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Summaries · Grade 7 EMS › Accounts, net worth and budgets in practice
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Accounts, net worth and budgets in practice

Asset, liability or expense; calculating net worth and profit; and a cash budget in practice. Read one part at a time and tap “I know this”. Then test yourself in the quiz.

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ItemWhat is it?
Delivery vehicleAsset
Loan from the bankLiability
Wages paid to workersExpense
Rent received from a tenantIncome
Someone who owes the business moneyDebtor
Someone the business owes money toCreditor
The cash budget in practice.
The cash budget in practice.
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Calculate

Assets−Liabilities=Net worth
Net worth: what is left after paying all debts.

A shop’s expenses: wages R8 000 + electricity R1 200 + telephone R500 = R9 700. If it earns R15 000, the profit is R5 300. If you spent more on ingredients than you earned, you made a loss. First check your records, then raise your prices or cut your costs.

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The cash budget

Receipts (money in)Payments (money out)
Money from selling shoesPurchase of stock
  • Expected receipts R30 000 and payments R26 000: a surplus of R4 000.
  • A club expects R8 000 in and R9 500 out: cut costs or find more income.
  • A bank statement shows money into and out of a bank account.
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Remember this and test yourself

Remember this: your summary
  • Delivery vehicle: asset. Bank loan: liability. Wages to workers: expense. Rent received: income.
  • Bakery: oven R30 000 + van R120 000 + building R250 000 = assets R400 000; minus loan R150 000 = net worth R250 000.
  • Profit: R15 000 − R9 700 = R5 300; loss: R6 000 − R7 500 = −R1 500.
  • A cash budget plans money expected in and out.
  • Start R5 000 + receive R20 000 − pay R18 000 = R7 000 at the end.

Write these points in your book. Read them again the night before the test.

Memory trick

Ask with every item: do I own it (asset), do I owe it (liability), or did I use it up (expense)?

Flash cards · Tap to turn over

Important words

First say what the word means, then turn the card over.

Test yourself · Part 2

True or false?

Read the question and the answer. Is the answer right? Tap True or False.

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    Follows CAPS for Grade 7 Economic and Management Sciences (EMS). Always check your teacher’s notes and textbook too.

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