but more importantly what their weaknesses are, what people say
about them, exactly what they sell and what their marketing strategies are.

5. Goals for the year in question (in this case 2004)

A business always sets specific goals that it wants to achieve in a particular year.

Example:

5.1 To be contracted by 200 home owners for the care of their gardens

5.2 To reach sales of R980 000,00

• To achieve a profit equal to 20% of the sales

6. Steps in pursuing the goals in the particular year

For each of the goals there will be an indication of what is to be done to achieve the goal.
Example:

6.1 Goals 5.1 and 5.2 will be achieved by

tailoring the product or service to the needs of the clients,
pricing it right,
advertising in the newspaper,

making personal visits to all the homes in the area,

giving excellent service to existing clients so that they advertise the undertaking, and offering a 20%
discount on the normal price.

6.2 Goal 5.3 will be achieved by
cutting out unnecessary expenses, etc.
A little more about marketing:

• Pursuing business goals without effective marketing is not possible and therefore marketing should get
a great deal of attention in this part of the business plan. It is often said that it is easier to sell a poor
product if the marketing is good, than to sell a good product if the marketing is poor.

• As far as the marketing of a business is concerned, two phases can be distinguished:

Phase 1 entails the market research that must be completed early in the planning process, to ensure that
the nature and price of the product or service are determined correctly.
Phase 2 entails the planning and execution of a marketing campaign.

• Place, time and promotion are the three key words. Firstly, the marketing campaigns must take place
at the right time at the right place. For instance, it is pointless to display the product at a venue when
there are no people. Furthermore, the campaigns must catch the attention of the potential clients
(promotion).

• Advertisements have a very important role to play in this phase. Advertisements must draw attention,
be interesting and compel the viewer to take action.

• The choice of media is also important. The media that are probably used most frequently are posters,
newspapers, radio and television.



7. Budget for the year

The budget is the most important part of the business plan. All the planning, mentioned above, can only
be realised if the necessary finances are available. The budget that shows whether this is possible or not.

The income statement done in Activity 1.2 is an important part of the budget, but must be augmented
by a balance sheet and cash flow statement. In this module we shall only look at the income statement.

8. Projection for the following year (in this case 2005)

A business always looks ahead of the present year and attempts to make an informed estimate of what
should be attained in the next year or two.



42 CHAPTER 3. TERM 3

The income statement format can be used for this purpose. All possible factors are taken into consider-
ation and then it is decided whether the sales ought to increase, (e.g. by 10%), whether there will be new
costs that will reduce the profit, (e.g. if it is expected that additional marketing needs to be done, etc.).

ASSIGNMENT:

Follow the example given in the preceding section and turn your business idea into a business plan. Use
the captions on the next page to write a business plan.

My Business Plan

Period to

1. Vision:

2. Mission:

3. Organogram:

4. The market:

4.1 Potential clients (based on research)

4.2 Competitors (based on research)

5. Goals (Remember: Specifically for the period indicated in the heading.)

6. Steps in pursuing the goals (Remember to set out your marketing strategy here.)

7. Budget (for the period indicated in the heading)
Data:

• Selling price

• Number of units that will be sold

• Product cost per unit

• Expected operational costs (Remember to make sufficient provision for the market)

Calculations:

• Sales

• Cost of product
Gross profit as first indicator (sales less cost of product)











Operational costs



• Operational profit

8. Projection (for the period following the period indicated in the heading)



• Sales

• Cost of product



• Gross profit as first indicator

(sales less cost of product)

• Operational costs

• Operational profit

3.2,6 Assessment



43



Learning Outcomes (LOs)



LO 4



Business, Consumer and Financial Knowledge and SkillsThe learner is able to apply, in a respon-
sible manner, a range of business, consumer and financial skills.



Assessment Standards(ASs)



We know this if the learner:



4.1 generates, through SWOT analysis, possible business ideas to meet the need for manufactured goods
or services;



4.2 develops a business plan (including a budget) for a manufacturing, service or tourism concern based
on the best business opportunity from the ideas generated;



4.3 engages in the business activity planned and discusses the reasons for choosing a particular form of
ownership;



4.4 conducts a marketing campaign to promote a product and discusses the self-selected advertising media;



4.5 researches the role of small, medium and micro enterprises in wealth and job processes.



Table 3.2

3.3 Ownership of a business 3

3.3.1 ECONOMIC AND MANAGEMENT SCIENCES

3.3.2 Grade 9

3.3.3 ENTREPRENEURSHIP

3.3.4 Module 14

3.3.5 OWNERSHIP OF A BUSINESS

3.3.5.1 Activity:

3.3.5.2 To discuss the different kinds of ownership of a business

3.3.5.3 [LO 4.3]

When you plan to start a business you must decide to whom the business will belong.

There are mainly four options: you as individual could be the owner, you could establish a close corpo-
ration, you could create a company or you could take up a concession.

3.3.5.4 Option 1: You assume ownership as individual

You can own the business in your personal capacity. That means that you as person

• will be taxed on any profits of the business (maximum 40%), and

• will be held accountable for debts that are incurred by the business (which means that, should the
business not be in a position to pay the debts, you could lose your possessions and means of livelihood).

You could also invite other people to become co-owners, but that is dangerous, because there is always the
possibility of misunderstandings and tension in the management of the business.



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44 CHAPTER 3. TERM 3

3.3.5.5 Option 2: You establish a close corporation

In this case you become a member of the corporation and your personal assets are protected. Your ac-
countability for any debts of the corporation does not exceed the amount of capital that you contributed.
Furthermore the income tax is fixed at 30%, which is substantially less than in the case of an individual. You
can also allow other people to become members, which means that you obtain additional financial support
and do not stand altogether alone. As a close corporation functions in terms of a specific law, the interests
of all the members are protected. The books of a CC must be done by a chartered accountant. There can
be 1 - 10 members.

The name of a close corporation always ends in CC, for example Laser Services CC.

3.3.5.6 Option 3: You create a private company

A company is managed in terms of a specific act and a number of requirements must be met that are not
applicable to a close corporation. There must be a board of directors and the names of the board members
must be made available to the Public Registrar of Companies. Fully audited annual statements must be
submitted annually. Annual general meetings must be

held according to prescribed guidelines. All these requirements make the process of establishing a private
company quite expensive.

The name of a private company ends in (Pty) Ltd.

3.3.5.7 Option 4: You take up a franchise

A franchise has many advantages for an individual, becomes a business owner, but has the support of the
group and shares in advantages such as purchasing stock at lower prices, having access to tried and tested
recipes (e.g. in the case of a restaurant), etc. Well-known names such as SPAR and 7-Eleven are examples
of franchises.
Assessment



Learning Outcomes (LOs)



LO 4



Business, Consumer and Financial Knowledge and SkillsThe learner is able to apply, in a respon-
sible manner, a range of business, consumer and financial skills.



Assessment Standards(ASs)



We know this if the learner:



4.1 generates, through SWOT analysis, possible business ideas to meet the need for manufactured goods
or services;



4.2 develops a business plan (including a budget) for a manufacturing, service or tourism concern based
on the best business opportunity from the ideas generated;



4.3 engages in the business activity planned and discusses the reasons for choosing a particular form of
ownership;



continued on next page



45



4.4 conducts a marketing campaign to promote a product and discusses the self-selected advertising media;



4.5 researches the role of small, medium and micro enterprises in wealth and job processes.



Table 3.3

In Conclusion:

How would you feel if your name were to appear like this in the newspapers some day?

SOURCE

BLOEMFONTEIN BOASTS TWO IT MILLIONAIRES

Gert Coetzee

Once again an inhabitant of Bloemfontein has made a great hit in the field of information technology.
This time it is Mr Brian Lackey (54), a jovial businessman who sold a computer program for tens of millions
of rands to a foreign company.

Lackey's success follows hot on the heels of that of Mr Igme Hatting (27), a computer programmer who
also hails from Bloemfontein. He sold his program for access control and equipment operation in stadiums
to a foreign company for "somewhere between R106 million and R700 million".

Lackey has confirmed that his 4D group has sold the right of use for a combined program for the micro-
loaning industry and credit life insurance to the Australian division of an international company which has
its headquarters in the United States of America.

This company may use the program in every country in the world except in South Africa. Lackey has
retained the South African rights because he has many local clients and the business prospects in this country
are "unlimited".

Owing to the sensitivity of the transaction he cannot reveal the name of the foreign buyer or the purchase
price.

According to a reliable source the purchase price is "round about R400 million". According to Lackey the
transaction has been finalised pending a condition that the program be made "web friendly".

A team of workers has already been working on this for 12 to 15 hours per day for the past months.
Payment will be done in US dollars once the program has been adapted.

Lackey, who was born in Walvis Bay, was the provincial manager of a catering business in the Free State
until the '80s, when he started his own business.

In 1993 he started a micro-lending business. He asked a friend to write a program for the administration
of loans so that he could manage the data of his 900 clients.

This program was hired out to other micro-lenders, some of them even in Cape Town. "Before we
knew where we were, we were being inundated with calls. It was an easy decision to bid farewell to the
micro-lending business in favour of the new venture of developing software."

The 4D group, with companies such as Proloan Marketing and 4D Insurance Solutions in its stable, and
with 30 employees in offices in Bloemfontein, Centurion and Cape Town, was established then.

Lackey does not write the programs himself, but conceives them. His employees do the rest.

Initially Lackey kept the good news to himself and did not tell his employees. Once it leaked out, he
informed them about the new developments "so that they would not read about everything in the newspapers".
Every employee will receive a bonus.

(Source: Die Burger, 31 July 2003)



46 CHAPTER 3. TERM 3



Chapter 4

Term 4



4.1 Difference between an income statement and a balance sheet 1

4.1.1 ECONOMIC- AND MANAGEMENT SCIENCES

4.1.2 Grade 9

4.1.3 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.1.4 Module 15

4.1.5 DIFFERENCE BETWEEN THE INCOME STATEMENT AND BAL-
ANCE SHEET

ACTIVITY 1:

To be able to distinguish between an income statement and a balance sheet

[LO 3.1]

Financial statements are documents which give information about finances of a business. The balance
sheet and the income statements are two of these. They give a summary of the financial state of a business.
It is important that financial statements are easy to set out and understand.

The information in financial statements makes it possible to plan and make good decisions for a business.
All financial statements have to be drawn up according to the rules of Generally Accepted Accounting
Practice.

The main purpose of the income statement is to show the profit or loss made over a particular period.

The main purpose of the balance sheet is to show the financial position of a business on a
particular date. The balance sheet is divided into the following sections:

1. Assets - Non-current Assets and Current Assets.

2. Equity and Liabilities - Ownership Interest, Non-current Liabilities and Current Liabilities.

• In your own words, describe the difference between an income statement and a balance sheet.

ACTIVITY 2:

To draw up income statements for a service enterprise and a commercial enterprise
[LO 3.1]

• The following examples are Income Statements of a service enterprise and a commercial enterprise:



1 This content is available online at <http://cnx.Org/content/m31771/l.l/>.



47



48



CHAPTER 4. TERM 4



Z. ZulekiTrading as XYZ Plumbers Income Statement for the year ended 31 December 2003



Current Income


55 000


Operating Expenditure


(38 274)


Telephone


3 420


Water and Electricity


5 620


Rental


12 000


Fuel


3 730


Stationery


3 680


Wages


9 824


Net Income for the year


16 726



Table 4.1
S. SolaniTrading as Solani Dealers Income Statement for the year ended 31 December 2003



Sales


324 000


Selling costs


(200 000)


Gross Profit


124 000


Other current income


14 400


Rental income


12 000


Interest income


2 400


Gross Current Income


138 400


Operating expenditure


(32 800)


Salaries and Wages


23 000


Stationery


800


Insurance


2 400


Telephone


500


Advertising costs


600


Interest on bond


2 500


Rates and taxes


3 000


Net Profit for the year


105 600



Table 4.2

ASSIGNMENT 1 : Income Statement of a Service Enterprise

• The accounting period of Fixit Plumbers (owner F. Fix) ends on 30 June every year. The trial balance
below appears in their books on 30 June 2003. Use the information to draw up the Income Statement
for the year ended 30 June 2003. (Paper will be provided.)

TRIAL BALANCE OF FIXIT PLUMBERS



49







Dt.


Cr.


Balance Sheet section








Capital


Bl




138 629


Withdrawals


B2


15 800




Land and Buildings


B3


100 000




Vehicles


B4


28 000




Equipment


B5


12 740




Bank


B6


3 963












Nominal Accounts section








Cost of materials


Nl


6 084




Insurance


N2


531




Advertisements


N3


389




Salaries


N4


12 500




Wages


N5


4 715




Current Income


N6




52 871


Fuel


N7


3 186




Repairs


N8


917




Telephone


N9


1 008




Stationery


N10


492




Water and Electricity


Nil


1 175








191 500


191 500











Table 4.3

ASSIGNMENT 2 : Income Statement of a Commercial Enterprise

• Use the information below to complete the Income Statement of Hendrikse Dealers (Owner: H. Hen-
drikse) for the year ended 30 June 2003. (Paper will be provided.)



TRIAL BALANCE OF HENDRIKSE DEALERS AS AT 30 JUNE 2003



50



CHAPTER 4. TERM 4







Dt.


Cr.


Balance Sheet section








Capital


Bl




166 047


Withdrawals


B2


6 320




Land and Buildings


B3


140 000




Equipment


B4


18 600




Trading inventory


B5


8 860




Debtors control


B6


11 224




Bank


B7


7 621




Change


B8


150




Petty cash


B9


110




Creditors control


BIO




9 216










Nominal Accounts section








Sales


Nl




83 706


Selling costs


N2


55 804




Rental income


N3




3 200


Telephone


N4


640




Water and Electricity


N5


760




Salaries


N6


8 900




Wages


N7


1 100




Postage


N8


120




Stationery


N9


680




Packaging material


N10


1 280








262 169


262 169











Table 4.4

ACITVITY 3:

To draw up Balance Sheets for a service enterprise and a commercial enterprise respectively
[LO 3.1]

• The following examples are Balance Sheets of a service enterprise and a commercial enterprise:

M. MuvaloTrading as Muvalo Hairdressing Salon Balance Sheet as at 28 February 2003



51



Assets




Non-current Assets




Fixed Assets 1


49 700


Current Assets


2 840


Total Assets


52 540






Equity and Liabilities




Ownership Interest 2


52 540


Current Liabilities


-


Total Equity and Liabilities


52 540



Table 4.5

M. MuvaloTrading as Muvalo Hairdressing Salon Notes to the financial statements for the
year ended 28 February 2003



1. Fixed Assets




Vehicles


35 000


Equipment


14 700




49 700






2. Ownership Interest




Balance as at 28 February 2002/last day of previous year


45 000


Net Profit for the year


18 140


Additional capital contributed


-


Withdrawals


(10 600)


Balance as at 28 February 2003/ last day of current year


52 540







Table 4.6
F. Foxie Trading as Fox and Co. Balance Sheet as at 31 December 2003



52



CHAPTER 4. TERM 4



Assets




Non-current Assets




Fixed Assets 1


158 600


Current Assets


27 965


Trading inventory


8 860


Debtors


11 224


Cash 2


7 881






Total Assets


186 565






Equities and Liabilities




Ownership Interest 3


177 349


Current Liabilities


9 216


Creditors


9 216






Total Equity and Liabilities


186 565



Table 4.7

F. Foxie Trading as Fox and Co. Notes to the financial statements for the year ended 31
December 2003



1. Fixed Assets




Land and Buildings


140 000


Equipment


18 600




158 600


2. Cash




Bank


7 621


Change


150


Petty cash


110




7 881


3. Ownership Interest




Balance as at 31 December 2002


166 047


Net Profit for the year


17 622


Withdrawals


(6 320)


Balance as at 31 December 2003


177 349



Table 4.8

ASSIGNMENT 1: Balance Sheet of a Service Enterprise



53

• Use the information of Activity 1.2 and draw up the Balance Sheet of Fixit Plumbers. (Paper will be
provided.)

ASSIGNMENT 2: Income Statement of a commercial enterprise

• The financial year of Orange Dealers (Owner: O. Sitro) ends on the last day of February every year.

• The Trial Balance below appeared on their books on 28 February 2003.

• Draw up the Income Statement for the business for the relevant accounting period. (Paper will be
provided.)

ASSIGNMENT 3 : Balance Sheet of a Commercial Enterprise

• Draw up the Balance Sheet as at 28 February 2003. (Paper will be provided.)
TRIAL BALANCE OF ORANGE DEALERS AS AT 28 FEBRUARY 2003







Dt.


Cr.


Balance Sheet section








Capital


Bl




200 000


Withdrawals


B2


4 700




Land and Buildings


B3


150 800




Vehicles


B4


36 200




Equipment


B5


29 000




Trading inventory


B6


16 700




Debtors control


B7


3 980




Bank


B8


2 550




Change


B9


660




Petty cash


B10


110




Creditors Control


Bll




16 000


Nominal Accounts section








Sales


Nl




192 557


Selling costs


N2


115 440




Rental Income


N3




8 400


Rates and Taxes


N4


2 720




Wages


N5


9 600




Salaries


N6


30 000




Repairs


N7


2 416




Advertisements


N8


819




Insurance


N9


2 690




Water and Electricity


N10


3 670




Telephone


Nil


4 902








416 957


416 957











54 CHAPTER 4. TERM 4

Table 4.9

4.1.6 Assessment



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.10



4.1.7 Memorandum

ACTIVITY 1

Difference between an income statement and a balance sheet. Accept the learners' wording. The time
aspect is important: over a period (income statement) and on a specific date (balance sheet).
ACTIVITY 2
ASSIGNMENT 1



55



F. Fok

Trading as FjjnJJ.PIumDera|

IncorriE statEmEnt for the year -Ended 3D June 2DD3

Cu rre nt inco me 52 371

Operating expenditure (30 '997)



Cast of materials


5DB4


Insurance


531


Advertisements


339


Salaries


12 500


Wages


4715


Fuel


3iee


Re pa irs


917


Te le p ho ne


iooe


Stationery


492


Water and Electricity


1 175


I Inco me for the year


21 374



Figure 4.1



ASSIGNMENT 2



H-tt&ndrjJWi

Trading as yej^drikse. Dealers

Income state me nt for the year ended 3D June2DD3

Sales S3 705

Belling costs f5E ED4j

Gross Profit 27 902

Other Operating Income 3 200



Rental income


3 200


pe rating expe nd rtu re


(13 4BD>


G'dss Operating Income


31 102


Telephone


5 + D


Water and Electricity


"53


Salaries


3 900


/VagiE-


1 133


Postage


120


Stationery


53D


Packaging material


1230


Met Profit for the year


17 522



Figure 4.2



ACTIVITY 2
ASSIGNMENT 1



56



CHAPTER 4. TERM 4



F. Fok

Trading as Fjjujj. PI limbers!

IncomE state m e nt f or the year -Ended 3D June2DD3

Cu ne nt inco me 52S71

Operating expenditure (30 '997)



Cast of materials


5DB4


Insurance


531


Advertisements


339


Salaries


12 500


Wages


4715


Fuel


3 136


Re pa irs


917


Te le p ho ne


1003


Stationery


492


Water and Electricity


1 175


I Inco me for the year


21 374



Figure 4.3



ASSIGNMENT 2



H-tt&ndfiJSLS.

Trading as ttanj&iksa. Dealers

IncomE EitatEmEnt for the year ended 3D June 2D D3

Sates S3 706

Selling costs (55 304)

Gross Profit 27 902

Other-Operating Income 3 200



Rental income


3 200


pe rating expe nd rtu re


(13 430)


G'dss Operating Income


31 102


Telephone


5 + D


Water and Electricity


760


Salaries


3 900


A'agiE-


1 133


Postage


120


Stationery


630


Packaging material


1230


Met Profit forthe year


17 522



Figure 4.4



57



ACTIVITY 3

ASSIGNMENT 1

F. Fix Trading as Fixit PlumbersBalance sheet as at 30 June 2003



Assets




Non-current assets




Fixed assets 1


140 740


Current assets


3 963


Cash


3 963


Total Assets


144 703


Equity and Liabilities




Ownership interest 2


144 703


Total Equity and Liabilities


144 703



Table 4.11

F. Fix Trading as Fixit PlumbersNotes to the financial statements for the year ended 30 June 2003



1 Fixed Assets:




Land and Buildings


100 000


Vehicles


28 000


Equipment


12 740




140 740






2 Ownership interest




Balance as at 30 June 2002


138 629


Net Income for the year


21 874


Withdrawals


(15 800)


Balance as at 30 June 2003


144 703



Table 4.12



ASSIGNMENT 2



58



CHAPTER 4. TERM 4



Trading as Orange Dealers

^omE statement for the year ended 21

Sales

Selling costs
Gross Profit
OtherOpe rating Income

Rental income

Operating Expenditure

G'dss Operating Income

Rates and Taxes

Wages

Salaries

Repairs

Advertisements

Insurance

Water and Electricity

Te le p h rj ne

Met Profit farthe year



Figure 4.5



February 2003

192 557
(115 44D)
77 117
B4DD



3^33



23 703



[55317)
35517



2 720


9600


30 000


2415


319


2 590


3 670


4 002



ASSIGNMENT 3



59



o.�Jfta

Trading a 5 Orange Dealers

Balance sheetas at 2B February 20D3

Assets

Mon^current Assets

Fixed Assets 1

Cu ne nt Assets



215333
2^333



Stock

Debtors

Cash


2

3


16 700
3 960
3 320


Tata I Assets


243 303


Equity and Liabilities
Ownership interest
Current Liabilities


224 000

15333


Creditors


16 000






Total Equity and Liabilities


243 300



Figure 4.6



O. SitroTrading as Orange DealersNotes to the financial statements for the year ended 28 February 2003



60



CHAPTER 4. TERM 4



1 Fixed Assets




Land and Buildings


150 800


Vehicles


36 200


Equipment


29 000




216 000






2 Cash




Bank


2 550


Petty cash


110


Change


660




3 320






3 Ownership interest




Balance as at 28 February 2003


200 000


Net Profit for the year


28 700


Withdrawals


(4 700)


Balance as at 28 February 2003


224 000



Table 4.13



4.2 Social and environmental responsibilities of businesses 2

4.2.1 ECONOMIC- AND MANAGEMENT SCIENCES

4.2.2 Grade 9

4.2.3 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.2.4 Module 16

4.2.5 SOCIAL AND ENVIRONMENTAL RESPONSIBILITIES OF BUSI-
NESSES

ACTIVITY 1:

To discuss the social and environmental responsibilities of businesses

[LO 3.2]

When businesses focus on maximising profit, they often forget their responsibilities towards society and
the environment. No business should make money at the expense of nature and the well-being of the
community.

Manufacturing businesses should take care that the waste products, that are the result of their production
processes, do not pollute the environment especially water sources. Natural resources are irreplaceable and
misuse or overutilisation could deplete them so much that development in the future becomes impossible.



2 This content is available online at <http://cnx.Org/content/m31769/l.l/>.



61

Commercial enterprises should ensure that the products they sell are not harmful to the youth. Alcohol,
cigarettes, undesirable books and magazines, are harmful to young people. The owners of bookshops and
music shops should be aware of the content of the books, magazines and music they sell.

Any dealer has a social and moral obligation towards society.

Businesses can make a positive contribution to society by putting part of their profits back into the
community by aiding the development of sport and training for disadvantaged groups or providing housing
for the poor.

Group Assignment

• Split into groups of three and identify problems in your area that are the result of businesses not
honouring their obligations. Approach the businesses if possible and try to find practical solutions to
the problems.

• Make sure that you do not choose the same problems as the other groups. Use a sheet of cardboard
and pictures or drawings to illustrate your report. Make a presentation to the rest of the class.

4.2.6 Assignment



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.14



4.2.7 Memorandum
GROUP ASSIGNMENT

• Possible problems that could be investigated:



Environmental problems such as air, water and environmental pollution can be given attention.
Attempts by the government and businesses to limit the use of plastic bags, as well as the involvement
of businesses in the recycling of waste material, must be mentioned.



62 CHAPTER 4. TERM 4

• Sale of cigarettes and alcohol to minors. Undesirable material with regard to videos, magazines, etc.

• Exploitation of the consumer by exorbitant prices, especially with regard to daily necessities.



4.3 Recording cash transactions of service and commercial
enterprises 3

ECONOMIC- AND MANAGEMENT SCIENCES

4.3.1 Grade 9

4.3.2 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.3.3 Module 17

4.3.3.1 RECORDING CASH TRANSACTIONS OF SERVICE AND COMMERCIAL EN-
TERPRISES

Section 1: Auxiliary Journals
ACTIVITY 1:

To record cash transactions of service and commercial enterprises
[LO 3.3]

The following cash transactions regularly occur in service and commercial enterprises:
CRJ

• Capital contribution, capital increase or capital reduction by the owner

• Receipt of cash for services provided

• Sale of goods for cash

CPJ

• Purchase of goods and other items for cash

• Payment of operating expenditure

These transactions, where cash is received or paid, are recorded in the CRJ or the CPJ.
ASSIGNMENT 1:

• Complete a CRJ and CPJ for the service enterprise, Mzondi Plumbers. Use CRJ 3.1.1 and
CPJ 3.1.1 on the pages that follow.

• Service enterprises are businesses that get an income from providing services and their income is
recorded in the CRJ in a column headed: Current Income.

• Z. Mzondi started a business called Mzondi Plumbers. The transactions below occurred during Septem-
ber. Record them in the CRJ and the CPJ and close the journals on 30 September 2003.



3 This content is available online at <http://cnx.Org/content/m31768/l.l/>.



63

September 1 Z. Mzondi starts the business by depositing his capital contribution of R50 000 in the current
bank account

September 3 Rents a building from Denvon Properties and pays the rent of R525 by cheque 001

September 6 Purchases service materials to the value of Rl 009 from Puma Stores and pays by cheque
002

September 8 Issues cheque 003 for R4 500 to Lundi Stores for equipment purchased

September 11 Receives stationery from Bundu Dealers and pays R487 by cheque 004

September 12 Receives R2 073 cash as per cash-register roll for services provided

September 14 Pays the municpality R390 by cheque 005 for water and electricity

September 15 Cashes cheque 006 for R190 for wages

September 21 Receives Rl 795 cash as per cash-register roll for services provided

September 25 Pays Telkom R106 by cheque 007 for telephone

September 27 Cheque 008 for R477 is issued to Mpula Insurers for insurance

September 29 Wages of R210 are paid by cheque 009

September 30 Purchases a vehicle for R28 000 from Mdantsane Motors and pays by cheque 010

Cash-register roll shows R2 418 received for services provided

ASSIGNMENT 2:

• Complete a CRJ and CPJ for the commercial enterprise, Levubu Dealers.

• In the case of a commercial enterprise, goods are purchased and sold to make a profit. Goods are
purchased at a certain price (cost price) and sold at a higher price (selling price) in order to make a
profit .

• Both the cost price and the selling price are recorded in the CRJ so that the profit can be calculated
at the end of the period. In the CRJ columns provision must be made for sales and the cost price of
sales instead of current income, as in the case of a service enterprise.

• Use the information provided and show the entries in the Cash Receipts Journal and the Cash Payments
Journal of Levubu Dealers (CRJ 3.1.2 and CPJ 3.1.2 on the pages that follow).

• On 1 July 2003 G. Levu started the business with a capital contribution of R130 000 deposited in the
current bank account.

• According to the cheque counterfoils the following cheques were issued in July:



Date 2003


Cheque No.


Payee


For


Amount


July 2


001


Levubu Builders


Rent


R 1 400


July 6


002


Wilger Suppliers


Equipment


R6 000


July 8


003


Municipality


Trade licence


R 150


July 12


004


A Z Dealers


Goods


R 7 800


July 15


005


Levubu Motors


Delivery vehicle


R23 300


July 18


006


Telkom


Telephone


R 125


July 20


007


Northern Suppliers


Goods


R6 700


July 24


008


Waldo Dealers


Stationery


R 220


July 26


009


A Jansen


Salary


R 2 650


July 28


010


Levubu Motors


Fuel


R78


July 30


011


Municipality


Water and Electricity


R 56


July 31


012


Cash


Wages


R 1 330



64



CHAPTER 4. TERM 4



Table 4.15



• Cash sales of goods

July 17 Rl 600 (cost price Rl 280)

July 24 R3 900 (cost price R3 120)

July 31 R5 400 (cost price R4 320) In the case of sales at a commercial enterprise, the cost price
sometimes needs to be determined. Every business works on a fixed profit percentage. This means that the
profit percentage is added to the cost price to determine the selling price. The cost price of sales is regarded
as an expenditure and therefore reduces the ownership interest. If the selling price and the % profit on the
cost price are known, the following formula is used to calculate the cost price:

sp = cp + profit

(a) If the item is sold at R750 and a profit percentage of 25% is applied, the cost price will be calculated
as follows:

sp = cp + profit
750 = cp + 25% x cp
cp + ^cp = 750
1,25 cp = 750
cp = 600

(b) At a profit of 331/3% and a selling price of R400 the cost price will be calculated as follows:
sp = cp + profit

cp + 33,3% cp = 400
1,333 cp = 400
cp = 300
OPDRAG 3:

• Complete the CRJ and calculate the cost price for Lubbe Dealers using the information
below. (Use CRJ 3.1.3 on the next page.)

• Goods are sold at cost price plus 331/3%. Close the journals by calculating the column totals.

• Transactions for May 2003

1 The owner, H. Lubbe, deposits R80 000 in the current bank account as his capital contribution
13 Cash sales of goods R 760
24 Cash sales of goods R 960
28 Cash sales of goods Rl 240
CASH RECEIPTS JOURNAL OF MZONDI PLUMBERS - SEPTEMBER 2003 CRJ 3.1.1



Doc.


Day


Deta


ilFol.


Analysis


Bank


Current
income






Sundries ac-
counts


Amoui


ltFol.


Details


continued on next page



65



Table 4.16

CASH PAYMENTS JOURNAL OF MZONDI PLUMBERS - SEPTEMBER 2003 CPJ 3.1.1



Doc.


Day


Nam

of

ben-

efi-

ciarj


eFol.


Bank


Cost of
materi-


Stationery


Equipmem


Wag


es


Sundries ac-
counts




als








AmountFol.


Details





























































































































































































































































































































































































































































































































Table 4.17
CASH RECEIPTS JOURNAL OF LEVUBU DEALERS - JULY 2003 CRJ 3.1.2



Doc.


Day


Deta


ilFol.


Analysis


Bank


Sales


Selling
costs




Sundries ac-
counts


Amoui


ltFol.


Details


continued on next page



66



CHAPTER 4. TERM 4



Table 4.18
CASH PAYMENTS JOURNAL OF LEVUBU DEALERS - JULY 2003 CPJ 3.1.2



Doc.


Day


Nam

of-

ben-

efi-

ciarj


eFol.


Bank


Cost
ofmateri-


Stationery










Sundries ac-
counts




als








AmountFol.


Details





























































































































































































































































































































































































































































































































Table 4.19



ASSIGNMENT 4:



• Complete the CRJ and the CPJ of the combined commercial and service enterprise,
Donovan Motors. (Use CRJ 3.1.4 and CPJ 3.1.3)

• Mr D. Daniels opened a business called Donovan Motors on 1 December 2003. He deals in fuel, oil and
tyres. He provides services in the form of repairs and panel-beating of vehicles.

• The business maintains a profit margin of 25% on the cost price.



• Cash transactions concluded in December 2003:



67

1 D. Daniels deposits his capital contribution of R80 000 in the current bank account opened in the name
of the business

Draws a cheque for R300 to pay the trade licence

Pays R540 by cheque to Enlen as rental for the premises

Pays the insurance premium of R175 by cheque to Petru Insurance Brokers

2 Purchases materials for R5 625 and goods to the value of R7 350 from Nissau Car Sales and pays by
cheque 025

Draws a cheque for change, R350

3 Purchases equipment from Motoquip Co. for R10 500 and pays by cheque 026
Purchases stationery from Scribble Ltd. and pays by cheque

7 Draws a cheque of Rl 280 for the week's wages

8 Sells goods for R3 000 cash

13 Purchases additional equipment from Motoquip Co. for Rl 125 and pays by cheque

14 Purchases a delivery vehicle for R30 445 from Mobile Motors and pays by cheque
Draws a cheque of Rl 745 for wages

16 Receives additional stationery from Scribble Ltd. and pays R85 by cheque

17 Receives cash of R5 262 for services provided
Sells goods for R6 500 cash

20 Purchases materials from Alfa Car Suppliers and pays Rl 721 by cheque
Purchases goods to the value of R585 from Nissau Car Sales and pays by cheque

21 Draws a cheque of Rl 250 for the week's wages

22 D. Daniels (owner) cashes a cheque of R250 for his own use

23 Receives R3 558 in cash for services provided
Sells goods for R3 855 cash

24 Purchases materials for Rl 500 and goods for R3 500 from Tika Suppliers and pays by cheque
28 Draws a cheque of R2 335 for the week's wages

30 Draws a cheque of R2 950 in favour of the manager, H. Hedwig, for his salary
Draws a cheque of R335 in favour of Telkom for the owner's personal telephone account
CASH RECEIPTS JOURNAL OF LUBBE DEALERS - MAY 2003 CRJ 3.1.3



Doc.


Day


Deta


ilFol.


Analysis


Bank


Sales




Selling
costs






Sundries ac-
counts












Amoui


ltFol.


Details























































































































































































Table 4.20

CASH RECEIPTS JOURNAL OF DONOVAN MOTORS - DECEMBER 2003 CRJ 3.1.4



68



CHAPTER 4. TERM 4



Doc.


Day


Deta


ilFol.


Analysis


Bank


Current
income


Sales




Selling
costs


Sundries ac-
counts












AmountFol.


Details























































































































































































Table 4.21

CASH PAYMENTS JOURNAL OF DONOVAN MOTORS - DECEMBER 2003 CPJ 3.1.3



Doc.


Day


Nam

of

ben-

efi-

ciar}


eFol.


Bank


Trading
inven-


Stationery


Cost of
materi-


Wag


es


Sundries ac-
counts




tory




als




AmountFol.


Details





























































































































































































































































































































































































































































































































Table 4.22



4,3.4 Assessment



69



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.23



4.3.5 Memorandum

ACTIVITY 1

ASSIGNMENT 1

CASH RECEIPTS JOURNAL OF MZONDI PLUMBERS - SEPTEMBER 2003 CRJ 3.1.1



Doc


Day


Dets


ilFol


Analysis


Bank


Current
income






Sundries ac-
count


Amoui


ltFol


Details


101


1


Z.

Mzo


idi






50
000


-














50
000


-


Bl


Capi


CR


12


Serv
pro-
vide!


ces
1


2
073




2
073




2
073




















CR


21


Serv
pro-
vide!


ces
1


1
795




1
795




1
795




















continued on next page



70



CHAPTER 4. TERM 4



CR


30


Serv
pro-
vide!


ces
i


2
418




2
418




2
418
































56

286


-


6

286


-










50
000


-


















B2




Nl





















Table 4.24



ACTIVITY 1

ASSIGNMENT 1

CASH PAYMENTS JOURNAL OF MZONDI PLUMBERS



SEPTEMBER 2003 CPJ 3.1.1



Doc


Day


Nam

of

paye


eFol

3


Bank


Cost of
materi-
als


Stationery


Equip-
ment


Wages


Sundries ac-
count




AmountFol


Details


i


001


3


Dem
Prop
er-
ties


r on


525




















525






Renl

ex-
pen-
di-
ture


al


002


6


Pum
Stor


a


1
009


-


1
009


-
























003


8


Lunc
Stor


li


4
500


-










4
500


-
















004


11


Bum
Deal
ers


lu


487








487






















005


14


Mun


icipali


ty390




















390






Wat.
and
Elec
tric-

ity


;r


006


15


Casl




190


-














190


-












007


25


Telk


)m


106


-


















106






Tele


)h


008


27


Mpu
In-
sur-
ers


la


477




















477






Insu


•ai




continued or


next page





one



71



009


29


Casl




210


-














210












010


30


Mda
Mo-
tors


itsan(


i 28
000




















28
000






Vehi










35


-


1


-


487


-


4


-


400


-


29


-














894




009








500








498









Table 4.25



ACTIVITY 1

ASSIGNMENT 2

CASH RECEIPTS JOURNAL OF LEVUBU DEALERS



JULY 2003 CRJ 3.1.2



Doc


Day


Dets


ilFol


Analysis


Bank


Sales




Selling
costs






Sundries ac-
count












AmountFol


Details




1


G.

Levi








130
000


-














130
000


-


Bl


Capi


CR


17


Sales




1
600


-


1
600


-


1
600


-


1
280


-














CR


24


Sales




3
900


-


3
900


-


3
900


-


3

120


-














CR


31


Sales




5
400


-


5
400


-


5
400


-


4
320


-


























140
900


-


10
900


-


8
720


-






130
000


-


















B3




Nl




B2/1


12















Table 4.26

ACTIVITY 1

ASSIGNMENT 2

CASH PAYMENTS JOURNAL OF LEVUBU DEALERS - JULY 2003 CPJ 3.1.2



Doc


Day


Nam

of

paye


eFol

3


Bank


Trading
inven-
tory


Stationery






Sundries ac-
count


Amoui


ltFol


Details


continued on next page



72



CHAPTER 4. TERM 4



001



Levi: bu
Builders



1
400



1

400



N2



Rental

ex-

pen-

di-

ture



002



Wil^

Sup

pli-



6
000



6
000



Bl



Equipment



003



Municipalitjl50



150



N3



Trade
li-
cence



004



12



AZ

Deal

ers



7
800



7
800



005



15



Leviibu
Mo-
tors



23
300



23
300



B2



Vehi cles



006



18



Telkom



125



125



N4



Telephone



007



20



Northern

Sup-

pli-

ers



6
700



6
700



008



24



Waldo
Deal

crs



220



220



009



26



Janssn



2
650



2
650



N5



Sala: - y



010



28



Leviibu
Mo-
tors



78



78



N6



Fuel



011



30



Municipality



56



N7



Wat
and
Elec
tric-

ity



or



continued on next page



73



012


31


Casl




1
330


-


















1
330


-


N8


Wag


ns










49
809


-


14
500


-


220


-










35
089


-
















B4




B3




Nl























Table 4.27



ACTIVITY 1

ASSIGNMENT 3

CASH RECEIPTS JOURNAL OF LUBBE DEALERS



MAY 2003 CRJ 3.1.3



Doc


Day


Deta


ilFol


Analysis


Bank


Sales




Selling
costs






Sundries ac-
count












AmountFol


Details




1


H.

Lubl


>e






80
000


-














80
000


-


Bl


Capi


CR


13


Sales




760


-


760


-


760


-


570


-














CR


24


Sales




960


-


960


-


960


-


720


-














CR


28


Sales




1
240


-


1
240


-


1
240


-


930


-


























82
960


-


2
960


-


2
220


-






80
000


-


















B3




Nl




B2/1


12















Table 4.28

ACTIVITY 1

ASSIGNMENT 4

CASH RECEIPTS JOURNAL OF DONOVAN MOTORS - DECEMBER 2003 CRJ 3.1.4



Doc


Day


Deta


ilFol


Analysis


Bank


Current
income


Sales




Selling
costs


Sundries ac-
count












Amoui


ltFol


Details




1


D.
Dam


els






80
000


-














80
000


-




Capi


CR


8


Sales




3

000


-


3

000


-






3

000


-


2
400


-














continued or


next page







74



CHAPTER 4. TERM 4



CR


17


Serv
pro-
vide!


ces
1


5
262




5
262




5
262




















CR




Sales




6
500


-


6
500


-






6
500


-


5
200


-










CR


23


Serv
pro-
vide!


ces
1


3

558




3

558




3

558




















CR




Sales




3

855


-


3

855


-






3

855


-


3

084


-






















102


-


8


-


13


-


10


-


80


-


















175




820




355




684




000









Table 4.29



ACTIVITY 1

ASSIGNMENT 4

CASH PAYMENTS JOURNAL OF DONOVAN MOTORS



DECEMBER 2003 CPJ 3.1.3



Doc



Day



Nam

of

payek



eFol



Bank



Cost of
materi-
als



Trading
inven-
tory



Wages



Stationery



Sundries
count



AmountFol



Details



01



Municipality300



300



Trade
li-
cence



02



Enlen



540



540



Rental

ex-

pen-

di-

ture



03



Petrji
In-
sur-
ance
Bro-
kers



175



175



Insu



continued on next page



75



04



Niss&u

Car

Sales



12
975



5
625



7
350



05



Cast



350



350



Chan



gc
pment



06



Motoquip
Co.



10
500



10
500



Equi



07



Scribble
Ltd.



352



352



08



Casl



1
280



1
280



09



13



Motoquip
Co.



1
125



1
125



Equi



pment



10



14



Mobile
Mo-
tors



30
445



30
445



Vehi cle



11



Casl



1
745



1

745



12



16



Scriqible
Ltd.



85



85



13



20



Alfa

Car

Sup-

pli-

ers



1
721



1

721



14



Nissiu

Car

Sales



585



585



15



21



Casl



1
250



1
250



16



22



D.

Daniels



250



250



Withdrawals



17



24



Tika

Sup

pli-

crs



5
000



1

500



3
500



18



28



Casl



2
335



2
335



19



30



H

Hed

wig



2
950



2
950



Salary



20



Telkom



335



335



Withdrawals



74
298



846



11
435



6
610



437



46
970



Table 4.30



76



CHAPTER 4. TERM 4



4.4 Recording credit transactions of commercial and service
enterprises 4

4.4.1

4.4.2 ECONOMIC AND MANAGEMENT SCIENCES

4.4.3 Grade 9

4.4.4 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.4.5 Module 18

4.4.6 RECORDING CREDIT TRANSACTIONS OF COMMERCIAL ANS
SERVICE ENTERPRISES

4.4.6.1 ACTIVITY 1:

4.4.6.2 To record credit transactions of commercial and service enterprises

4.4.6.3 [LO 3.3]

Not all transactions done by businesses are cash transactions. Sometimes transactions are on credit, in other
words payment is only made at a later date.

When credit transactions are done, they must be recorded in order to have a record and to ensure that
the amounts owing are paid on the due date and are received. The entries are usually made from the credit
invoices.

The business can sell goods on credit to clients. The persons who owe money to the business are called
debtors and are a current liability to the business.

These transactions are entered in the Debtors Journal. It is important that the cost price of sales be
taken into account to be able to calculate the correct profit.

The entry is made as follows in the Debtors Journal:



Invoice


Day


Debtors


Fol.


Sales


Selling costs


101


1


S. Swanepoel




140


100



Table 4.31

The effect of such transactions on the accounting equation is as follows:

(a) Asset + (debtor's debt decreases) Ownership interest + (income increases)

(b) Ownership interest - (expenditure increases)Asset - (trading inventory decreases)

The purchase of goods or other items on credit means that the business owes money to another business
or person, called a creditor. A creditor is regarded as a current liability to the business. These entries are
based on credit invoices and are made in the Creditors Journal as follows:



In- voice


Day


Creditor


Creditors
control


Trading
inven-
tory


Statio-
nery


Sundries accounts


Amount


Fol.


Details




continued on next page



4 This content is available online at <http://cnx.Org/content/m31766/l.l/>.



77



001


1


Werda
Suppli-
ers


R520


R520













Table 4.32

The effect of such transactions on the accounting equation is as follows:

(a) If an asset is purchased on credit: Asset + (trading inventory increases) Liability + (creditors increase)

(b) If credit expenditure is incurred: Ownership interest - (expenditure increases) Liability + (creditors
increase)

ASSIGNMENT 1:

Record the transactions below in the Debtors Journal of Gesina Dealers and close the
journal by adding up the column totals. (Use DJ 3.2.1 on the next page.)
The information for April 2003 is as follows:
Goods are sold at a profit of 331/3%.



Invoice


Date


To whom


Selling price


713


April 3


C. Simpson


R210


714


April 10


C. Simpson


R346


715


April 11


N. Nguni


R920


716


April 16


C. Simpson


R400


717


April 18


L. Naidoo


R312



Table 4.33

ASSIGNMENT 2:

Record the transactions in the Creditors Journal of Toledo Dealers and close the journal
by adding up the column totals. (Use CJ 3.2.1 on the following pages.)
The information for May 2003 is as follows:

Original invoices received from suppliers have been renumbered as follows:
2003

May 1 No. 225 from Transo Dealers for equipment, R380
5 No. 226 from Trixo Suppliers for goods, Rl 328

8 No. 227 from S & S Distributors for goods purchased, R625, and stationery, R185
12 No. 228 from Computec for repairs to the computer, R500
15 No. 229 from Trixo Suppliers for goods, R300, and packaging material, R260
22 No. 230 from S & S Distributors for goods, R530
25 No. 231 from Zee Signs for advertising poster, R285
31 No. 232 from Trixo Suppliers for stationery, R220, and packaging material, R345

4,4,7 Assessment



Learning Outcomes (LOs)



continued on next page



78



CHAPTER 4. TERM 4



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.34



4.4.8 Memorandum

ACTIVITYl

ASSIGNMENT 1



4.4.8.1 Debtors journal of gesina dealers - April 2003DJ 3.2.1



Invoice


Day


Debtors


Fol


Sales


Selling costs


713


3


C. Simpson




210


157.50


714


10


C. Simpson




346


259.50


715


11


N. Nguni




920


690-


716


16


C. Simpson




400


300-


717


18


L. Naidoo




312


234-










2 188


1 641










B2/N1


B1/N2



Table 4.35



ACTIVITYl
ASSIGNMENT 2



4.4.8.2 CREDITORS JOURNAL OF TOLEDO DEALERS - MAY 2003CJ 3.2.1



79



In-
voice


Day


Cred


itBnfe


Creditors
control


Trading
inven-


Stationery


Packaging
material






Sundries ac-
count




tory








AmountFol


Details


225


1


Iran
Deal
ers


so


380




















380




Bl


Equi


226


5


Trix
Sup-
pli-
ers


)


1

328




1

328
























227


8


S

&

S

Dis-

trib-

u-

tors




810




625




185




















228


12


Com


putec


500


-


















500


-


N3


Rep;


229


15


Trix
Sup-
pli-
ers


)


560




300








260
















230


22


S

&

S

Dis-

trib-

u-

tors




530




530
























continued on next page



80



CHAPTER 4. TERM 4



231


25


Zee

Sign


5


285


-


















285


-


N4


Adv(


232


31


Trix
Sup-
pli-
ers


)


565








220




345
























4


-


2


-


405


-


605


-






1


-














958




783
















165
















B3




B2




Nl




N2

















Table 4.36



4.5 Recording payments received from debtors 5

4.5.1 ECONOMIC AND MANAGEMENT SCIENCES

4.5.2 Grade 9

4.5.3 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.5.4 Module 19

4.5.5 RECORDING PAYMENTS RECEIVED FROM DEBTORS

ACTIVITYl:

To record payments received from debtors

[LO 3.3]

When debtors pay their debt, the cash received is recorded in the CRJ. The CRJ makes provision for an
additional column headed Debtors Control.

A receipt is issued to the debtor as proof that the money was received. This is called the source document
for the entry.

The effect of the transaction on the accounting equation is as follows:

• Assets + (Cash in bank increases)

• Assets - (Debtors' debt decreases)

ASSIGNMENT 1:

• Using the information below, complete the Cash Receipts Journal (CRJ) and Debtors Journal (DJ) of
Highway Dealers.



Highway Dealers sells goods on credit and for cash.



• The following transactions must be recorded in DJ 3.3.1 for May and DJ 3.3.2 for June 2003, and in
CRJ 3.3.1 for June 2003.



5 This content is available online at <http://cnx.Org/content/m31772/l.l/>.



81



May 2003

3 Sells goods for R320 on credit to S. Westonand issues invoice no. 141 (cp. R256)

8 Issues invoice 142 to A. Niemand for goods sold on credit for R240 (cp. R192)

10 Sells goods for R160 on credit to H. Olwage and issues invoice no. 143 (cp. R128)

12 Sells goods on credit to:

S. Selby for R280, invoice no. 144 (cp. R224)

W. Willow for R120, invoice no. 145 (cp. R96)

June 2003

3 Receives a cheque from S. Weston for R320, issues receipt no. 61

Cash sales of goods, R4 000 (cp. R3 200)

5 Receives R160 cash from H. Olwage and issues receipt no. 62 to him
Cash sales of goods, Rl 600 (cp. Rl 280)

6 Receives a cheque for R280 from S. Selby and issues receipt no. 63
Cash sales of goods, Rl 200 (cp. R960)

14 Sells goods on credit to:

W. Willow for R80, invoice no. 146 (cp. R64)

A. Niemand for R40, invoice no. 147 (cp. R32)

24 Supplies goods on credit to:

S. Selby together with invoice no. 148 for R120 (cp. R96)

30 Cash sales of goods, R4 800 (cp. R3 840)

4.5.5.1 DEBTORS JOURNAL OF HIGHWAY DEALERS - MAY 2003DJ 3.3.1



In- voice


Day


Debtors


Fol.


Sales


Selling costs















































































































Table 4.37



82



CHAPTER 4. TERM 4



4.5.5.2 DEBTORS JOURNAL OF HIGHWAY DEALERS - JUNE 2003DJ 3.3.2



In- voice


Day


Debtors


Fol.


Sales


Selling costs



























































































































Table 4.38



4.5.5.3 CASH RECEIPTS JOURNAL OF HIGHWAY DEALERS - JUNE 2003CRJ 3.3.1



Doc.


Day


Deta


ilFol.


Analysis


Bank


Sales


Selling
costs


Debtors
control


Sundries accounts


Amount


Fol.


Deta


ils





























































































































































































































































































































Table 4.39



83



4,5.6 Assessment



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.40



4.5.7 Memorandum
ACTIVITY 1

4.5.7.1 Debtors journal of Highway dealers - May 2003DJ 3.3.1



Invoice


Day


Debtors


Fol


Sales


Selling costs


141


3


S. Weston




320


256


142


8


A. Niemand




240


192


143


10


H. 01 wage




160


128


144


12


S. Selby




280


224


145




W. Willow




120


96










1 120


896










B2/N1


B1/N2



Table 4.41



84



CHAPTER 4. TERM 4



4.5.7.2 Debtors journal of Highway dealers - June 2003DJ 3.3.2



Invoice


Day


Debtors


Fol


Sales


Selling costs


146


14


W. Willow




80


64


147




A. Niemand




40


32


148


24


S. Selby




120


96










240


192










B2/N1


B1/N2



ACTIVITY 1



Table 4.42



4.5.7.3 CASH RECEIPTS JOURNAL OF HIGHWAY DEALERS - JUNE 2003CRJ 3.3.1



Doc


Day


Dets


ilFol


Analysis


Bank


Sales


Selling
costs


Debtors
control


Sundries account


Amount


Fol


Deta


ils




























61


3


S.

We-
ston




320
















320












CR




Sales




4
000


-


4
320


-


4
000


-


3

200


-














62


5


H.
01-

wag(




160
















160












CR




Sales




1
600


-


1
760


-


1
600


-


1

280


-














63


6


S.
Selb;


'


280


-














280


-










CR




Sales




1
200


-


1

480


-


1
200


-


960


-














CR


30


Sales




4
800


-


4
800




4
800


-


3

840


-


























12


-


11


-


9


-


760


-






















360




600




280
















continued on next page



85















B3




Nl




B1/N2


B2













Table 4.43



4.6 Recording payments to creditors 6

4.6.1 ECONOMIC AND MANAGEMENT SCIENCES

4.6.2 Grade 9

4.6.3 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.6.4 Module 20

4.6.5 RECORDING PAYMENTS TO CREDITORS

ACTIVITYl:

To record payments to creditors
[LO 3.3]

When the amounts owed to creditors are paid, a cheque (that serves as source document) is issued. The
entry is made in the CPJ in an additional column headed Creditors Control.
The effect of the transaction on the accounting equation is as follows:

• Assets - (Bank decreases)

• Liabilities - (Creditors decrease)

ASSIGNMENT 1: Creditors Journal and Cash Payments Journal

• Record the following information for Marais Dealers in CJ 3.4.1 for March and CJ 3.4.2 for April 2003,
and in CPJ 3.4.1 for April 2003. The original invoices received from suppliers have been renumbered.



2003



March 3 No. 316 from Bengo Wholesalers for goods, Rl 560

4 No. 317 from Situ and Co. for packaging material, R625

5 No. 318 from Banda Ltd. for repairs to vehicle, R380

6 No. 319 from Pento and Son for stationery, R345

10 No. 320 from Pento and Son for advertising poster, R258

20 No. 321 from Bengo Wholesalers for goods, R780

2003

April 4 No. 322 from Situ and Co. for goods, R560

8 No. 323 from Bergtuin Motors for delivery vehicle, R7 500

12 No. 324 from Banda Ltd. for repairs to delivery vehicle, R330

16 No. 325 from Pento and Son for stationery, R280

20 No. 326 from Bengo Wholesalers for goods, R757

• Cheque counterfoils



6 This content is available online at <http://cnx.Org/content/m31773/l.l/>.



86



CHAPTER 4. TERM 4



2003

April 2 No. 642 to Bengo Wholesalers in settlement of account, R2 340
3 No. 643 to Pento and Son in settlement of their account, R603
6 No. 644 to the municipality for water and electricity, R110
8 No. 645 to Situ and Co. in settlement of their account, R625
10 No. 646 to Boland Wholesalers for goods, R950

14 No. 647 cash for wages, R210

15 No. 648 cash for personal use of the owner, R500
18 No. 649 to Maxi Suppliers for the following:
Goods, R600

Cash register, R400

20 No. 650 to Prompt Printers for advertising posters, R235

30 No. 651 to the manager, M. Meintjies, for salary, Rl 250

CASH PAYMENTS JOURNAL OF MARAIS DEALERS - APRIL 2003 CPJ 3.4.1



Doc.


Day


Nam

of

ben-

efi-

ciarj


eFol.


Bank


Creditors
control


Trading
inven-


Stati


onery


Wag


es


Sundries ac-
counts






tory






AmountFol.


Details





























































































































































































































































































































































































































































































































Table 4.44
CREDITORS JOURNAL OF MARAIS DEALERS - MARCH 2003 CJ 3.4.1



87



In-
voice


Day


Cred


itfink


Creditors
control


Trading
inven-


Statio-
nery


Vechicle
costs


Packaging
material


Sundries ac-
counts




tory








AmountFol.


Details































































































































































































































































Table 4.45
CREDITORS JOURNAL OF MARAIS DEALERS - APRIL 2003 CJ 3.4.2



In-
voice


Day


Cred:


tdfal.


Creditors
control


Trading
inventory


Stationery


Vehicle
costs


Sundries ac-
counts










Amoun; Fol.


Details



































































































































































































































































































Table 4.46



ASSIGNMENT 2:



Enter the transactions below in the correct auxiliary journals,
column totals. (Use CRJ 3.4.1, CPJ 3.4.2, DJ 3.4.1 and CJ 3.4.3.)



Close by calculating the



November

1 A. Enslin, the owner, deposits a capital contribution of R20 000 - Receipt no. 001 is issued to him
Purchases equipment to the value of R2 630 from Pronto Ltd and receives credit invoice number 100

(renumber) together with the equipment

2 Cash sales of goods for R500 (cp. R400)

Cheque 001 to the value of R7 800 is issued to Highway Motors for the purchase of a vehicle

4 Cash sales of R625 are recorded (cp. R500)

5 Cheque 002 is paid to ZA Ltd

This is for cash purchases of trading stock, R490, and stationery, R200

6 Stationery to the value of R312 is purchased on credit from Malan and Co



88



CHAPTER 4. TERM 4



Credit sales of R360 (cp. R280) to R. du Toit

8 Quick Suppliers provides goods of R2 890 on credit

9 Credit sales of R660 (cp. R420) to W. Bennett

10 Cash sales, R750 (cp. R600)

Travalia Office Suppliers delivers equipment purchased on credit for Rl 310

The owner hands a cheque in the amount of RIO 000 to the business to increase his capital contribution

11 Packaging material to the value of R880 is purchased on credit from Malan and Co

12 The business draws a cash cheque of R150 for wages

Credit invoice no. 119 is issued for goods sold to G. Wilmans, R890 (cp. R720)

14 Credit sales to W. Bennett, R520 (cp. R360)

15 A cheque to the value of R135 is issued to the Postmaster as payment for the telephone account

16 Credit invoice 104 is received from Quick Suppliers for goods, R3 060, and packaging material, R860

20 Cash sales to the value of R875 (cp. R700)

Cheque no. 006 in the amount of R870 is issued to ZA Ltd - R140 is for stationery and R730 for goods

21 A cash cheque to the value of R250 is drawn - R150 is for wages and R100 for fuel for the owner's
private vehicle

Goods to the value of R320 (cp. R180) are sold on credit to R. du Toit

22 A computer belonging to the business is repaired on credit, R621

30 Cheque no. 008 is issued to AN Manufacturers for goods, R500, and equipment, R700

Cash sales of Rl 000 (cp. R800)

DEBTORS JOURNAL OF ENSLIN DEALERS - NOVEMBER 2003 DJ 3.4.1



In- voice


Day


Debtors


Fol.


Sales


Selling costs



























































































































Table 4.47
CASH RECEIPTS JOURNAL OF ENSLIN DEALERS - NOVEMBER 2003 CRJ 3.4.1



89



Doc.


Day


Deta


ilFol.


Analysis


Bank


Sales




Selling
costs






Sundries ac-
counts












AmountFol.


Details



























































































































































































































Table 4.48
CREDITORS JOURNAL OF ENSLIN DEALERS - NOVEMBER 2003 CJ 3.4.3



In-
voice


Day


Cred


itBmk


Creditors
control


Trading
inven-


Stationery


Vechile
expendi-


Packaging
material


Sundries ac-
counts




tory




ture




AmountFol.


Details



































































































































































































































































































Table 4.49
CASH PAYMENTS JOURNAL OF ENSLIN DEALERS - NOVEMBER 2003 CPJ 3.4.2



Doc



Day



NamleFol.
of

ben-
efi-
ciary



Bank



Trading
inven-
tory



Stationery



Wages



Sundries ac-
counts



AmountFol. Details:



continued on next page



90



CHAPTER 4. TERM 4



Table 4.50



Assessement



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.51



91



4.6.6 Memorandum

ACTIVITYl

ASSIGNMENT 1

CASH PAYMENTS JOURNAL OF MARAIS DEALERS - APRIL 2003 CPJ 3.4.1



Doc


Day


Payc


eFol


Bank


Creditors
control


Wages


Trading
inven-
tory




Sundries
count


ac-




AmountFol


Details


i


642


2


Benj
Whc

salei


le-

3


2
340




2
340


























643


3


Pent

and

Son


O


603




603


























644


6


Mun


icipali


tyilO




















110




N7


Wat.
and
Elec
tric-

ity


>r


645


8


Situ
and
Co.




625




625


























646


10


Bola
Whc

salei


ad
le-

3


950












950


















647


14


Casl




210


-






210


-




















648


15


Casl




500


-


















500


-


Bl


Witl


idrawals


649


18


Max
Sup-
pli-
ers




1
000












600








400




B2


Equi


pment


650


20


Flinl
Prin

ers


;-


235




















235




N2


Adv<


irtisement


continued on next page





92



CHAPTER 4. TERM 4



651


30


M.




1


-


















1


-


N3


Sala: - y






Meir


-


250




















250














tjies










































7


-


3


-


210




1


-






2


-
















823




568








550








495


















B5




B6




Nl




B4



















Table 4.52



ACTIVITY 1

ASSIGNMENT 1

CREDITORS JOURNAL OF MARAIS DEALERS



MARCH 2003 CJ 3.4.1



In-


Day


Crec


ifflmfc


Creditors


Trading


Statio-


Vehicle


Packaging


Sundries ac-


voice


i






control


inven-
tory


nery


costs


material


count


AmountFol


Details


316


3


Benj
Whc

salei


le-

3


1
560




1
560
























317


4


Situ
and
Co.




625
















625












318


5


Banc
Ltd


la


380


-










380


-














319


6


Pent

and

Son





345








345




















320


10


Pent

and

Son





258




















258




N2


Adv(


321


20


Benj
Whc

salei


le-

3


780




780
































3


-


2


-


345


-


380


-


625


-


258


-














948




340
































B6




B4




N4




N5




N6


















continued or


next page









93



Table 4.53
CREDITORS JOURNAL OF MARAIS DEALERS - APRIL 2003 CJ 3.4.2



In-


Day


Crec


ifflmfc


Creditors


Trading


Statio-


Vehicle


Packaging


Sundries ac-


voice


i






control


inven-
tory


nery


costs


material


count


AmountFol


Details


322


4


Situ
and
Co.




560




560
























323


8


Berg

Mo-
tors


tuin


7
500




















7
500




B3


Vehi


324


12


Banc
Ltd


la


330


-










330


-














425


16


Pent

and

Son





280








280




















326


20


Benj
Whc

salei


le-

3


757




757
































9


-


1


-


280


-


330


-






7


-














427




317
















500
















B6




B4




N4




N5

















Table 4.54

ACTIVITY 1

ASSIGNMENT 2

CREDITORS JOURNAL OF ENSLIN DEALERS - NOVEMBER 2003 CJ 3.4.3



94



CHAPTER 4. TERM 4



In-
voice


Day


Cred:


ttffal


Creditors


Trading


Packaging






Sundries account




control


inventory


material




Amoun; Fol


Details




100


1


Prom


,0


2


-














2


-


B4


Equipment






Ltd.




630
















630










101


6


Mala


i


312


-














312


-


N4


Stationery






and


































Co.






























102


8


Quid
Sup-
pli-
ers




2
890




2
890






















103


11


Mala

and

Co.


i


880








880


















104


16


Quid
Sup-
pli-
ers




3
920




3
060




860


















105


22


Prom


,0


621


-














621


-


N7


Repa rs






Ltd.






































11


-


5


-


1


-






3


-
















253




950




740








563


















B8




B5




N6
































Table


4.55























ACTIVITY 3.4 ASSIGNMENT 2

CASH RECEIPTS JOURNAL OF ENSLIN DEALERS -NOVEMBER 2003 CRJ 3.4.1



Doc


Day


Deta


ilFol


Analysis


Bank


Sales




Cost
price


of






Sundries ac-
count








sales




Amoui


ltFol


Details


100


1


A.
En-

slin




20
000




20
000
















20
000




Bl


Capi


CS1


2


Sales




500


-


500


-


500


-


400


-














CS3


4


Sales




625


-


625


-


625


-


500


-




















continued or


next page





95



1CS


10


Sales




750


-






750




600


-














101




A.
En-

slin




10
000




10
750
















10
000




Bl


Capi


CS4


20


Sales




875


-


875


-


875


-


700


-














CS5


30


Sales




1
000


-


1
000


-


1
000


-


800




























33

750


-


3

750


-


3
000


-






30
000


-


















B7




Nl




B5/N2















Table 4.56

ACTIVITY 1

ASSIGNMENT 2

CASH PAYMENTS JOURNAL OF ENSLIN DEALERS - NOVEMBER 2003 CPJ 3.4.2



Doc


Day


Nam

of

paye


eFol

3


Bank


Wages


Stationery


Trading
inven-
tory




Sundries ac-
count


AmountFol


Details


001


2


High
Mo-
tors


way


7
800




















7
800




B3


Vehi


002


5


ZA
Ltd.




690


-






200


-


490


-














003


10


Trav
Of-
fice
Sup-
pli-
ers


alia


1
310




















1
310




B4


Equi


004


12


Casl




150


-


150


-






















005


15


Post


naste


• 135


-


















135


-


N5


Tele]


006


20


ZA
Ltd.




870


-






140


-


730


-




















continued or


next page



96



CHAPTER 4. TERM 4



007


21


Casl




250


-


150


-














100


-


B2


Wit!


008


30


AN

Man

u-

fac-

tur-

ers




1
200












500








700




B4


Equi










12


-


300


-


340


-


1


-






10


-














405












720








045
















B7




N3




N4




B5

















Table 4.57

ACTIVITY 1

ASSIGNMENT 2

Debtors journal of Enslin dealers - November 2003 DJ 3.4.1



Doc


Day


Debtors


Fol


Sales


Selling costs


117


6


R. du Toit


Dl


360-


280-


118


9


W. Bennett


D2


660-


420-


119


12


G. Wilmans


D3


890-


720-


120


14


W. Bennett


D2


520-


360-


121


21


R. du Toit


Dl


320


180-










2 750


1 960










B6/N1


B5/N2



Table 4.58



4.7 Ledger entries 7

4.7.1 ECONOMIC AND MANAGEMENT SCIENCES

4.7.2 Grade 9

4.7.3 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.7.4 Module 21

4.7.5 LEDGER ENTRIES

section 2: ledger accounts
ACTIVITY1:
To do ledger entries
[LO 3.3]

An account is a separate record in which all transactions for a particular item are entered.
An account takes the form of a T and comprises three sections, namely:



7 This content is available online at <http://cnx.Org/content/m31774/l.l/>.



97



• the name of the item, for example, bank account;

• the left-hand side, called the debit side, and

• the right-hand side, called the credit side.



For example:



Bank Account



2:.



Figure 4.7



Debiting an account means to do an entry on the debit side. Crediting an account means to do an entry on
the credit side.

Every transaction affects at least two accounts. The one account is debited and the other account is
credited. This is known as the double-entry system. In the details column of the ledger account the name
of the other account involved in the transaction appears, for example:



Sales



Jul. 2 Bank R1 000



Figure 4.8



This means that cash sales to the value of Rl 000 were made. The two accounts are therefore bank and
sales. The double entry will be as follows:



Bank



Jul. 2 Salss Rl ODD



Figure 4.9



The following rules must be taken into account in the case of entries in ledger accounts:



98



CHAPTER 4. TERM 4



• When an asset is increased, the bank account is debited

• When an asset is reduced, the bank account is credited

• When a liability is increased, the liabilities account is credited

• When a liability is reduced, the liabilities account is debited

• When capital is increased, the capital account is credited

• When capital is reduced, the capital account is debited

• When income is increased, the income account is credited

• When income is reduced, the income account is debited

• When expenditure is increased, the expenditure account is debited

• The opening balance of accounts that increase on the credit side, appears on the credit side

• The opening balance of accounts that increase on the debit side, appears on the debit side

ASSIGNMENT 1:



• Determine the effect of Ledger Accounts on A

table.



O + L by analysing the transactions in the



Owner deposits some of his personal funds as capital in the bank account of the business.

2. Equipment is purchased and paid by cheque.

3. A vehicle is purchased on credit.

4. Cash is received for services provided.

5. Salaries are paid by cheque.

6. The amounts owed to creditors are paid.

7. Money is received from debtors.
Table for assignment 1



GENERAL LEDGER








NO.


ACCOUNT DEBITED


ACCOUNT CREDITED


A





L



























































































































Table 4.59

ASSIGNMENT 2:
• Answer the following questions according to the columns in the table:



99



Current income


Consumer goods


Fuel


Withdrawals


Change


Salaries


Water and Electricity


Land and Buildings


Debitors control


Rental income


Advertisements


Equipment


Telephone


Selling costs


Cost of materials


Trading inventory


Trade licence


Stationery


Packaging material


Wages


Repairs


Sales


Bank


Rental expenditure


Vehicles


Creditors control


Capital



Table 4.60



(a) Arrange the accounts in the columns in the table.

(b) Indicate by means of +, - or next to the account whether an increase in it will increase or reduce
the ownership interest or leave it unchanged.

(c) Indicate by means of dt. or cr. next to the account whether the account will have a debit or credit
opening balance.

table for assignment 2



100



CHAPTER 4. TERM 4



*l



lb!



Assets {-a)






ib:

*H0



Liabilities Is!



:=:



ib:



Acco u nts that affect
ownership interest (a)



Id



Figure 4.10



ASSIGNMENT 3:



• Do the following debit and credit entries on the ledger sheet (below):

1 The owner invests R12 000 as capital in the business

2 A vehicle is purchased on credit from TP Motors

3 Fuel is purchased and paid by cheque

4 Cash for service provided is received

5 Salaries are paid by cheque

6 Goods on credit to J. van Schalkwyk are supllied

7 Rent by cheque to A and B Lessors is paid

8 The owner takes cash for his personal use

9 Materials are purchased on credit from AB Suppliers

10 Equipment from Model Suppliers and pays by cheque is purchased

11 Receives the amount owing from J. van Schalkwyk

12 Part of the debt to TP Motors is paid

13 Goods are sold for cash
Table for assignment 3



101



GENERAL LEDGER








NO.


ACCOUNT DEBITED


ACCOUNT CREDITED


A





L


1












2












3












4












5












6a












6b












7












8












9












10












11












12












13a












13b

























Table 4.61



4,7.6 Assessment



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



continued on next page



102



CHAPTER 4. TERM 4



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.62



4.7.7

4.7.8 Memorandum

ACTIVITYl

ASSIGNMENT 1



GENERAL LEDGER








NO.


ACCOUNT DEBITED


ACCOUNT CREDITED


A


O


L


1


Bark account


Caphal


+




+


2


Equipment


Bark









3


Vehicle


Creations control


+




+


4


Bank


Current income


+


+




5


Salaries


Bank


-




-


6


J red hors control


Bank


-




-


7


Bank


Debtors control










Figure 4.11



ACTIVITY 1
ASSIGNMENT 2



103



m

■>wo


-.'SitS






Liabilities.






Accounts that

influence Owners-hip

Interest







Tra:irg inventory


Si





Creditors com rol


W


4-


Capital


m





C'=-:=


*








+


CurreM income


S.r





Land and Buildings


*








-


Whriirawars


&





Bant


*








-


W + E


*





Venules


*








*■


Renal income


cr





Debtors control


*








-


Telephone


*


:


Equipment


*








+


Packagirg malerial

Bales

Consumer gooes

Advertisements

Selling costs;

Trace licence

Wages

Fuel

Salaries

Cosi of malerials

Stationery

Repairs

Renal espercitLre





Figure 4.12



ACTIVITY1
ASSIGNMENT 3



104



CHAPTER 4. TERM 4



NO.



4
5

:?
zz

1
1
E-

■:
••

•2
1 =



GENERAL LEDGER



ACCOUNT DEBTED



Vehfcte

-_s

Bark

Salaries

Debtors control

Cost price of sales

RanalexpersilLre

WH I" z\ rawals

Cosi of malerials

Equipment

Bank

Creditors control

Bank

Cos1 price of sates



ACCOUNT CREDITED



Capital

Creuhors accoLrl

E~<

C urrent income

Bank

Sales

~'=z '2 r vs r ::- r :

Bank

Bark

Creditors control

Bank

Debtors control

Bank

Sales

_r =: r : r ve r :: r ?



Figure 4.13



4.8 Transferring the auxiliary journals to the ledger 8

4.8.1 ECONOMIC AND MANAGEMENT SCIENCES

4.8.2 Grade 9

4.8.3 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.8.4 Module 22

4.8.5 TRANSFERRING THE AUXILLIARY JOURNALS TO THE LEDGER

ACTIVITY 1:

To transfer the auxiliary journals to the ledger

[LO 3.3]

Once the entries in the auxiliary journals have been completed, all the information is transferred to the
ledger.

The column totals of the CRJ are transferred on the last day of the month and the entries in the sundries
column are transferred individually on the date of the entry.

Cash received by a service enterprise is transferred as follows to the CRJ:

1. Bank account - debit with the total cash received (Asset increases on the debit side).

2. Current Income account - credit with the total for the month (Ownership interest increases on the
credit side).



B This content is available online at <http://cnx.Org/content/m31775/l.l/>.



105

3. Capital account - credit with the capital amount deposited (Ownership interest increases on the credit
side).

The names of the other accounts involved appear in the "details" column of the ledger.

In the case of the bank account - capital and current income (total receipts)In the case of the capital
account - bankln the case of the current income account - bank

ASSIGNMENT 1: Transfer of the CRJ in a Service Enterprise

• Use the completed CRJ of Mzondi Plumbers (Activity 3.1 Assignment 1) and transfer

the CRJ to the ledger. (Supply your own ledger paper to complete the activity.)

ASSIGNMENT 2: Transfer of the CRJ in a Commercial Enterprise

• Use the completed CRJ of Levubu Dealers (Activity 3.1 Assignment 2) and transfer the CRJ. (Supply
your own ledger paper to complete the activity.)

• The same principles apply. The transfer is done as follows:

1. Bank account - debit with the total receipts for the month (Asset increases on the debit side.)

2. Capital account - credit with all capital deposited during the month(Ownership interest increases on
the credit side.)

3. Sales account - credit with the sales for the month(Ownership interest increases on the credit side.)

4. Selling costs - debit with the amount for the month(Ownership interest decreases on the debit side.)

5. Trading inventory - credit with cost price of the sales amount(Asset decreases on the credit side.)
Bank account - Double entry is total receipts

Capital - Double entry is bank accountSales - Double entry is bank account
Selling costs - Double entry is trading inventory
ASSIGNMENT 3: transfer of the CPJ

• Use the completed journals of Levubu Dealers (Activity 3.1 Assignment 2) and transfer the CPJ.
(Supply your own ledger paper.)

• The total of the bank column and all the other columns is transferred on the last day of the month.
The entries in the sundries column are transferred as individual amounts to the specific account on the
date of the entry.

• The transfer is done as follows:

1. Bank account - credit with the total payments for the month(Asset decreases on the credit side.)

2. Assets purchased for cash - debit every asset separately with the relevant amount (Assets increase on
the debit side.)

3. Expenditure paid by cheque - debit each expenditure separately with the relevant amount (Ownership
interest decreases on the debit side.)

Bank account - Double entry is total payments

Assets - Double entry is bank accountExpenditure - Double entry is bank account

ASSIGNMENT 4 : transfer of CRJ with cost price of sales

• Use the completed CRJ of Lubbe Dealers (Activity 3.1 Assignment 3) and transfer. (Supply own ledger
paper.)

ASSIGNMENT 5 : transfer of the debtors journal

• Use the complete DJ of Gesina Dealers (Activity 3.2 Assignment 1) and transfer it to the ledger.



106 CHAPTER 4. TERM 4

• The total of the sales column, as well as the total of the selling costs column, is transferred to two
accounts as follows:

sales column

1. Debtors control account - debit with the total of credits sales for the month(Asset increases on the
debit side.)

2. Sales account - credit with the total of the credit sales for the month(Ownership interest increases on
the credit side.)

The double entry for sales is debtors control and the double entry for debtors control is sales,
selling costs column

1. Selling costs account - debit with the total selling costs for the month (Ownership interest decreases
on the debit side.)

2. Trading inventory account - credit with the total of the credit sales for the month(Asset decreases on
the credit side.)

Double entry for selling costs is trading inventory and double entry for trading inventory is selling costs.
ASSIGNMENT 6 : transfer of the creditors journal

• Use the completed CJ of Toledo Dealers (Activity 3.2 Assignment 2) and transfer it to the ledger.

• Column totals are transferred on the last day of the month. Entries in the sundries column are
individually transferred to the specific account on the date of the entry.

• The transfer is done as follows:

1. Creditors control - credit with all the credit purchases for the month (Liability increases on the credit
side.)

2. All assets purchased are debited separately with the amount of purchases (Asset increases on the debit
side.)

3 All expenditure incurred on credit is debited with the specific amount (Ownership interest decreases on
the debit side.)

The double entry for creditors control is sundry purchases. The double entry for every asset purchased
or expenditure incurred on credit, is creditors control.

ASSIGNMENT 7 : receipts from debtors: transfer of the D J and CRJ

• Use the completed DJ and CRJ of Highway Dealers (Activity 3.3) and complete the transfer.

• When a debtor pays his account, it is recorded in the CRJ and then transferred to the ledger as follows:

1. Bank - debit with the cash received (Asset increases on the debit side.)

2. Debtors control - credit with the amount paid by debtors(Asset decreases on the credit side.)
The double entry in the case of bank is debtors control, and in the case of debtors control it is bank.
ASSIGNMENT 8 : payments to creditors: transfer of the CJ and CPJ

• Use the completed CJ and CPJ of Marais Dealers (Activity 3.4 Assignment 1) and complete the
transfer.

• When payments are made to creditors, they are recorded in the CPJ and then transferred to the ledger.

• This is done as follows:

1. Creditors control - debit with all payments to creditors for the month(Liability that decreases is debited.)

1. Bank - credit with cash payments (Asset that decreases is credited.)
ASSIGNMENT 9 : Transfer of all the auxiliary journals - CRJ, CPJ, DJ and CJ

• Use the completed journals of Enslin Dealers (ctivity 3.4 Assignment 2) and transfer them.



107
4.8.6 Assessment



108



CHAPTER 4. TERM 4



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.63



4.8.7 Memorandum

ACTIVITY 1

ASSIGNMENT 1

General Ledger of Mzondi Plumbers







Balance Sheet Section








Date


Details


Fol


Amount




Date


Details


Fol


Amount








Capital


Bl


















Sept.


1


Bank


CRJ3.1.1


50 000


-






Bank


B2






Sept.


30


Total receipts


CRJ3.1.1


56 286




















Nominal Accounts Section












Current Income


Nl


















Sept.


30


Bank


CRJ3.1.1


6 286


-



Table 4.64



ACTIVITY 1

ASSIGNMENT 2

General Ledger of Levubu Dealers



109







Balance Sheet Section








Date


Details


Fol


Amoun;


Date


Details


Fol


Amoun;






Capital


Bl


















Jul.


1


Bank


CRJ3.1


2130
000


-






Trading Inventory


B2


















Jul.


31


Cost
price
of
sales


CRJ3.1


28 720








Bank


B3






Jul.


31


Total
re-
ceipts


CRJ3.1


2140
900




















Nominal Accounts Section












Sales


Nl


















Jul.


31


Bank


CRJ3.1


210
900


-






Selling Costs


N2






Jul.


31


Trading
In-
ven-
tory


CRJ3.1


.28 720

















Table 4.65



ACTIVITY 1

ASSIGNMENTS 3

General Ledger of Levubu Dealers



110



CHAPTER 4. TERM 4







Balance Sheet Section








Date


Details


Fol


Amount




Date


Details


Fol


Amount








Equipment


Bl






Jul.


6


Bank


CPJ3.1.2


6 000


-


















Vehicle


B2






Jul.


15


Bank


CPJ3.1.2


23 300


-


















Trading Inventory


B3






Jul.


31


Bank


CPJ3.1.2


14 500


-


















Bank


B4


















Jul.


31


Total Payments


CPJ3.1.2


49 809


-






Nominal Accounts Section












Stationery


Nl






Jul.


31


Bank


CPJ3.1.2


220


-


















Rental Expenditure


N2






Jul.


2


Bank


CPJ3.1.2


1 400


-


















Trade Licence


N3






Jul.


8


Bank


CPJ3.1.2


150


-


















Telephone


N4






Jul.


18


Bank


CPJ3.1.2


125


-


















Salary


N5






Jul.


26


Bank


CPJ3.1.2


2 650


-


















Fuel


N6






Jul.


28


Bank


CPJ3.1.2


78


-


















Water and Electricity


N7






Jul.


30


Bank


CPJ3.1.2


56


-


















Wages


N8






Jul.


31


Bank


CPJ3.1.2


1 330


-















Table 4.66



ACTIVITY 1

ASSIGNMENT 4

General Ledger of Lubbe Dealers







Balance Sheet Section








continued on next page



Ill



Date


Details


Fol


Amoun;


Date


Details


Fol


Amoun;






Capital


Bl


















May


1


Bank


CRJ3.1


380
000


-






Trading Inventory


B2


















May


31


Selling
costs


CRJ3.1


32 220


-






Bank


B3






May


31


Total
Re-
ceipts


CRJ3.1


382
960




















Nominal Accounts Section












Verkope


Nl


















May


31


Bank


CRJ3.1


32 960


-






Selling Costs


N2






May


31


Trading
In-
ven-
tory


CRJ3.1


32 220

















Table 4.67



ACTIVITY 1

ASSIGNMENT 5

General Ledger of Gesina Dealers







Balance Sheet Section








Date


Details


Fol


Amoun


;


Date


Details


Fol


Amoun


;






Trading Inventory


Bl


















Apr.


30


Selling
costs


DJ3.2.1


1 641


-






Debtors Control


B2






Apr.


30


Sales


DJ3.2.1


2 188


-


















Nominal Accounts Section












Sales


Nl






continued on next page



112



CHAPTER 4. TERM 4















Apr.


30


Debtors
con-
trol


DJ3.2.1


2 188








Cost Price of Sales


N2






Apr.


30


Trading
In-
ven-
tory


DJ3.2.1


1 641

















ACTIVITY 1

ASSIGNMENT 6

General Ledger of Toledo Dealers



Table 4.68







Balance Sheet Section








Date


Details


Fol


Amoun


;


Date


Details


Fol


Amoun


;






Equipment


Bl






May


1


Credito
Con-
trol


rsCJ3.2.1


380




















Trading Inventory


B2






May


31


Credito
Con-
trol


rsCJ3.2.1


2 783




















Creditors Control


B3


















May


31


Sundry
Pur-
chases


CJ3.2.1


4 958








Nominal Accounts Section












Stationery


Nl






May


31


Credito
Con-
trol


rsCJ3.2.1


405
















continued on next page



113







Packaging Material


N2






May


31


CreditorsCJ3.2.1
Con-
trol


605




















Repairs


N3






May


12


CreditorsCJ3.2.1
Con-
trol


500




















Advertisement


N4






May


25


Credito
Con-
trol


rsCJ3.2.1


285

















ACTIVITY 1

ASSIGNMENT 7

General Ledger of Highway Dealers



Table 4.69







Balance Sheet Section








Date


Details


Fol


Amoun


;


Date


Details


Fol


Amoun


;






Trading Inventory


Bl


















May


31


Selling
costs


DJ3.3.1


896


-














Jun


30


Selling
costs


DJ3.3.2


192


-














Jun


30


Selling
costs


CRJ3.3


19 280


-






Debtors Control


B2






May


31


Sales


DJ3.3.1


1 120


-


Jun.


30


Bank


CRJ13


760


-


Jun.


30


Sales


DJ3.3.2


240


-


















Bank


B3






Jun.


30


Total
re-
ceipts


CRJ3.3


.112
360
















continued on next page



114



CHAPTER 4. TERM 4







Nominal Accounts Section












Sales


Nl


















May


31


Debtors
con-
trol


DJ3.3.1


1 120
















Jun.


30


Debtors
con-
trol


DJ3.3.2


240
















Jun.


30


Bank


CRJ3.3


111
600


-






Selling Costs


N2






May


31


Trading
In-
ven-
tory


DJ3.3.1


896
















Jun.


30


Trading
In-
ven-
tory


DJ3.3.2


192


















30


Trading
In-
ven-
tory


CRJ3.3


.19 280

















Table 4.70



ACTIVITY 1

ASSIGNMENT 8

General Ledger of Marais Dealers







Balance Sheet Section








Date


Details


Fol


Amoun


;


Date


Details


Fol


Amoun


;






Withdrawals


Bl






Apr.


15


Bank


CPJ3.4


1500


-


















Furniture and Equipment


B2






Apr.


18


Bank


CPJ3.4


1400


-


















Vehicles


B3






continued on next page



115



Apr.


8


CreditorsCJ3.4.2
con-
trol


7 500




















Trading Inventory


B4






March


31


Credito
con-
trol


rsCJ3.4.1


2 340
















Apr.


30


Credito
con-
trol


rsCJ3.4.2


1 317
















Apr.


30


Bank


CPJ3.4


11 550


-


















Bank


B5


















Apr.


30


Total

Pay-

ments


CPJ3.4


17 823








Creditors Control


B6






Apr.


30


Bank


CPJ14


3 568




March


31


Sundry
pur-
chases


CJ3.4.1


3 948
















Apr.


30


Sundry
pur-
chases


CJ3.4.2


9 427








Nominal Accounts Section












Wages


Nl






Apr.


30


Bank


CPJ3.4


1210




-
















Advertisements


N2






March


10


Credito
con-
trol


rsCJ3.4.1


258
















Apr.


20


Bank


CPJ3.4


1235


-


















Salary


N3






Apr.


30


Bank


CPJ3.4


11 250


-


















Stationery


N4






continued on next page



116



CHAPTER 4. TERM 4



March


31


CreditorsCJ3.4.1
con-
trol


345
















Apr.


30


CreditorsCJ3.4.2
con-
trol


280




















Vehicle Expenses


N5






March


31


Credito
con-
trol


rsCJ3.4.1


380
















Apr.


30


Credito
con-
trol


rsCJ3.4.2


330




















Packaging Material


N6






March


31


Credito
con-
trol


rsCJ3.4.1


625




















Water and Electricity


N7






Apr.


6


Bank


CPJ3.4


1110


-















ACTIVITY 1

ASSIGNMENT 9

General Ledger of Enslin Dealers



Table 4.71







Balance Sheet Section








Date


Details


Fol


Amoun


;


Date


Details


Fol


Amoun


;






Capital


Bl


















Nov.


1


Bank


CRJ3.4


120
000


-
















10


Bank


CRJ3.4


110
000


-






















30
000


-






Withdrawals


B2






Nov.


21


Bank


CPJ3.4


2100


-














continued on next page



117







Vehicles


B3






Nov.


2


Bank


CPJ3.4 27 800


-


















Equipment


B4






Nov.


1


Credito
con-
trol


rsCJ3.4.3


2 630


















10


Bank


CPJ3.4


21 310


-
















30


Bank


CPJ3.4


2700


-






















4 640


-


















Trading Inventory


B5






Nov.


30


Bank


CPJ3.4


21 720


-


Nov.


30


Selling
costs


DJ3.4.1


1 960


-




30


Credito
con-
trol


rsCJ3.4.3


5 950






30


Selling
costs


CRJ3.4


13 000


















30


Balance


b/f


2 710


-










7 670


-










7 670


-


Dec.


1


Balance


c/f


2 710


-


















Debtors Control


B6






Nov.


30


Sales


DJ3.4.1


2 750


-


















Bank


B7






Nov.


30


Total
Re-
ceipts


CRJ3.4


133

750




Nov.


30


Total

Pay-

ments


CPJ3.4


212
405


















30


Balance


b/f


21
345


-










33

750


-










33

750




Dec.


1


Balance


c/f


21
345


-












-






Creditors Control


B8


















Nov.


30


Sundry
Pur-
chases


CJ3.4.3


11
253




continued on next page



118



CHAPTER 4. TERM 4







Nominal Accounts Section












Sales


Nl


















Nov.


30


Bank


CRJ3.4


13 750


-
















30


Debtors
con-
trol


DJ3.4.1


2 750
























6 500








Cost Price of Sales


N2






Nov.


30


Trading
inven-
tory


CRJ3.4


13 000


















30


Trading
inven-
tory


DJ3.4.1


1 960
























4 960


-


















Wages


N3






Nov.


30


Bank


CPJ3.4


2300


-















Table 4.72







Stationery


N4






Nov.


30


Bank


CPJ3.4.2


340


-
















6


Creditors control


CJ3.4.3


312


-






















652


-


















Telephone


N5






Nov.


15


Bank


CPJ3.4.2


135


-


















Packaging Material


N6






Nov.


30


Creditors control


CJ3.4.3


1 740


-


















Repairs


N7






Nov.


22


Creditors control


CJ3.4.3


621


-















Table 4.73



119

4.9 Drawing up a trial balance 9

4.9.1 ECONOMIC AND MANAGEMENT SCIENCES

4.9.2 Grade 9

4.9.3 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.9.4 Module 23

4.9.5 DRAWING UP A TRIAL BALANCE

Section 3: Trial balance
ACTIVITY1:

To draw up a trial balance
[LO 3.3]

Once the ledger accounts have been completed, the accounts are closed and transferred to a Trial Balance.
Accounts that have entries only on the debit or credit side, are simply added up to obtain a total.
In the case of accounts that have entries on the debit as well as the credit side, the balance is calculated.
This means a balance that is the difference between the two sides is calculated. For example:



Bank Account


2003










2003










Nov.


30


Total received


CRJ


20 698


00


Nov.


30


Total payments


CPJ


15 633


00
















30


Balance


b/f


5 065


00










20 698


00










20 698


00


Des.


1


Balance


c/f


5 065


00















Table 4.74

The balances carried forward and the totals are transferred to the Trial Balance.

• A Trial Balance is a list of balances and totals compiled to determine whether the debit side and
credit side are equal and by so doing to check whether the double-entry principle was applied to every
transaction.

Although the Trial Balance indicates that a credit entry was done for every debit entry, certain errors will
not be shown up by the Trial Balance. Thererfore a Trial Balance that balances cannot always be accepted
as proof of correctness.

• Below is an example of a Trial Balance.



TRIAL BALANCE OF RANDOM STORES AS AT 30 JUNE 2003



9 This content is available online at <http://cnx.Org/content/m31776/l.l/>.



120



CHAPTER 4. TERM 4







Dt.


Cr.


Balance sheet section








Capital


Bl




199 322


Withdrawals


B2


15 000




Land and Buildings


B3


105 000




Vehicles


B4


28 000




Equipment


B5


32 125




Trading inventory


B6


45 310




Debtors control


B7


12 180




Bank


B8


11 754




Change


B9


600




Petty cash


BIO


250




Creditors control


Bll




15 994










Nominal Account section








Sales


Nl




350 000


Selling costs


N2


250 000




Rates and Taxes


N3


4 210




Insurance


N4


3 850




Water and Electricity


N5


4 952




Telephone


N6


4 810




Stationery


N7


2 750




Repairs


N8


5 325




Wages


N9


18 000




Salaries


N10


26 000




Rental income


Nil




4 800


Totals




570 116


570 116











Table 4.75



ASSIGNMENT 1: Trial Balance



Use the completed ledger accounts of Enslin Dealers (Activity 3.6 Assignment 9).



• Calculate the balances on the accounts, calculate totals and draw up a Trial Balance.
ASSIGNMENT 2 : Auxiliary Journals, Ledger and Trial Balance

• P. Hatting starts his own business, Hatting Dealers, on 1 April 2003 with a capital contribution of
R105 000.



121

1. Record the transactions for April in the following auxiliary journals: CRJ 3.7.1, CPJ 3.7.1, DJ 3.7.1 and
CJ 3.7.1

2. Close the journals at the end of the month

3. Transfer to the ledger accounts and indicate folio numbers

4. Calculate the balances, or totals where necessary

5. Draw up a trial balance at the end of April

• Transactions: April 2003

• Duplicates of receipts issued



DATE


TO WHOM ISSUED, FOR


AMOUNT


2003






April 1


P. Hatting, for capital contribution


R105 000


7


V. Jansen, to pay his debt


R660




Blommie Bloemiste, for rental income


R 500


14


D. Coetzee, payment on account


R300


21


G. Ferreira, payment on account


R 200


28


V. Jansen, to pay the amount of the invoice issued on 17 April


R 246



Table 4.76



Cash sales of goods as per cash-register roll



DATE


SALES


SELLING COSTS


2003






April 7


R5 800


R4 600


17


R3 820


R2 440


21


R7 620


R5 740


28


Rl 944


Rl 406



Table 4.77



Cash received for services provided



DATE


AMOUNT


2003




April 5


R2 160


17


R3 220


25


Rl 736



Table 4.78



122



CHAPTER 4. TERM 4



• Duplicates of bank deposit slips



DATE


AMOUNT


2003




April 1


R105 000


5


R2 160


7


R6 960


14


R300


17


R7 040


21


R7 820


25


R 1 736


28


R2 190



Table 4.79



Cheque counterfoils



DATE


PAYEE


REASON FOR PAYMENT


AMOUNT


2003








April 2


Perfectum Builders


Building purchased


R80 000


3


Stylish Equipment


Equipment purchased


R4 500


4


Cash


For change


R 180




Caro Ltd.


For materials purchased


R 2 675


7


Cash


For wages


R 560


10


Trust Brokers


For insurance premium


R600


14


Cash


For wages


R 560




Zy Wholesalers


Goods purchased for cash


R 5 950






Stationery purchased for cash


R 180


16


Larnie Furnishers


Paid amount owing


R3 760


17


Caro Ltd.


Materials purchased


R 2 896




Cash


For wages


R 560




Wesco Distributors


For goods purchased


R3 875


28


Cash


For wages


R 560


30


J Henning


Manager's salary


R 2 110




Bengo Wholesalers


Amount owing to date





Table 4.80



Original invoices received from providers



123



DATE


PURCHASED FROM


ITEMS/SERVICES


AMOUNT


2003








April 3


Larnie Furnishers


Equipment


R3 760


5


Bengo Wholesalers


Goods


R8 844


6


Willow Suppliers


Materials


R2 500


7


Pen and Paper


Stationery


R228


9


Bengo Wholesalers


Goods


R4 750


15


Toledo Motors


Delivery vehicle


R28 660


17


Willow Suppliers


Materials


R420






Goods


R3 000


19


Pen and Paper


Stationery


R 106


26


Bengo Wholesalers


Trading stock


R 1 400



Table 4.81



• Duplicates of invoices issued for goods sold on credit



DATE


SOLD TO


AMOUNT


COST PRICE


2003








April 4


V Jansen


R660


R495


10


D Coetzee


R890


R712


13


G Ferreira


R260


R128


16


D Coetzee


R106


R84


17


V Jansen


R246


R184


26


G Ferreira


R340


R272



Table 4.82
DEBTORS JOURNAL OF HATTING DEALERS - APRIL 2003 DJ 3.7.1



In- voice


Day


Debtors


Fol.


Sales


Selling costs























































































Table 4.83



124 CHAPTER 4. TERM 4

CASH RECEIPTS JOURNAL OF HATTING DEALERS - APRIL 2003 CRJ 3.7.1



125



Doc


• Day


Det


liBol.


Analysis


Bank


Sales


Selling
costs


Current
income


Debtors
Control


Sundries ac-
counts














AmounFol.


Detai



























































































































































































































































































































































































































































































































































































































Table 4.84
CREDITORS JOURNAL OF HATTING DEALERS - APRIL 2003 CJ 3.7.1



In-
voice


Day


Cred


.tfihsditors
control


Trading
inventory


Stationery


Cost of
materials






Sundries ac-
counts












Amoun


tFol.


Details
















































































































































































































































continued on next page



126



CHAPTER 4. TERM 4



Table 4.85
CASH PAYMENTS JOURNAL OF HATTING DEALERS - APRIL 2003 CPJ 3.7.1



Doc.


Day


Nam

of

ben-

efi-

ciarj


eFol.


Bank


Trading
inven-


Cost of
materi-


Wag


es


Creditors
control


Sundries ac-
counts




tory


als






AmountFol.


Details









































































































































































































































































































































































































































































































































































































































Table 4.86



4.9.6 Asessment



127



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.87



4.9.7 Memorandum

ACTIVITY 1

ASSIGNMENT 1

TRIAL BALANCE OF ENSLIN DEALERS AS AT 30 NOVEMBER 2003



128



CHAPTER 4. TERM 4







Dt.


Cr.


Balance Sheet section








Capital


Bl




30 000


Withdrawals


B2


100




Vehicles


B3


7 800




Equipment


B4


4 640




Trading inventory


B5


2 710




Debtors control


B6


2 750




Bank


B7


21 345




Creditors control


B8




11 253










Nominal Accounts section








Sales


Nl




6 500


Cost price of sales


N2


4 960




Wages


N3


300




Stationery


N4


652




Telephone


N5


135




Packaging material


N6


1 740




Repairs


N7


621




Totals




47 753


47 753











Table 4.88

ACTIVITY1

ASSIGNMENT 2

CASH PAYMENTS JOURNAL OF HATTING DEALERS - APRIL 2003 CPJ 3.7.1



Doc


Day


Nam

of

paye


eFol

3


Bank


Trading
inven-
tory


Cost of
materi-
als


Wages


Creditors
control


Sundries Ac-
count


Amoui


ltFol


Details


continued on next page



129



200



Perfectum
Builders



80
000



80
000



B2



Land
and
Build-
ings



201



Stylish
Equip-
ment



4
500



4
500



B3



Equi



pment



202



Casl



180



180



B8



Change



203



Care
Ltd



2
675



2
675



204



Casl



560



560



205



10



Trust
Bro-
kers



600



600



No



Insurance



206



14



Casl



560



560



207



ZY

Whole-
salers



6
130



5
950



180



N6



Stat: onery



208



16



Larn
Fur-
nish-
ers



10



3
760



3
760



209



17



Care
Ltd



2
896



2
896



210



Casl



560



560



211



Wescpo

Dis-

trib-

u-

tors



3

875



3

875



212



28



Casl



560



560



213



30



J

Hen-

ning



2
110



2
110



N7



Sala: - y



continued on next page



130



CHAPTER 4. TERM 4



214




Benj
Whc

salei


le-

3


14
994
















14
994




















123
960


-


9

825


-


5
571


-


2
240


-


18
754


-


87
570


-














B7




B5




N8




N9




B9













Table 4.89



ACTIVITY1

ASSIGNMENT 2

CASH RECEIPTS JOURNAL OF HATTING DEALERS



APRIL 2003 CRJ 3.7.1



Doc Day DetaiBol



Analysis



Bank



Sales



Selling
costs



Current
income



Debtors
control



Sundries Ac-
count



Amou nFol Detai



01



P.
Hat

ting



105
000



105
000



105
000



Bl



Capital



KR



Services
pro-
vided



2
160



2
160



2
160



02



V.

Jan&en



660



660



Blommie

Florists



500



500



N4



Rental

in-

comle



KP



Sales



5
800



6
960



5
800



4
600



03



14



D.

Co-

ct-

zee



300



300



300



KR



17



Sales



3

820



3

820



2
440



KR



Services
pro-
vided



3

220



7
040



3

220



continued on next page



131



04


21


G.

Fer-

reir<


i


200




















200












KR




Sale


s


7
620


-


7
820


-


7
620


-


5
740


-


















KR


25


Ser^
pro-
vide


ices
d


1
736




1
736












1
736
















05


28


V.
Jan


ien


246


-


















246


-










KR




Sale


s


1
944


-


2
190


-


1
944


-


1
406


-






























133


-


19


-


14


-


7


-


1


-


105


-


















206




184




186




116




406




500




















B7




Nl




N3/


B5


N2




B6













Table 4.90

ACTIVITY1

ASSIGNMENT 2

CREDITORS JOURNAL OF HATTING DEALERS FOR APRIL 2003 CJ 3.7.1



Invoi


leDay


Credi


tdfal


Creditors


Trading


Cost


of


Stationery


Sundries Account


control


inventory


materials




Amoun; Fol


Details


100


3


Larni
Fur-
nish-
ers


e


3

760
















3

760




B3


Equij


101


5


Beng

Whol
salers


e-


8
844




8
844




















102


6


Willo
Sup-
pli-
ers


w


2
500








2
500






















continued on


next page







132



CHAPTER 4. TERM 4



103


7


Pen
and
Pa-
per




228












228












104


9


Beng

Whol
salers


e-


4
750




4
750




















105


15


Toled
Mo-
tors





28
660
















28
660




B4


Vehic


106


17


Willo
Sup-
pli-
ers


w


3

420




3
000




420
















107


19


Pen
and
Pa-
per




106












106












108


26


Beng

Whol
salers


e-


1
400




1
400




























53


-


17


-


2


-


334


-


32


-














668




994




920








420
















B8




B5




N8




N6













Table 4.91



ACTIVITY 1

ASSIGNMENT 2

Debtors Journal of Hatting Dealers DJ 3.7.1



Inv.


Day


Debtors


Fol


Sales


Selling costs




4


V Jansen




660


495




10


D Coetzee




890


712




13


G Ferreira




260


128




16


D Coetzee




106


84




17


V Jansen




246


184




26


G Ferreira




340


272










2 502


1 875










B6/N1


B5/N3



Table 4.92



ACTIVITY

ASSIGNMENT 2

General Ledger of Hatting Dealers



133







Balance Sheet Section








Date


Details


Fol


Amoun;


Date


Details


Fol


Amoun


;






Capital 2003


Bl


















Apr.


1


Bank


CRJ3.7


1105
000


-






Land and Buildings


B2






Apr.


2


Bank


CPJ3.7


180
000




















Equipment


B3






Apr.


3


Bank


CPJ3.7


14 500


















3


Credito
con-
trol


rsCJ3.7.1


3 760
























8 260




















Vehicles


B4






Apr.


15


Credito
con-
trol


rsCJ3.7.1


28
660




















Trading Inventory


B5






Apr.


30


Bank


CPJ3.7


19 825




Apr.


30


Trading
In-
ven-
tory


CRJ3.7


114
186






30


Credito
con-
trol


rsCJ3.7.1


17
994






30


Trading
In-
ven-
tory


DJ3.7.1


1 875




















Balance


b/f


11

758












27
819












27
819




Mei


1


Balance


a/b


11

758
















continued on next page



134



CHAPTER 4. TERM 4







Debtors Control


B6






Apr.


30


Sales


DJ3.7.1


2 502




Apr.


30


Bank


CRJ3.7


11 406




















Balance


b/f


1 096












2 502












2 502




Mei


1


Balance


c/f


1 096
















Table 4.93






Bank


B7






Apr.


30


Total
Re-
ceipts


CRJ3.7


1133
206




Apr.


30


Total

Pay-

ments


CPJ3.7


1123
960




















Balance


b/f


9 246












133
206












133
206




May


1


Balance


c/f


9 246




















Change


B8






Apr.


4


Bank


CPJ3.7


1180




















Creditors Control


B9






Apr.


30


Bank


CPJ3.7


118
754




Apr.


30


Sundry
pur-
chases


CJ3.7.1


53
668








Balance


c/f


34
914
























53
668












53
668
















May


1


Balance


b/f


34
914








Nominal Accounts Section












Sales


Nl


















Apr.


30


Bank


CRJ3.7


119

184




continued on next page



135

















30


Debtors
con-
trol


DJ3.7.1


2 502
























21
686








Current Income


N2


















Apr.


30


Bank


CRJ3.7


17 116


-






Selling Costs


N3






Apr.


30


Trading
inven-
tory


CRJ3.7


114
186




















Trading
inven-
tory


DJ3.7.1


1 875
























16
061




















Rental Income


N4


















Apr.


7


Bank


CRJ3.7


1500








Insurance


N5






Apr.


10


Bank


CPJ3.7


1600




















Stationery


N6






Apr.


14


Bank


CPJ3.7


1180


















30


Credito
con-
trol


rsCJ3.7.1


334
























514




















Salary


N7






Apr.


30


Bank


CPJ3.7


12 110




















Cost of Materials


N8






Apr.


30


Bank


CPJ3.7


15 571


















30


Credito
con-
trol


rsCJ3.7.1


2 920
















continued on next page



136



CHAPTER 4. TERM 4











8 491




















Wages


N9






Apr.


30


Bank


CPJ3.7 12 240

















Table 4.94

ACTIVITY 1

ASSIGNMENT 2

TRIAL BALANCE OF HATTING DEALERS AS AT 30 APRIL 2003







Dt.


Cr.


Balance Sheet section








Capital


Bl




105 000


Land and Buildings


B2


80 000




Equipment


B3


8 260




Vehicles


B4


28 660




Trading inventory


B5


11 758




Debtors control


B6


1 096




Bank


B7


9 246




Change


B8


180




Creditors control


B9




34 914










Nominal Accounts section








Sales


Nl




21 686


Current income


N2




7 116


Cost price of sales


N3


16 061




Rental income


N4




500


Insurance


N5


600




Stationery


N6


514




Salary


N7


2 110




Cost of materials


N8


8 491




Wages


N9


2 240








169 216


169 216











Table 4.95



137

4.10 Analysing financial statements 10

4.10.1 ECONOMIC AND MANAGEMENT SCIENCES

4.10.2 Grade 9

4.10.3 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.10.4 Module 24

4.10.5 ANALYSING FINANCIAL STATEMENTS

Financial Statements: Analysis and Use for Decision Making

ACTIVITY 1:

To analyse financial statement[LO 3.5]

Financial statements are used as a way of discovering the financial position and financial results of a
business.

Financial figures, contained in the financial statements, usually do not tell outsiders very much. In order
for the figure to be of any value, they must be compared with the results of previous years or with the results
of other businesses in the same industry.

Financial statements are also used to determine ratios and trends.

The following ratios can be used in decision making:

1. Liquidity:

This is the ability of the business to honour its obligations (pay its bills) and is expressed in the ratio
current assets to current liabilities.
Current assets : Current liabilities
40 000 : 16 000
2,5 : 1
This indicates good liquidity, as the norm for businesses is 2:1.

2. Profitability:

This indicates the profitability of the funds invested in the business and is calculated as follows:

Net profit 100 20000 100 _ ln t/

Capital A 1 200000 A 1 ~ lu/0

If the percentage is significantly higher than the current bank rate of �15%, the profitability is good.

3. Solvency:

This indicates by how much the total assets of the business exceed the total liabilities. It is calculated
as follows:

Total Assets : Total Liabilities

50 000 : 20 000

2,5 : 1

The solvency is good as the norm is 2:1.

ASSIGNMENT:

• Use the information below to determine the following:

(a) Profitability

(b) Solvency

(c) Liquidity

Comment on the answer to each and give reasons why it is good or bad.

• The net profit of the company is R35 000

• The capital is R100 000



�This content is available online at <http://cnx.Org/content/m31777/l.l/>.



138 CHAPTER 4. TERM 4

• Fixed assets are R90 000

• Current assets are R30 000

• Current liabilities are RIO 000

4,10.6 Assessment



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.96



4.10.7 Memorandum

ACTIVITY 1

(a) Profitability:
nv x 100



Capital 1

35000 x 100



100000 1

= 35%

Very good profitability measured against a bank rate of 15%.

(b) Solvability:

Total Assets : Total Liabilities

120 000 : 10 000

12 : 1

A good solvability ratio, as the liabilities are covered 12 times by the assets.

(c) Liquidity:

Current assets : Current liabilities

30 000 : 10 000

3 : 1

A good liquidity ratio measured against the norm of 2:1.



139

4.11 Forms of credit purchases and methods of payment 11

4.11.1 ECONOMIC AND MANAGEMENT SCIENCES

4.11.2 Grade 9

4.11.3 BUSINESS, CONSUMER AND FINANCIAL KNOWLEDGE AND
SKILLS

4.11.4 Module 25

4.11.5 FORMS OF CREDIT PURCHASE AND METHODS OF PAYMENT

ACTIVITY 1:

To investigate forms of credit purchases and methods of payment and to be able to make recommendations

[LO 3.6]

As the consumer does not always have sufficient cash to make purchases, various forms of credit business
have been developed. This means that purchases are made now, but payment is only made at a later stage.
Credit purchases can be made in a number of ways - a very common way is to buy on account.

The consumer opens an account at a particular shop and makes his purchases. At the end of the month
he receives an account and pays a monthly amount.

Hire-purchase transactions are another form of credit used for buying expensive items such as a car, for
example. A fixed instalment is paid every month until the entire purchase price, plus interest, has been paid.

Today, credit cards are a very popular method of credit. Various purchases can be made during the
month and a copy of all the client's purchases is sent to his bank. At the end of the month the amount owing
is deducted from the client's bank account.

A consumer may pay for his purchases in a number of ways. The most common way of making payments
is by means of cash, but it is not safe to carry large amounts of cash. For this reason increasing use is being
made of electronic modes of payment where money is not handled physically at all.

A popular way of paying is by cheque. The holder of a cheque account instructs his bank, by means of
the cheque, to pay a specific amount of money to a certain person. The instruction is carried out when the
cheque is presented for payment at a bank.

Payments may also be made through the Post Office by means of postal orders. These payments can
safely be sent to any place in the country. The amount of money you want to pay, plus commission, is paid
in at a post office and the postal order is sent to the person concerned. On receipt of the postal order, it
can be exchanged for cash at the post office.

Debit cards may also be used for payments. The money is deducted electronically from ones bank account.
This is a safe method of payment, as one need not carry cash with one. One can also not spend more money
than one had in ones bank account. The bank balance can be checked at any time at an automatic teller
machine.

Traveller's cheques are useful when travelling abroad. The money is paid in at a bank and in exchange for
it one receives traveller's cheques that one can use to make payments in other countries. Traveller's cheques
are provided in American, Canadian or Australian dollar, Euro, British pound, Swiss franc, Japanese yen
and Saudi rial.

Although an increasing number of people are buying on credit, it is still better to pay cash for ones
purchases.

Cash purchases can be made at any shop. Some businesses are prepared to give a discount for cash.

Credit is expensive, because interest and administrative costs have to be added.

Paying cash means that one will not purchase more than one can afford. Easy credit can result in ones
spending money that one does not actually have. When the money has to be repaid, financial problems can
occur.



lr This content is available online at <http://cnx.Org/content/m31778/l.l/>.



140 CHAPTER 4. TERM 4

In a world of credit and electronic payments there is still a place for cash payments.
RESEARCH ASSIGNMENT:

• Collect information from financial institutions and shops about different methods of payment.

• Determine which methods will be the best for the following people and give reasons for your answers:

(a) a professional person

(b) a student

(c) a farmer

(d) a pensioner

4,11,6 Assessment



Learning Outcomes (LOs)



LO 3



MANAGERIAL, Consumer and Financial Knowledge and SkillsThe learner will be able to demonstrate
knowledge and the ability to apply responsibly a range of managerial, consumer and financial skills.



Assessment Standards (ASs)



We know this if the learner :



3.1 completes a basic income statement and balance sheet for a service and retail business;



3.2 investigates the public relations, social responsibility and environmental responsibility strategies and
actions of different businesses and organisations;



3.3 completes cash and credit transactions in the books of service and retail businesses;



3.4 uses keyboard skills and function keys in developing, storing, retrieving and editing business docu-
mentation;



3.5 analyses financial statements for decision-making at a basic level;



3.6 differentiates between the forms of credit purchases.



Table 4.97



4.11.7 Memorandum

ACTIVITY 1

(a) A professional person - By virtue of his professional status such a person can enjoy certain benefits at
banks, such as a special cheque account and other facilities. As professional people do not have much time
to spend on their personal financial affairs, a cheque account and credit cards as well as electronic modes of
payment are useful. Traveller's cheques are handy on overseas trips.

(b) Student - As students do not earn a full-time income they often have special needs for which most
banks cater by means of special packages. Credit cards are handy if self-discipline is exercised so that not
too much is purchased on credit. Debit cards are handy because the student cannot spend more money than
he has in his account.

(c) Farmer - As farmers annually have the proceeds of crops and must make payments regularly, a cheque
account with overdraft facilities are suitable. A monthly bank statement and copies of cheques, or cheque



141

counterfoils assist in checking payments and in planning. Distance is usually a limiting factor and in this
case cheque payments and electronic payments are advantageous.

(d) Pensioner - It is dangerous for older people to carry cash. They should rather make use of credit
cards or debit cards to make their payments.



142 ATTRIBUTIONS

Attributions

Collection: Economic and Management Sciences Grade 9

Edited by: Siyavula Uploaders

URL: http://cnx.org/content/colll074/l-l/

License: http://creativecommons.Org/licenses/by/3.0/

Module: "The flow of money, production factors and goods (revised)"

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URL: http://cnx.org/content/m21445/Ll/

Pages: 1-3

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Explaining business enterprises"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21444/Ll/

Pages: 3-4

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "The economic cycle and markets"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21446/Ll/

Pages: 5-7

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "The foreign sector in the economic cycle"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21450/l-l/

Pages: 7-12

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Price-fixing through supply and demand"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21461/Ll/

Pages: 12-16

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "The influence of trade unions"

By: Siyavula Uploaders

URL: http://cnx.org/content/m22933/Ll/

Pages: 16-19

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/



ATTRIBUTIONS 143

Module: "The national budget, growth and economical equalities"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21498/l-l/

Pages: 19-22

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Reconstruction and development programme"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21501/l-l/

Pages: 23-27

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Regional and international agreements"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21503/l-l/

Pages: 27-29

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Savings and investment"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21504/l-l/

Pages: 30-31

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Productivity"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21506/l-l/

Pages: 31-33

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "An idea for an enterprise"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21509/l-l/

Pages: 35-40

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Develop a business plan"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21515/l-l/

Pages: 40-43

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Ownership of a business"

By: Siyavula Uploaders

URL: http://cnx.org/content/m21516/l-l/

Pages: 43-45

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/



144 ATTRIBUTIONS

Module: "Difference between an income statement and a balance sheet"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31771/l-l/

Pages: 47-60

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Social and environmental responsibilities of businesses"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31769/Ll/

Pages: 60-62

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Recording cash transactions of service and commercial enterprises"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31768/l-l/

Pages: 62-76

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Recording credit transactions of commercial and service enterprises"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31766/l-l/

Pages: 77-82

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Recording payments received from debtors"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31772/l-l/

Pages: 82-87

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Recording payments to creditors"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31773/l-l/

Pages: 87-98

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Ledger entries"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31774/l-l/

Pages: 98-106

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Transferring the auxiliary journals to the ledger"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31775/l-l/

Pages: 106-120

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/



ATTRIBUTIONS 145

Module: "Drawing up a trial balance"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31776/l-l/

Pages: 121-138

Copyright: Siyavula Uploaders

License: http://creativecommons.Org/licenses/by/3.0/

Module: "Analysing financial statements"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31777/Ll/

Pages: 139-140

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/

Module: "Forms of credit purchases and methods of payment"

By: Siyavula Uploaders

URL: http://cnx.org/content/m31778/Ll/

Pages: 141-143

Copyright: Siyavula Uploaders

License: http://creativecommons.org/licenses/by/3-0/



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Since 1999, Connexions has been pioneering a global system where anyone can create course materials and
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