Accounting

Which statement correctly describes the informal sector?

Which ONE of these businesses belongs to the informal sector?

Sipho sells vegetables at a taxi rank and has no tax number. His cousin says, ‘Informal means illegal, so you are breaking the law just by trading like this.’ Which reply is correct?

Which ONE of the following is a feature of the formal sector?

Which statement correctly defines the formal sector?

Nomvula pays R1 800 for a sewing machine that she will use for years to make school uniforms. In her books the machine is…

Mpho starts a vetkoek stall with R1 500 from her stokvel payout. For the stall, that R1 500 is…

Busisiwe buys 20 trays of eggs from a wholesaler and sells them from her stall one tray at a time. To Busisiwe the 20 trays are…

A hair-braider pays her assistant R120 for each day worked, and the assistant worked 3 days this week. The R360 paid is the braider’s…

A sandwich costs Zinhle R28 to make, and she charges R35 for one sandwich. The R35 charged for ONE sandwich is her…

Thandi’s tuck shop takings and her household’s grocery money share one tin, so she can never say how much the shop has. What is the best way to fix this?

Sbu’s spaza shop sells bread and milk. Each delivery is put in front of the older stock, and some old loaves and cartons at the back have gone off. What should he do?

Pieter’s biltong stall uses a scale he bought and a fridge brought from his home. Neither is written down, and when the scale was stolen nobody could say what it cost. What should he do?

Fatima lets regular customers take bread on credit until Friday. By the end of the month she cannot remember who owes what. What should she do?

Mbali’s spaza keeps losing sweets and airtime vouchers, and she cannot tell whether they were stolen, given away or never bought. What is the best fix?

Zanele buys school socks for R40 a pair and adds a mark-up of 30% on cost. What is her selling price for a pair?

Mama Dlamini buys a bag of oranges for R18 and sells it for R27. What is her mark-up percentage?

Ayanda buys a box of 12 cold drinks for R168 and adds a 25% mark-up on cost to each drink. What does she charge for one drink?

A vetkoek costs Thoko R4 to make. She adds a 50% mark-up on cost and sells 60 vetkoek on Saturday. How much does she take in from sales?

Karabo pays her helper R45 an hour. The helper worked 4 hours on Friday and 7 hours on Saturday. What is the labour cost for the two days?

Mama Joy sells loaves of bread at R18 each, and each loaf costs her R12. She starts the week with 20 loaves, buys 100 more and ends the week with 15. She pays her helper R200 and R60 for transport, and takes R100 from the takings for her family’s groceries. What is her profit for the week?

Vusi’s fruit and veg stall starts the week with stock worth R450 at cost, buys stock worth R2 800 during the week and ends with stock worth R650 at cost. His takings are R4 100. He pays a helper R500 and R170 for crates, and takes R300 from the takings for his own use. What is his profit for the week?

A chips and sweets stall sells packets at R8 each, and each packet costs R5. It starts the week with 40 packets, buys 200 more and has 60 left on Friday. The week’s other costs are R150 for a helper and R90 for electricity, and the owner takes R120 from the takings to buy her own lunch. What is the profit for the week?

Zinzi sells second-hand clothes. She starts the week with stock worth R300 at cost, buys R1 500 more and ends with R700 of stock at cost. Her takings are R1 900, she pays R100 for her spot at the market and R150 for transport, and she takes R200 from the takings to pay her phone bill. What is her profit for the week?

Bheki sells school jerseys. Each jersey costs him R90 and he sells it for R135. He starts the week with 6 jerseys, buys 34 and has 8 left. He pays R300 to a helper and R150 for his stall space, and takes R200 from the takings for his family. What is his profit for the week?

At the end of the week Mrs Dube counts R2 400 in her tin and says, ‘My profit this week is R2 400.’ The stock she sold cost her R1 500, and she paid R300 for a helper and transport. What is wrong with her statement?

Themba’s profit for the week is R850. He then takes R150 from the till for his child’s school shoes and says, ‘That is an expense, so my profit is now only R700.’ What is wrong with his statement?

Naledi’s shop had no stock at the start of the week. She bought R3 000 of stock, sold R2 800 worth of goods, and still has R1 000 of stock (at cost) on the shelf. She takes the whole R3 000 off the sales and says she made a loss of R200. What is wrong with her working?

This week Gugu buys a R1 800 chest freezer for her stall. Her income was R3 200, her cost of sales R2 000 and her other expenses R400. She says, ‘The freezer is an expense, so I made a loss of R1 000 this week.’ What is wrong with her statement?

Jabu buys sunglasses at R60 a pair and sells them at R75. He says, ‘My mark-up is 20%, because the R15 mark-up is 20% of the R75 selling price.’ What is wrong with his statement?

Mrs Zulu runs an informal stall, and her cousin runs a registered, formal shop. Compare how the two businesses handle (i) records, (ii) fixed assets, (iii) labour and (iv) controls. Name BOTH businesses in every point (4)

1. Content: records. Informal: a notebook, cash box or memory with few or no records; formal: journals, ledgers and financial statementsOne mark for a record kept by EACH system. The informal trader relies on a notebook, a cash box or memory; the formal business keeps source documents, journals, ledgers and statements. One system alone earns nothing.
2. Content: fixed assets. Informal: shared with the home, not listed or valued; formal: listed in an asset registerThe informal owner’s trolley or fridge is shared with the home and never listed; the formal business lists each fixed asset in an asset register. Both sides must be named.
3. Content: labour. Informal: family or casual helpers paid in cash or goods and not recorded; formal: employees on wages or salaries with payroll recordsInformal helpers are family or casual workers paid in cash or goods with nothing written down; formal employees are on wages or salaries with payroll records.
4. Content: controls. Informal: the owner watches the till and relies on trust; formal: documents, separate duties and checksInformal control is the owner’s eyes and trust. Formal control is built into the system through documents, separate duties and checks. The examiner wants one idea from each side.

The informal trader keeps a notebook or relies on memory, whereas the formal business keeps source documents, journals and ledgers. Informal fixed assets are shared with the home and are not listed or valued, but formal fixed assets are listed in an asset register. Informal helpers are family or casual workers paid in cash or goods and not recorded, whereas formal employees are paid wages or salaries with payroll records. The informal owner controls the business by watching the till and trusting people, while the formal business uses documents, separate duties and checks.

Mama Joyce runs a vetkoek stall. She writes the money that comes in and goes out in a notebook, remembers which neighbours owe her for vetkoek, and counts what is left in her cooler every Friday. For EACH of these three habits, name the formal bookkeeping procedure it grows into and say what the formal procedure gives the business that the habit does not (6)

1. Content: the notebook grows into source documents and the Cash Receipts and Cash Payments JournalsThe money in and out written in a notebook becomes a document for each transaction, entered in the cash journals.
2. Content: it records every transaction in date order with a document as proof, so the money in and out can be checkedThe benefit is reliability: nothing is left out, each entry has a document behind it, and anyone can check the figures. A notebook has no proof.
3. Content: remembering who owes her grows into the debtors’ ledger and the debtors’ listA customer who owes the business is a debtor, so the habit becomes the debtors’ list and each customer’s account in the debtors’ ledger.
4. Content: it shows each customer’s balance and the total owed, so she knows who to remind and chase for paymentMemory forgets and cannot add up; a ledger shows exactly how much each customer owes so the owner can ask for payment.
5. Content: counting what is left in the cooler grows into the stock countThe Friday look at the shelf becomes a proper count of the stock on hand.
6. Content: the count shows the stock that was sold, so the cost of sales and profit can be worked out and any shortage or theft showsOpening stock + purchases − closing stock gives the cost of sales, which is needed for the profit; a gap between the count and the records shows theft or loss.

Her notebook grows into source documents and the Cash Receipts and Cash Payments Journals. These record every transaction in date order with a document as proof, so the money in and out can be checked. Remembering who owes her grows into the debtors’ ledger and the debtors’ list. The ledger shows each customer’s balance and the total owed, so she knows who to remind and chase for payment. Counting the cooler on Fridays grows into the stock count. The count shows how much stock was sold, so the cost of sales and the profit can be worked out and any shortage or theft shows.

Thuli sells 2 kg bags of maize meal. She pays R32 a bag and adds a mark-up of 25% on cost. She starts the week with 15 bags, buys 85 and ends the week with 18; prices do not change. She pays a helper R100 a day for 3 days and R85 for transport, and takes R200 from the takings for groceries. Show every line of working and calculate (a) the selling price of a bag (1), (b) the cost of sales (2) and (c) her profit for the week (3)

1. Accuracy: selling price R40Mark-up = R32 × 25% = R8, and the selling price is the cost price plus the mark-up. The mark-up alone (R8) does not earn the mark.
2. Method: opening stock + purchases − closing stock (15 + 85 − 18 bags, or their values)Cost of sales is the stock that was sold: what she started with plus what she bought, less what is left. The 18 bags still on the shelf are not yet a cost.
3. Accuracy: cost of sales R2 62482 bags sold × R32 = R2 624. Subtracting everything she bought (R2 720) is the common slip.
4. Accuracy: income R3 280 (82 bags × R40)Income is the number sold times the selling price, not the cost price: 82 × R40 = R3 280.
5. Method: other expenses R385 (3 × R100 labour + R85 transport); the R200 for groceries is drawings and stays outLabour cost = 3 × R100 = R300, plus transport. The groceries are the owner’s own spending: drawings, not an expense.
6. Accuracy: profit R271Profit = income − cost of sales − other expenses = R3 280 − R2 624 − R385 = R271.

Mark-up = R32 × 25% = R8, so the selling price = R32 + R8 = R40. Cost of sales = opening stock + purchases − closing stock = 15 + 85 − 18 = 82 bags. 82 bags × R32 = R2 624. Income = 82 × R40 = R3 280. Other expenses = 3 × R100 + R85 = R385; the R200 for groceries is drawings and stays out. Profit = R3 280 − R2 624 − R385 = R271.

Explain to a Grade 8 learner why a spaza owner who counts R2 000 in her tin at the end of the week cannot say that her profit is R2 000.

Explain to a Grade 8 learner why money that a trader takes from the till to buy her child’s school shoes is not an expense of the business, and what it is called.

Explain to a Grade 8 learner how a street trader works out a selling price from what she paid, and why the mark-up percentage is worked out on the cost price.