Weeks 2-3: Topic 1: Financial Literacy: Income and expenses - pg. 66 - 74

Question 1

What is personal income?

Answer 1

Personal income is the amount of money you get as an individual. It is the money that you have to live on.

Question 2

Fill in the blanks 1:

2.1. TYPES OF PERSONAL INCOME

1. Employment
   This is the money earned when people work for an ________. You get paid a salary/______ for the time spent at work.
2. Investments
   This is when your money works for you. You earn income on investments in the form of ________, dividends or _____ income for letting out your assets.
3. Running your own business
   This is money earned from ________ working for you. Through their efforts, you earn a ______.

Answer 2

1. employer; wage
2. interest; rent
3. people; profit

Question 3

What are personal expenses?

Answer 3

Personal expenses are money spent by a person/household on personal expenses. Personal expenses include the amounts paid for goods and services, such as groceries, water, electricity, and rent.

Question 4

What is net worth?

Answer 4

Net worth is:
All the person's possessions/assets 
minus
all the person's liabilities/debt
equals
net worth.

Question 5

What is operating income?

Answer 5

Operating income is a business’s main source of income/money that it gets from operating/running the business.

Question 6

What is interest income?

Answer 6

A business receives interest on a favorable bank account/on investments such as fixed deposits at a bank.

Question 7

Name 4 types of other income that a business can receive.

Answer 7

1. Rent received for renting out property, called rent income.
2. Discount received for prompt payments of accounts.
3. Commission income. The business sells products on behalf of another business and receives a percentage commission on sales.
4. Donations received.

Question 8

What are capital expenses?

Answer 8

When a business buys assets, these expenses are called capital expenses. These assets are used to carry out business and will last for more than a year.

Question 9

What are operating expenses?

Answer 9

Operating expenses are the costs of running the business and paying for day-to-day activities. Theses include salaries, water, and electricity.

Question 10

What are financing expenses?

Answer 10

The business will have to pay interest on the money borrowed and this is called a financing expense.
Examples include interest on loan, interest on mortgage bond, interest on overdraft, and interest on overdue accounts.

Question 11

What are wasteful expenses?

Answer 11

Businesses should try to control their expenses to avoid wasting money which will decrease their profit.
Examples are electricity, paper and printing wastage, interest on overdue accounts, telephone and internet usage, and salaries and wages.

Question 12

What are investments?

Answer 12

Investments mean putting money aside for future use, like savings, except for a longer period of time.