L3 MATHEMATICAL LITERACY - PowerPoint Presentation

1. L3 MATHEMATICAL LITERACYTOPIC 3 – FINANCELESSON 1SUBJECT OUTCOME 3.1 Manage finances with confidence in WORKPLACE contexts:3.1.1 Explain financial concepts and methods of financing and financial control related to small and home based WORKPLACES and BUSINESSES3.1.2 Identify and list typical WORKPLACE and/or BUSINESS income and funds received.3.1.3 Identify and list typical WORKPLACE and/or BUSINESS expenditure and payments.2020/07/071compiled by B Adams

2. FINANCIAL DOCUMENTSDESCRIPTIONRECEIPTSFinancial document given to a client as proof of payment made by clientINVOICEIf you buy something at a store, you should receive a till slip or cash invoice. Both are types of receipts and proof of income. PAYSLIPDocument given to employee as evidence that a specified amount has been paid. If a person earns a salary (not a wage) it is called a salary advice:Following information appears on the payslip:Employer and employee detailsSalary amountTaxable amountUIF contributionCompany contributionsBUDGET OR CASH FLOW PROJECTIONThis is a plan on how the Business intends to spend its money. It lists all projected income and expenses for the month.QUOTATIONEstimated cost is indicated and specified for client (items or services) to be rendered. TRAVEL ALLOWANCE CLAIM FORMForm to be used by Business for employee to complete a claim for kilometers travel during the month. The Business would pay back at a specific standard rate per kilometer.Expenses such as Business lunches with clients, parking fees and telephone calls could also be claimable.INCOME AND EXPENDITURE STATEMENTActual income and expenditure for the month specified . 2020/07/072compiled by B Adams3.1.1 EXPLAIN FINANCIAL CONCEPTS AND METHODS OF FINANCING AND FINANCIAL CONTROL RELATED TO SMALL AND HOME BASED WORKPLACES AND BUSINESSES

3. Financial concepts – Business - WorkplaceFINANCIAL CONCEPTSDESCRIPTIONCOST PRICEThe price that someone pays for something he/she is going to sellCOST OF PRODUCTIONThe cost of producing something without profit addedREAL COSTThe cost of producing a product/service, including resources used. FIXED COSTA Cost that stays the same every month. SELLING PRICEThe price at which an item is sold (cost price + profit)EXCHANGE RATEThe rate at which currency is converted to another – Rand to DollarUIFUnemployment Insurance Fund – assist employees should they become Unemployed for reasons beyond their control (retrenchment, maternity, and so on). Both employee and Employer each contribute 1% to fund = 2%INCOME TAXAmount that every person and business earning more than a certain income have to pay to SARS (South African Revenue Service)PERSONAL INCOME TAXTax (PAYE) paid on personal income, usually collected on a pay-as-you-earn basis, with correction at the end of the year. TAXABLE INCOMEAmount used to calculate income tax due by a person or Business usually consisting of income minus any tax deductions allowable for the tax year.PAYE (PAY-AS-YOU-EARN)PAYE tax is deducted from employee’s salary by employee and paid to SARSTAX REBATEMoney paid back to a person or Business when more than specified amount is paid to government.Tax rebates – Primary, secondary and tertiary rebates depending on age. A rebate is a set amount that SARS takes off from your total tax liabilities.NON-TAXABLE DEDUCTIONSalary deductions such as pension fund contributions that is deducted from taxable income. Contributions to charities by Businesses could also be non-taxable. TAXABLE DEDUCTIONSalary deduction, such as accommodation, low interest loans, meal vouchers CANNOT be deducted from taxable deductionsREPAYMENT PERIODPeriod within which loan has to repaid to bank or financial institution.PROFITIncome is greater that expenditure. INCOME – EXPENSES = POSITIVE (PROFIT)LOSSExpenses is greater than Income . INCOME – EXPENSES = NEGATIVE (LOSS)GROSS INCOMEIncome of a person or Business BEFORE tax and deductionsNET INCOMEIncome of a person or Business AFTER tax and deductions BREAK-EVEN POINTPoint where total expenses and total income are equal.VATValue Added Tax charged on purchase price of items and servicesVAT INCLUSIVEFinal amount has already VAT added. VAT EXLCUSIVEAmount of good or services excluding VAT (VAT must still be ADDED to the price)INTERESTAmount a bank pays into a customer’s account for saving money. Interest money is a percentage % of the amount in the bank account = Interest rateINTEREST RATEThe rate that the back or Financial institutional determine on positive and negative bank accounts. It can be determined by dividing the interest by the amount of money. 2020/07/07compiled by B Adams3

4. 3.1.2 IDENTIFY AND LIST TYPICAL WORKPLACE AND/OR BUSINESS INCOME AND FUNDS RECEIVED.BUSINESS INCOMEDESCRIPTIONSALES AND/OR SERVICESIncome received by selling a product or rendering a serviceINTEREST RECEIVEDBusiness could earn income from interest received on a POSITIVE balance in its saving account.RENT OR LEASE RECEIVEDBusiness could own Property or equipment from which rental or lease income is receivedGRANTSBusiness applies for to use for a specific purpose. – Business could receive grants from government to cover cost of training their employeesSPONSORSHIPSNon-profit organisations or charity could receive sponsorships from private companies or people. DONATIONSDonations is money or goods given to Business unconditionally (No repayment or payment is expected)LOANSBusiness could take out a loan to fund its activities. Borrowed amount is seen as income. Loan has to be repaid within a time limit, and repayment limit.The amount that is repaid is called the repayment amount. This consist of original loan amount plus interest, calculated at a specific interest rate. 2020/07/07compiled by B Adams4

5. 3.1.3 IDENTIFY AND LIST TYPICAL WORKPLACE AND/OR BUSINESS EXPENDITURE AND PAYMENTSBusiness ExpensesDESCRIPTIONSALARIESIt is paid to employees on a monthly basis. It is fixed monthly amount, paid directly into employee’s bank account. Additional benefits: housing and car allowances are sometimes addedGROSS SALARYCost to company, more that the amount the employee receive at the end of month. Benefits such as medical aid contributions, pension, PAYE have to be deducted from GROSS before it is paid into the employee’s bank account. NET SALARYThis is the Take-home salary, that is paid into the bank account of the employee. GROSS SALARY – COMPANY DEDUCTIONS = NET SALARYWAGESEmployee paid on a weekly basis. Usually paid in cash. Wage differs slightly from week to week as it is often calculated on a rate system (hours worked)COMMISSIONEmployees received this on items sold or services provided. OPERATING OR RUNNING EXPENSESOngoing expenses such as electricity, water, telephone line rentals, maintenance on Business vehicles and insurance. Some costs are fixed and other variable. LOAN OR CREDIT CARD REPAYMENTSBusiness takes out loan in order to establish expansion. It needs to be paid back instalments agreed on between the business and loan provider. Credit card debt has to be paid back as well. PAYMENT TO CREDITORSDepending on the type of business, businesses may have several creditors. INCOME TAXIncome tax is an amount that every person or business earning more that a certain income has to pay to SARS. It is calculated as a percentage of the earnings, using a sliding scale. The more you earn, the more tax will be paid. 2020/07/07compiled by B Adams5