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Summaries · Grade 7 EMS › Income, expenses and budgets in practice
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Income, expenses and budgets in practice

Kinds of income, fixed and variable expenses, surplus and deficit, and budgets in practice. Read one part at a time and tap “I know this”. Then test yourself in the quiz.

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Income and expenses

IncomeMeaning
SalaryFixed amount every month
WagePer hour or day
CommissionA percentage of every sale
RentSomeone pays you to live in your flat
InterestThe bank pays you on savings
EssentialNon-essential
Food for the family, rentBranded takkies when you have good shoes
A family makes a budget together.
A family makes a budget together.
Tap when you could tell someone without looking.

Drawing up a budget

ItemAmount
RentR4 000
FoodR3 000
TransportR1 500
SavingsR500
Total budgetedR9 000

Put a little aside for emergencies: unexpected costs always come along. Compare your budget with what you really spent, to see where you overspent. A surplus of R800? Save it or pay off debt.

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A stall’s statement

Thandi sells 40 cupcakes at R12: income R480. A stall takes in R950; ingredients cost R420 and the table R80: profit R950 − R500 = R450. Income R600 and expenses R750: a loss of R150.

Rule

A personal budget plans a household’s money; a business budget a business’s.

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A business’s income, expenses and savings

Income a business receivesExpenses a business has
Sales: goods that were soldRent for the premises
Fees for services provided, like a haircutWages and salaries
Rent income: part of the building is rented outWater and electricity
Interest income on money in the bankTelephone, advertising and stationery
Commission income for selling someone else’s goodsBank charges and interest on loans

A business saves too: it puts part of its profit aside for emergencies, new equipment or growth. It can invest the money in a fixed deposit at the bank to earn interest, or invest it back into the business, for example by buying a second oven so that it can bake more.

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Remember this and test yourself

Remember this: your summary
  • Salary: monthly; wage: per hour or day; commission: a percentage of each sale; also rent and interest.
  • Fixed expense: rent. Variable expense: electricity.
  • Surplus: R14 000 − R12 500 = R1 500 left. Deficit: R8 000 − R8 600 = R600 short.
  • Balanced budget: income = expenses. Deficit? Cut non-essential spending first.
  • An income and expenditure statement shows what was really earned and spent.

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

Memory trick

Surplus = money left over. Deficit = money missing.

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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