Topic 6 – Accounting concepts. p61

When we read the case study on p.61&62, you will see that:

Thabo used his own capital to start his own Informal Business in the service industry – qualified spray painter.

The capital (p61) from his pension pay out was used to open his business. The owner (Thabo) basically loaned this money to the business. (Always remember that your personal money and your business money have to be separated).

This is why this money will always be seen as a liability (p64)

(Owners capital contribution remains part of the business as long as the business exists. Any profits (p65) earned

are added to the original amount. While losses (p66) and drawings (p62) from the owner are deducted from the profit.

The final amount is called the owners equity (p62)

p.63

p.64

Non-current liabilities/Long-term liabilities

Look for more examples

in your text book.

p.65

p.65

Income Money earned by a business or a person

Expenses/ costs Money spent on resources in a business in order to earn an income.

Profit (p.65) Income is greater than expenses (costs).

Losses (p.66) When costs exceed income.

p.66

You can add Activity 6.1 to your summaries. Question and answer.

Types of income.

1. Current income or sales.2. Rent income. 3. Discounts.4. Profit from selling assets.

Types of business expenses.

1. Telephone accounts2. Water and electricity. 3. Wages and salaries.4. Stationary used by the business.5. Consumable goods the business uses to make

goods the business sells.

p.66

p.67

Receipts Payments

Total receipts R Total payments RTotal receipts – Total payments (cash surplus/deficit) R

p.67

Receiving money,Money that you pay for your “needs and wants”

p.68

When the money borrowed from a bank is used to make capital investments, it’s usually a boost to the economy of any country for the following reasons.

It creates work opportunities. It promotes the country’s economical growth. It stimulates the country’s needs and wants.

p.70

List different ways how you can save money.

Why do businesses keep financial records?

Study and understand the Table 6.2 - p.70