LESSON

GRADE 10 5

SOLE TRADER
BUSINESS CONCEPTS

WORKSHEET 1

Why Open a business?

If a businessman has money to invest he has a choice. He can invest in a

bank or other financial institution. If he does this he can expect to receive
interest from the financial institution. On the other hand he may choose to
invest his money in a business. The advantage of investing in a business is
that the chance of making a large amount of money is greater than if he
invested in the bank, (to a large extent interest rates in the bank are fixed). A
disadvantage of investing in a business is that there is also a chance that the
businessman can lose his money (in a bank there is virtually no chance that he
could lose his money).

Role of accounting in a business

Most businesses are formed with the main purpose:

to make a profit

A profit is the balance between the business’s income and expenses

Profit = Income – Expenses

The role of accounting is to record transactions so that the owner will be able to calculate if he
has made a profit.

5 Accounting Grade 10 1
Types of businesses

Profit-making businesses are divided into three groups

Service business Trading business Manufacturing business

Business that earns Business that earns Business that earns income
income by rendering a income by buying and by producing goods
service selling goods - bakery
- hairdresser - pharmacy - clothing manufacturer
- plumber - pet shop
- doctor - grocery shop

People involved in the business

Owner The founder of the business

(one person)

Bank The financial institution where the business has opened

a current account (cheque account), deposits money
and makes payments by cheque.

Customers
The people who buy goods and services from the business.

Accountant / The person who records all the transactions of the

bookkeeper business.

Creditors The people from whom the owner buys goods on credit – the
business receives the goods now and pays later.

The business owes the creditor money.

5 Accounting Grade 10 2
Debtors People (customers) who buy goods from the business
on credit – they receive the goods now and pay the
business later.
The debtors owe the business money.

Staff / workers
The people who work for the business. They earn salaries or
wages

ACTIVITY 1

Match column a with the correct item in column B. Use the answer sheet provided
1 Creditor A A person/business that owes us money
2 Bookkeeper B A business that produces goods
3 Partnership C A business that has only one owner
4 Profit D People who work for a business
5 Hairdresser, plumber etc E A person that records the transactions of a business
6 Trader F A person/business to whom we owe money
7 Debtor G Incomes minus expenses
8 Manufacturer H A business that could have 2 – 20 owners
9 Staff I A business that buys and sells goods.
10 Sole Trader J Service business

ANSWER SHEET
Indicate only the correct letter.

1 Creditor
2 Bookkeeper
3 Partnership
4 Profit
5 Hairdresser, plumber etc
6 Trader
7 Debtor
8 Manufacturer
9 Staff
10 Sole Trader

5 Accounting Grade 10 3
Documents used in a business

In a business when a transaction takes place it is recorded on a document. The type of transaction will
determine the type of document that will be used.

Document Description
Receipts This is proof that an amount has been paid.
Deposit slip Used when money is deposited into the bank
Cheque An instruction to our bank to pay money out of our bank account.
Petty Cash Voucher Used when small amounts of money are paid out of the petty cashbox.
Invoice Used when goods are bought or sold on credit.
Debit & Credit Notes Used when unsatisfactory goods are returned

RECEIVING MONEY

A receipt will be used in this situation.

R c
Receipt
NO. 27. 2 March 2011.
Received from:
...L Selamolela......……..
the sum of
500 00
...Five hundred ......Rand
…………………….cents
for… Rent Income….….

…………………………
With Thanks

5 Accounting Grade 10 4
In cases where money is received as a result of a sale a Till slip (Cash Register slip) will be used.

PAYING MONEY

When a business makes a payment a cheque will be used. The cheque has two parts:-
The main part of the cheque (which will be handed to the person being paid) and a cheque counterfoil
(this is the section that will remain in the cheque book).

Cheque Counterfoil Tear off section of the cheque

Date: AMALGAMATED BANK

…2 March 2011…
To:
…2 March 2011
…L Ncube........…
For: PAY………L Ncube ...................……………………………….….or Bearer

…Stock………… ……............…Five Thousand Rand only..........…..…….... R5000,00

Amount: ………………………………………….………………………

…R5000…………
………………………..
ZZ Traders
45
45

Place for signature

5 Accounting Grade 10 5
When we want to deposit money in the bank we use a Deposit Slip.

AMALGAMATED BANK Rissik St

Date: ....2 March.. 20 11….. R c

Notes 520 00
Coins 20 00
Credit …………ZZ Traders……………….........................…
Sub Total 540 00
Name of Drawer Bank Branch
K. Mahlangu Standard Church St 1000 00
L. Skosana FNB Middle St 500 00

Total 2040 00

Paid in by : ……Z Zuma………… Account Number: ……72 346 6890……..

The other documents will be learnt later in the syllabus.

ACTIVITY 2

Complete the following documents using the information provided.

2.1
Received R1 000 from L. Sithole for rent of a storeroom. L Parker issued receipt No. 6 on
2 March 2011.
R c
Receipt

NO……. …………..20….
Received from:
…………………………..
the sum of

……………………..Rand
…………………….
…………………….cents
for
………………………….

…………………………
With Thanks

5 Accounting Grade 10 6
2.2
D. Nkosi owner of DD Stores paid LB Wholesalers R5 500 by cheque for stock bought on
2 March 2011.

Date: AMALGAMATED BANK

……………………….
…………20…
To:
………………………. PAY……………………………………………………………….….or Bearer
For: ……………………………………………..…..…………..……..
……………………….
………………………………………….……....…………………
Amount:
……………………….. ………….....……………..
45 45 for DD Stores

2.3
R Roberts, owner of RR Wholesalers, made the following deposit in the bank account of the
business.
Date: 2 March 2011.
Notes:- R750,
Coins:- R150,
Cheques:- from AB Stores R650 (FNB – Big Branch) R1 345.
BR Retailers R1 260 (ABSA – Small Branch) R4 655.
Account No. 254 986 451

AMALGAMATED BANK Gezina

Date: …………….. 20 ….. R c

Notes
Coins
Credit ………………………………………………
Sub Total
Name of Drawer Bank Branch

Total

Paid in by : ……………………… Account Number: …………………………..

5 Accounting Grade 10 7
 ANSWERS
5
ACTIVITY 1

1 Creditor F
2 Bookkeeper E
3 Partnership H
4 Profit G
5 Hairdresser, plumber etc J
6 Trader I
7 Debtor A
8 Manufacturer B
9 Staff D
10 Sole Trader C

ACTIVITY 2

2.1
Received R1 000 from L. Sithole for rent of a storeroom. L Parker issued receipt No. 6 on 2 March
2011.

R c
Receipt

NO…6…. …2 March..2011
Received from:
…L. Sithole….....................
the sum of
1000 00
…One Thousand .....Rand
…………………….cents
for
……Rent Income .……….

……L Parker…………
With Thanks

5 Accounting Grade 10 8
2.2
D. Nkosi owner of DD Stores paid LB Wholesalers R5 500 by cheque for stock bought

Date: AMALGAMATED BANK

…2 March 2011….
…2 March…2011
To:
....LB Wholesalers..
PAY…………LB Wholesalers……………...................………….….or Bearer
For:
….....Stock....……. ……Five Thousand Five Hundred Rand only…..........……..
R5500,00
Amount: ………………………………………….……....…………………
……R5500,00………..
………D Nkosi………..
45 45 for DD Stores

2.3

AMALGAMATED BANK Gezina

Date: ....2 March.. 20 11….. R c

Notes 750 00
Coins 150 00
Credit …………RR Wholesalers………….........................…
Sub Total 900 00
Name of Drawer Bank Branch
AB Stores FNB Big Branch 1 345 00
BR Retailers ABSA Small Branch 4 655 00

Total 6 900 00

Paid in by : …R Roberts………… Account Number: ……254 986 451……..

5 Accounting Grade 10 9
 CHALKBOARD SUMMARY

Forms of business Types of business

• Sole trader • Service
• Partnership • Trading
• Close corporation • Manufacturing
• Company

FORMAL
BUSINESS

People involved in
a business
• Owner Documents used
• Bank in a business
• Customer • Receipt
• Accountant • Cheque
• Creditors • Till slip
• Debtors • Deposit slip
• Staff • Invoice

5 Accounting Grade 10 10