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Jared > EMS > Flashcards

EMS Flashcards

EMS

1
Q

What are the 2 types of businesses?

A

Service business
Manufacturing business
Trading business

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2
Q

What do manufacturing businesses do?

A

Use components, parts or raw materials to make finished goods

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3
Q

What do trading businesses do?

A

Work with different kinds of products which are sold for consumer, business or government purposes.

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4
Q

Trading businesses can be divided into 2 sections?

A

Wholesalers

Retailers

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5
Q

Explain what a wholesaler is.

A
  • Buy goods in large quantities from manufacturers and importers
  • resell goods to other suppliers and retailers
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6
Q

What is a retailer?

A

Sells goods or stock in small quantities directly to consumers

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7
Q

Products in a trading business are known as any of the following …. (3 things)

A
  • trading stock
  • inventory
  • goods
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8
Q

Why is stock of a business considered an asset?

A

It has value and can be sold for cash

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9
Q

What are current assets?

A

Assets that have a short life span (less than 12 months)
with the intention of using or selling the asetts.
Trading stock is a current asset.

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10
Q

Why would the mark up of milk be less than the mark up for a jar of jam?

A

Milk needs to be sold quickly (it has a short shelf life)

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11
Q

The amount that is added to the cost price to get the selling price is called

A

gross profit

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12
Q

When stock is sold to customers it is recorded in the ___________?

A

Sales account

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13
Q

The Sales account is an _________?

A

income account and represents the selling price.

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14
Q

When stock is sold, the business has less trading stock and this transaction is recorded in

A

Cost of sales

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15
Q

Cost of sales is

A

an expense account and represents the

cost price of goods sold.

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16
Q

In the CRJ there is a Sales column which shows the _______?

and a Cost of sales column which shows the __________?

A

selling price of goods sold

cost price of the goods sold.

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17
Q

What is the formula for calculating the Selling Price

A

SP = CP x (100 + MU) / 100

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18
Q

What is the formula for calculating the Cost Price

A

• CP = SP x (100) / 100 + MU

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19
Q

What is the CPJ

A

Cash Payment Journal

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20
Q

What is the CRJ

A

Cash Receipt Journal

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21
Q

Whenever a sale takes place, there are two double entries that will be
recorded.

A

One is for the selling price and is debit bank and credit sales;
the other is for the cost price and is debit Cost of sales and credit trading stock.

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22
Q

There are three major economic systems namely

A

planned economy,
market economy and
mixed economy.

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23
Q

A planned economic system is a system where

A

the government owns the land
or natural resources and businesses and pays the workers.
The government decides what goods and services people need and set the
prices of these goods and services.

24
Q

A market economic system is a system where

A

individuals own the land or
natural resources and businesses, and these owners pay the workers for
making goods and services.

25
Q

A mixed economic system is a system where

A

both the government and

individuals own land or natural resources and businesses.

26
Q

The advantages of a planned economic system are:

A
  • Because it is fully controlled by the government, it is less subject to inflation and downturn than other types of economies.
  • The focus of a planned economy is usually on the benefits of the country and its citizens.
27
Q

The disadvantages of planned economic system are:

A
  • Individuals have little incentive to be innovate.

* Goods are often of poor quality since there is a lack of profit motive.

28
Q

The advantages of market economic system are:

A

o Skilled labour is valuable

o The market (where profits can be made) motivates producers to produce goods that consumers will want to buy.

29
Q

Disadvantages of market economic system:

A

o Unemployment and high inflation can occur.

o Advertising creates false needs.

30
Q

Advantages of mixed economic system:

A

o It is more stable than market economy because government regulations can prevent inflation.
o Citizens benefit from government support such as grants and subsidies and free social services such as health care and education.
o Even though private businesses are taxed, they still prosper.
• Disadvantages of mixed economic systems:
o High regulation fees and taxes raise prices and restrict consumer spending.
o It is not as efficient in meeting the needs of consumers when compared to market economies.

31
Q

The circular flow of income in a closed economy involves three participants,
namely

A

consumers, producers and the government.

32
Q

In a closed economy the product market is where

A

goods and services are

bought and sold,

33
Q

and the factor market is where

A

factors of production are

bought and sold.

34
Q

The circular flow of income diagrams illustrate

A

what happens in the real world

between households, businesses and the government.

35
Q

What is an economic system?

A

a system of production, distribution (of goods and services) and
resource allocation within a country (community).

36
Q

Explain scarcity in terms of an economic problem

A

There are not enough resources available to continuously supply people with all their needs
and wants. Resources need to be rationed in such a way so as to supply the population with
that which they need the most. Resource scarcity forces people to carefully consider WHAT
to produce and also, how to use the four factors of production in the best possible way.

37
Q

What is socialism?

A

Socialism is an economic and political system where the ways of making a living (factories, offices, etc.) are owned by the workers who run them and the people who depend on them, meaning the value made belongs to the people who make it, instead of a group of private owners.

38
Q

What is communism?

A

Communism’s aim is to set up a better version of society. One that will have everyone own everything but controlled by the government.

39
Q

What is capitalism?

A

the government plays a secondary role. People and companies make most of the decisions, and own most of the property. … The means of production are largely or entirely privately owned (by individuals or companies) and operated for profit.

40
Q

Characteristics of a Free Market Economy:

A

• Factors of production are owned and controlled by private individuals:

  • Entrepreneurs decide what to produce:
  • Entrepreneurs decide how production will take place:
  • Individuals decide what goods and services they would like to consume:
41
Q

Planned Economy Characteristics

A
  • Government controls the factors of production:
  • Government decides what goods are services to produce:
  • Government decides how production will take place:
  • Government decides who will consume the goods and services:
42
Q

When a business allows customers to buy goods and services and pay for it
at a later stage, it is known as

A

credit sales

43
Q

A debtor is a

A

credit customer who owes the business money.

44
Q

What records all sales on credit - the source document used is
a duplicate invoice.

A

The Debtors journal

45
Q

When debtors pay money they owe the business it will be recorded in the ?

A

Cash Receipt Journal

46
Q

Who offers protection to debtors as a business must meet certain criteria
before they allow a person to be a debtor.

A

The NCA

47
Q

When a debtor returns goods that he previously bought on credit it is called

A

Debtors Allowances.

48
Q

The steps in the Accounting cycle are as follows:

A 
o Make a transaction,
o Complete the source document,
o Record the transactions in journals
o Post the journals to the General Ledger
o Draw up a trial balance
o Prepare the Financial statements.
49
Q

What is supply and demand?

A

Demand refers to how much, or the quantity of a good or service is desired by
buyers or consumers.
• Supply refers to how much the market can offer.

50
Q

The point where the demand and supply graphs intersect is known as

A

the

equilibrium point.

51
Q

There are three sectors in the South African economy, namely

A

the primary,
secondary and
tertiary sectors.

52
Q

The primary sector is the sector in which

A

the initial exploitation of natural

resources take place.

53
Q

The secondary sector is the sector in which the

A

processing of primary goods

takes place.

54
Q

The tertiary sector is the sector in which

A

all the services used in the other

sectors are supplied

55
Q

What kind of skills are required in the 3 sectors of the economy?

A

More physical work and skills are required in the primary and secondary
sectors while managerial and mental skills are needed in the tertiary sector

56
Q

What does NCA stand for?

A

National Credit Act

Jared (10 decks)

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