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Test guide by Muhsin Parker > EMS Exam 22 Nov > Flashcards

EMS Exam 22 Nov Flashcards

1
Q

What does accounting do

A

1) It provides information to the owner of a business
2) It tells us how the business has spent money and where it comes from
3) It must be presented in such a way that the functioning of a business is understood

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2
Q

What is capital

A

Capital is anything in a business that has value

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3
Q

What possessions of business is included as capital

A

Capital can include the value of a businesses possessions like

Computers 
Desks
Cars
Furniture
Property 
And other goods
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4
Q

What is an asset

A

An asset is the correct term for possessions that a business has

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5
Q

What are assets used for

A

Assets are used to provide customers with a service

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6
Q

Anything that a business has that it uses to provide a service is an asset
What are all 4 sections

A

Land or buildings
Equipment
Vehicles- cars or delivery vehicles
Money possessed by the business

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7
Q

What is a liability

A

Liabilities are the debt incurred (gained) by a business

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8
Q

What can liabilities include

A

loans from banks
They are charged interest on outstanding loans
Money owed to suppliers

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9
Q

What is income

A

All the money that comes into a business via sales of goods or services

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10
Q

What are the things that money can be generated by, in a business

A

Selling goods to clients
Selling services
Renting property to other people
Earning interest on money invested in banks

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11
Q

What are these

Selling goods to clients
Selling services
Renting property to other people
Earning interest on money invested in banks

in accounting terms

A

Sales (For selling goods and services)
Current income
Rent income ( generated from renting out your property)
Interest income

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12
Q

What are expenses

A

These are the cost of running a business

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13
Q

Give 4 examples of expenses

A

1) Cost of rental
2) Cost of water
3) Cost of electricity
4) Wages that need to be paid
5) Cost of raw materials or products
6) Cost of advertising

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14
Q

True or False

Profit is the main idea behind people making a business

A

True

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15
Q

Is profit used to measure the success of a business

A

Yes profit is used to measure the success of a business

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16
Q

When is a profit made

A

A profit is made when a
business’ income exceeds its
expenses

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17
Q

What is the formula for calculating profit and loss

A

Income - Expenses = Profit

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18
Q

When is a loss made

A

When a business’ expenses are greater than its income ( the money that it has earned),
then the business is running at
a loss,

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19
Q

What does it mean when a business is in the “red”

A

when a business is ‘in
the red means that the business is
running at a loss,

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20
Q

What does it mean when a business is in the “black”

A

A business that is in the black is a business that is

making a profit

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21
Q 
Take Note 
1. Purchase of equipment
is not included,
as equipment becomes an
asset for a business.
and
A 
2. Loans are not included as
loans are liabilities and not
expenses. (The interest on
the loan, is, however,
recorded as an expense.)
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22
Q

Remember All business owners should open a banking account in the name of their business and

A

It is important to open an account that best suits
your business.
It is essential that an account should be opened to enable deposits and withdrawals to be made.

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23
Q

Where would you set up a business bank account

A

A meeting with your bank manager will

help.

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24
Q

Business banking is a company’s financial
dealings with a banking institution
what will it provide

A

Business loans
Savings account
Credit
Cheque accounts

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25
Q

What do monthly bank statements enable clients to keep accurate records of

A
  1. Money going out of their account

2. Money coming into- their account.

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26
Q

A bank statement is an official
document, prepared by the bank,
what does it display

A

It displays money, that has
been deposited; as well s money
that has been paid out.

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27
Q

Look at the bank statement made by you for more info

A

It will show you all the details

Skip this question

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28
Q

What security is there to keep bank statements safe

A

Banks require clients to enter
a code before they are able to-
read their statements.

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29
Q

How can Clients receive interim statements

A

Clients can receive interim
statements by:

  1. Using internet banking.
  2. Using an ATM.
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30
Q

What is the production process

A

This is when the business uses raw materials, ideas and knowledge to produce goods or services for the marketplace.
This includes when raw materials are transformed into products or when ideas are transformed into services.

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31
Q

What are The materials that a business uses in the production process are referred to as

A

The materials that a business uses in the production process are referred to as inputs

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32
Q

What are Goods or services that the production process makes are referred to as

A

Goods or services that the production process makes are referred to as outputs

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33
Q

If a company made a table what would the inputs be

A

The inputs will include things, wood, glue, screws, nails, and countertops.

And the output would be the table

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34
Q

Also, note that some of the components are already produced by other businesses.
For example the wood has been transformed to chipboard or melamine.

A

While the nails, screws and hinges have been manufactured from metal.
The glue has been manufactured from raw materials.
The countertops are made from either wood or melamine, or from natural or artificial stone.

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35
Q

What is labour

A

The work done by workers in the production process.

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36
Q

What are the 6 main inputs to the production process

A

1) Labour: The work done by workers in the production process.
2) Land: This can include the land that the factory is built on or the land where the raw materials are found or grown.
3) Water: The water used in the factory or the water used to grow things.
4) Energy: The electricity used during the production process.
5) Capital: The money that is used to build the factory, buy the raw materials, pay for the running costs and pay the employees.
6) Entrepreneurship: This includes the thinking, knowledge and ideas that puts the manufacturing process into place.

37
Q

What is the primary sector

A

When raw materials are grown or extracted from the earth.

38
Q

What is the secondary sector

A

This is where the raw materials are manufactured into products or services.

39
Q

What is the Tertiary Sector:

A

This is where the goods or services are sold,

All three sectors are linked.

40
Q

Why is it important for business owners to keep financial records

A

to know the financial wellbeing of their business

41
Q

What do they need to keep accurate records of

A
  1. All financial information
  2. How much money
    has come into-the
    business.
  3. How much has
    gone out of the
    business.
  4. They must know
    what they spent the
    money on.
42
Q

What contributes to financial records

A
  1. Documenty like contracts
  2. Bank statements received from banks
  3. Income statements which calculate a businesses profit
  4. Balance sheets to show how much the business is worth
43
Q

Who is interested in financial records

A
  1. Business owners
    They must know that their business is financially sound.
  2. Bank managers -
    Each business needs to have a bank manager.
  3. The employees -
    they need to know that the business is able to pay them an acceptable salary or wage.
44
Q

What is a salary

A

A person who is paid a fixed amount per month

45
Q

What is a wage

A

Someone who is paid by the hour

46
Q

Who does the financial records for a business

A

Business owners do- not usually do-the financial records themselves. They are usually done by
bookkeepers.

47
Q

Who keeps the school financial records

A

The bursar

48
Q

What is a business deal called

A

A transaction

49
Q

What are 4 examples of transactions

A
  1. Buying stock that the business can sell
  2. Paying wager or salary that the worker recieves
  3. Receiving money from customers
  4. Buying necessities from suppliers.
50
Q

Lets look at an example of financial records

A
  1. The purchase of hair dye and shampoo. - Cheque
  2. Interest earned from money
    in the bank. - Bank
    statement.
  3. Money received from
    customers. - Till slip
  4. Payment of water and
    electricity bill. EFT
  5. Paid the salary of an
    assistant. - EFT
  6. Rental received from another
    hairdresser who uses the
    salon. - Receipt

The cheque, bank statement, till slip, EFTs and receipt are all records of transactions. These are ‘Source Documents’.

51
Q

What are anual financial statements

A

Annual financial statements are financial records based on a 12 month consecutive time period

52
Q

All registered businesses will need to have their financial records audited and a auditers report signed off

What are the 4 types of auiditers

A

Unqualified audit
Qualified audit
Adverse audit
Disclaimer of audit

53
Q

What is the best type of audit that a business can recieve

A

An unqualified audit

54
Q

What is an unqualified audit

A

Often called av clean audit, this audit is a report that is
issued when the financial recovds provided are free of
any errorss or misrepresentations.

55
Q

What is a qualified audit

A

When a businesses financila records have not been maintained in accordance with accounting priciples, but no misrepresentations are identified

56
Q

What is a disclaimer of audit

A

On rare occasions an auditor is unable to- complete an accurate audit, This may occur because of an absence of appropriate financial records.

The auditor states that an opinion of the
business’ financial status could not
be determined.

57
Q

what is an adverse audit

A

The business’ financial recovds do- not conform to accounting principles the financial recovds provided by the business have been grossly misrepresented.

This is a sign of fraud

58
Q

What does an auditor do after an audit

A

After auditors have completed a business’ audit, they will sign it off anddate the document.

59
Q

Businesses in different sectors use resources as inputs.
Some of these resources are non-renewable, meaning that there is a limited supply of these resources.
name 2 examples

A

Fossil fuels and water

60
Q

Some of these resources are renewable which means that they have the ability to regenerate.
name 2

A

Examples include: wood, plants, solar, hydro and wind energy.

We must however be cautious with a resource like wood, because trees take a long time to grow.

We can class metals like gold and silver as renewable because we can recycle them, but we cannot recreate them.

61
Q

What can happen if we make the production process more efficient

A

By making their production processes more efficient, they can use less water and electricity.

They can use recycled resources where possible:

Using grey water.  
Using recycled plastic.
Using recycled metals. 
Using recycled paper. 
Using recycled glass.

They can also encourage their users to return plastic, metal, glass and paper components for recycling.

62
Q

What is economic growth

A

Economic Growth is the increase in the economy’s ability to produce goods and services over a specific period.

63
Q

What does GDP stand for

A

It stands for gross domestic product.

64
Q

What is GDP

A

The GDP is the total value of what a country produces over a specific period of time.

66
Q

What is economic growth measured as

A

It is measured as a percentage growth in the economy’s gross domestic product. (GDP)

66
Q

In order for the economy to grow, unemployment must be ………….. This is because when people are not earning they are unable to contribute towards a country’s sales and services.

A

In order for the economy to grow, unemployment must be low. This is because when people are not earning they are unable to contribute towards a country’s sales and services.

67
Q

What must goverments do to erradicate unemployment

A

Governments need to create more jobs in order to eradicate unemployment.

68
Q

When the value of a country’s goods and services increases, we say that the economy has

A

grown

69
Q

What bad things do we have in SA that contribute to low econimic growth

A

In South Africa we have:
High unemployment.
Inequality and poverty.
High HIV/Aids infections and generally poor levels of health.
High Levels of uneducated and unskilled people.

70
Q

What does a citezen have to be in order to contribute to the economy

A

A country’s citizens need to be healthy and educated in order for them to contribute towards the economy.

71
Q

Workers need to be as productive as they can.
In doing so they will be able to make their businesses more productive and contribute towards the economy.

what will being more efficient do

A

Being more efficient in the business’ production processes will save the business time and money.

72
Q

What are 3 problems that lower economic growth

A

Inequality and poverty
High HIV/Aids infections and general levels of health.
High levels of uneducated and unskilled people.

73
Q

For as long as people have been involved in production, there have been continual advances in technology.

Businesses embrace technology and in doing so they make the production process quicker and more efficient.

What are the advantages of technology

A

Machines work quicker than people.
Machines make less errors than people.
Machines can function day and night.
Machines do not get tired and are not distracted like people are.
Machines do not take time off for poor health like people do.

74
Q

What do euntropeneurs do

A

Entrepreneurs attempt to fill gaps in the market by supplying either products or services in exchange for income. Sometimes they employ other people.

75
Q

NAme 2 examples of needs

A 
Air
Water
Rest |
Sun
Food
76
Q

Name 3 exapmles of secondary needs

A 
Love
Security
Education
Income
Clothing
Transport
Health Care
Shelter
77
Q

Who satisfies needs and wants

A

An entrepreneur is a person who attempts to satisfy other people’s needs and wants in exchange for cash. He/She sees a gap in the market and responds accordingly.

78
Q

What does an entrepreneur do

A

An entrepreneur will want to generate income from owning his own business. In order to do so they take risks. When you start up your own business you require money (capital). There is always a chance that your business will be unsuccessful and that you will lose all your capital.

79
Q

Name 5 possible risks that entrepreneurs take.

A 
May go bankrupt. (overspending)
Crime influences business. (internal and external)
Legal difficulties.
Poor selection of workers. Also striking workers.
Poor planning and organization.
Insufficient knowledge of products.
Product does not sell.
Poor quality product. Competition.
Poor investing.
Natural or man made disasters.
Lack of capital.
Supplier lets you down.
Poor selection of location.
80
Q

Name 5 examples What makes entrepreneurs successful

A 
Using ideas that are successful.
Good management of staff.
Good choice of product(s)
Addressing customer’s needs.
Correct location for business.
Honest business dealings.
Good planning and organization.
Good selection of workers.
Accurate costing.
Quality equipment.
Safety measures
Provide solutions to problems.
They learn from and listen to others
They discuss their ideas with others
81
Q

What is one of the best ways to do market research

A

With a survey

82
Q

What does SWOT stand for

A

STRENGTHS, WEAKNESSES, OPPORTUNITIES and THREATS

83
Q

Explain SWOT

A

STRENGTHS of the business idea. These can include your knowledge, skills or talents

WEAKNESSES of the business idea. Perhaps
Some of the requirements to successfully run
your business are not available in your area.

OPPORTUNITIES. If you believe that you can achieve success, your idea becomes an opportunity.

THREATS. There are many threats to the success of a business.

84
Q

What must you include when making flyers for a stall

A

You must include the date and time of your activity, the venue, your product/s as well as the selling price/s. You must also give your stall a name.

85
Q

How do you calculate productivity

A

Output ÷ input = productivity

86
Q

How can employers get their workers to produce or sell more products?

A 
Offer workers fair pay.
Set goals.
Improve working conditions.
Offer incentives for good work.
Send them on training courses.
Employee of the month rewards.
Motivate staff in a positive way.
Provide quality equipment.
Send workers on team building exercises.
Provide transport for poor employees.
Allow workers to work in areas that they are best equipped for.
Promote the best workers.
Set fair working hours.
87
Q

Is it possible to increase production and at the same time maintain a quality product?

A

Yes

88
Q

What should you include when drawing up a business plan

A
  1. A logo that contains the name of the business and the name of the owner.
  2. Explain why you think that the business will be successful.
    3.
    Describe the product that you wish to market.
    4.
    Set attainable goals
    5.
    Give a detailed explanation of the cost of your materials. You will have to price these at a shop.
    6.
    List all your requirements. This includes equipment that you require.
    7.
    Determine how much you will add to the cost of your product in order to make a profit.

Test guide by Muhsin Parker (13 decks)

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