Grade 7 EMS 2021-01-20

Accounting concepts

KEY WORDS

Assets-Are the things that the business owns

E.g.) A car

Expenses-The things that the business pays for, more than once a year

e.g.) Water and Electricity

Income- Money that the business makes from selling products or providing
a service

Salary-Money that the business pays to its workers once in a month

Wages-The money that the business pays to its workers

Liabilities- The money that the business owes to other people

e.g.) A loan

Capital- Money used to start the business

TYPES OF BUSINESSES
Retail businesses- A business that buys and sells things, does not create
them.

e.g.) Pick ‘n Pay

Service businesses- A business that offers people experiences in exchange

for money.

-It does not create or sell things

e.g.)A cinema
Manufacturing business

-A business that creates things

e.g.)Clothes store

INCOME’S, EXPENSES, LOSS AND PROFIT

Income= Money earned from goods and services

 Sales
 Services
 Interest

Expenses=Costs running a business

 Water
 Electricity

Profit+

Losses-

Income-Expenses=Profit

Income- Expenses+= Loss

TYPES OF PERSONAL INCOME

(1)= Salaries and Wages

 Salaries=
 Full time
 Skilled
 Monthly
 Same amount each month
 e.g.) Teachers, lawyers , doctors
 Wages
 Part time
 Amount changes
 Semi/unskilled
 Daily/ weekly
 e.g.) Domestic workers , gardeners , labourers

(2) Interest on bank accounts

% of what u invested

EG)

12% annum of whatever amount you invested

The amount you put into the bank, the interest will grow, which
depends on how long you kept your money in the bank each year.

E.g.) Short period of time, long period of time

Different types of bank accounts

1. Savings account
2. Fixed deposits
3. 32 net day notice accounts
The amount of money you put into the savings account and the length of
time you plan to leave it there will depend on how much it grows over
time.

(3)Rent from property

People rent out or buy property to:

- To live in
- To work in
- To rent out
Tenants- People who move into the property, they pay rent to the owner
of the property.

The owner of the property has to earn an income from the property, the
rent has to be more than the cost of owning a property. They need to
make a profit.

(4) Profit from a business

Entrepreneurs- People who don’t work for somebody else they own their
own business; they create businesses to make money from it.

Its not a salaried position it is owners own business that is his personal
income.

PERSONAL EXPENSES
This is things people have to pay in order to live, so it’s everything going
out.

Personal expenses=Living expenses

Different people have different living expenses.

Most people would have to pay for things like:

 Rent
 Cell phones
 Food
 School fees
 Medical expenses
 Water
 Electricity
 Petrol
 Car payments
 Clothing
Always try to keep extra money away for emergencies, if u store money
away you can earn interest.

It is useful for people to draw up a budget each month to ensure that their
expenses do not cost more than their income.