GRADE 8 TERM ONE EMS

MODULE 1: REVISION
Historical development of money

Barter- (trade) exchanging of goods

Problem – difficult to find 2 people who wanted each other’s products

Difficult to work out the value of products

Gold was used – gold coins were made

Goldsmiths made coins and has safes, so people could keep gold in the safes

Promissory Note – written by goldsmith stating the gold would be returned to the
owner when they needed it. Then people started exchanging promissory notes.
Printing – paper money – no need for gold
Ways to safeguard notes – banks – banks invented chequebooks – means of
exchange
Today – credit card, debit card, ATM, EFT

Needs: We have to have in order to survive – air/water/clothing/shelter

Needs differ from person to person

Wants: Things we would like to have but don’t need to survive –

cellphones/laptops/ fancy clothes/ fancy cars
Wants differ from person to person

Goods and Services: They satisfy needs and wants

Goods
1. Free goods: ice or sea water
2. Economic goods: consumers are prepared to pay for them
 A. Consumer goods
 Satisfy consumer needs and wants
 Durable( lasts long time) or non-durable ( used up when consumed)
  Durable goods: cars, iPods, clothes, laptops, jewellery
 Non-durable goods: coffee, milk, cereal, petrol, pizza
 B. Capital Goods
 Goods used by business to generate income
E.G. baking equipment – oven/mixer/fridge

Services: 3 groups
1. Personal
2. Commercial
3. Community

1. Personal = education/medical/legal/financial
2. Commercial = advertising/transport/insurance
3. Community = provided by government & charity/clinics/ Old Age Home/ SPCA

Socio-Economic Imbalance
Government still trying to sort unemployment, poverty and lack of skills

Production and Productivity

Production
Using resources to turn inputs into outputs
Inputs: human resources/skills & labour/capital/machines/ buildings/ equipment/
transport
Materials used for outputs

Outputs: goods and services/ wages & salaries/ taxes

Production costs: fixed costs/variable costs

1. Fixed costs
These costs never change regardless of what is produced or sold
E.G. rent/insurance/manager’s salary

2. Variable costs
These costs change depending on items produced or sold
E.G. raw materials/direct wages

Productivity
How efficiently inputs are used to create outputs. For a country’s economy to
develop, productivity needs to be improved

Businesses
Formal businesses
  registered with SARS
 pay taxes
 fixed premises

Informal businesses
 no fixed address
 sell from the streets – anywhere
 not registered
 don’t pay tax

Entrepreneurship
 take risks – hardworking – disciplined
 confident – inspiring – problem solvers
 good mangers – honesty

SWOT ANALYSIS
Summarises entrepreneur’s strengths & weakness
Internal factors – strength & weaknesses
External factors – opportunities and threats

Accounting terms
Budget - plan estimating income and expenses
Banking
South African Reserve Bank
 Central Bank – sole right to destroy notes and coins – controls money in
circulation
 Bank for government
Commercial Banks (public bank)
Services – savings, investments, loans, insurance, wills, advance

EMS GRADE 8 TERM TWO

Standard of living: the level of wealth and material comfort available to a person
Infrastructure: the basic physical and organizational structures and facilities
needed by society

Module 2
The Economy: Government

2.1 Meaning of Government

 People that control the laws
 Every country has a government
 People elect government
 Constitution in SA make rules on how the government works
 Government makes laws and rules for people to follow
2.2 Different levels of Government
3 levels
1. National 2. Provincial 3. Local

1. National Government
 Deals with whole country
 Has 3 functions
1. Legislative Authority: Parliament and National Assembly
2. Executive Authority:
Cabinet consisting of President, Deputy President, Cabinet Minister
3. Judicial Authority: (Public Dep)
The Courts, Constitutional, Supreme, Court of Appeal, High Court,
Magistrates court
The president is in charge. He works with ministers to run the country.
2. Provincial Government
 Made up of 9 provinces
 Each province responsible for its people
 Follows laws of country
 Given money from National Government
 Teachers fall under Provincial Government

3. Local Government (Municipalities)

 Responsible for running smaller areas called municipalities
 Each municipality has a council and mayor
 Municipalities provide services:
 Electricity
 Clean water
 Sanitation
 Rubbish removal
 Clinics
 Roads
 Parks (civic centre)

2.3 Role of levels of Government in respect of households

Government interacts with households & businesses to help the economy function
and grow. Household: People that play a part in the economy, government provides
goods and services to households

Services:
All level of government provide services to households
E.G. clean water, sanitation, electricity, clinics, and roads
Government uses resources to provide these services
1. Natural Resources: water – drinking, cleaning/ coal – electricity
2. Human Resources: Doctors, nurses in government hospitals and clinics
Government employees: police, army, teachers
3. Financial Resources: charging taxes to make money to pay for services

Government as consumer & producer

Government & households interact and are consumers and producers
Households pay taxes to National Government (PAYE & VAT)
National Government provides services (police, army & navy) and national roads.
National Government also allocates taxes to Provincial Government so Provincial
Government can provide households with education & healthcare.
Local Government charge household’s rates – people who own property. Local
Government then provide these households with services … local roads, refuse
removal
Government uses labour from households – teachers, policeman, government
workers and pay their salary.

2.4 Role of levels of Government in respect of Businesses

Government interacts with businesses. All business offering goods (clothes /food) or
service (plumber/doctor)

Services
Government provides water, electricity, roads and sanitation
Additional Services
Department of Trade & Industry (DTI)
Assist with trade
Department of Economic Development
Assist with getting loans
Advice on selling goods
Advice on growth
Department of Small Businesses Development
Strengthens small businesses

Government uses resources to provide services

1. National Resources: water, coal
2. Human Resources: experts in business
3. Financial Resources: charge for services & taxes
Government as consumer & producer
Businesses pay: income tax on profit to National Government
Vehicle license to Provincial Government
Refuse removal, water, electricity to Local Government
Businesses sell goods & services – Government
E.G. National Government buys cars for ministers from car manufacturers
Provincial Government uses builders to build schools
Local Government uses small business to fix roads

National budget: Government financial plan for a country for a year

Economic growth: Increase in the production of economic goods and services
Government Revenue: The money the government gets from taxes
Government Expenditure: Government spending =
Housing H Health H Security S
Education E Transport T

Direct tax: Tax paid directly to the government (SARS)

Indirect tax: tax not paid directly to the government (SARS)
RDP: Reconstruction and Development
International trade: Trading with other countries

Module 3
The Economy: National Budget
Budget = Estimate of income and expenditure for a set period of time

Minister of Finance = Enoch Godongwana is head of National Treasury. He prepares

and implements National Budget. Annual Budget speech is in February 1 st March –
28th February

National Budget
Influences economic growth
Address housing, unemployment and poverty

3.1 Government Revenue - income

Government has various taxes to make money. Some taxes are direct others
indirect

E.G: of taxes
PAYE = Tax Paid on salaries and wages
VAT = Tax on consumers VALUE ADDED TAX 15%
Company Tax = Tax on company profit 28%
Customs Duties = Tax on imported goods
Capital Gains Tax = Tax on profit from a second or third property
Skills development Tax = Tax to encouraging training 1% if salaries over R500
000
Carbon Emission Tax = Tax on new vehicles
Exise (Sin) Tax = Tax on alcohol and cigarettes
Transfer duties = Tax on sale of, property
Rates = Property tax
Vehicle license = Tax on vehicles
Sugar Tax = Tax sugar products

DIRECT TAXES
 Paid directly to the government. Cannot be shifted to others
 Person is taxed directly – paid straight to government
 PAYE – the more you earn the more you pay
Company Tax
South African Revenue Services (SARS) collects direct taxes
Rates – property tax – paid to local government

INDIRECT TAXES
Not paid to SARS. Collected by someone else
E.G.: You buy clothes from a shop and pay VAT. The shop collects the VAT and pays
it to SARS. The shop is a VAT vendor
Custom duties, excise duties, carbon emissions, transfer duties

3.2 Government Expenditure

The Government allocates funds from national budget for services – education,
health, housing, transport and security

Education: Minister of Education

Largest expenses: paying teacher’s salaries, looking after schools. Department of
Basic Education/the Department of Higher Education & Training

Social Welfare:
Department of Social Development does social grants…
Disability grants war veteran’s grant
Old age grants foster child grant
Child support

Health: Minister of Health

Department of Health
Helps children, mothers, and people with disabilities and diseases. Provides
hospitals and medical training. Constitution says everyone has the right to health
care.

Housing:
Government must assist the poor with housing
Department of Human Settlement by Local Government run housing many housing
schemes

Transport: Minister of Transport

Department of Transport – transport South Africans by air, sea and road. A lot of
Government’s budget used to maintain harbours, airports and roads.

Security
Government is responsible for security of country. The National budget includes:
police, courts, prisons, army and intelligence.

3.3 Influence of the National Budget on Growth

Economic Growth
How much the economy of a country is growing? National Budget influences
economy. The National Budget influences how much is spent. The Minister of
Finance must ensure the economy grows. He can’t just keep increasing taxes
because people need to have money left to buy food, etc…
Recently National Budget has focused on Education. If a nation is educated they can
employed or start their own businesses and employ others thus growing an
economy.

Taxes are needed for Government to make sure people are healthy so they can
work and pay taxes.
The national budget also has to maintain roads so goods can be transported.

3.4 Influence of the National Budget on Redressing Economic Inequalities

The National Budget tries to make the poor less by taking money from the rich.
RDP – Reconstruction and Development Programme
GEAR – Growth, Employment and Redistribution

EMS GRADE 8 TERM ONE

Module 4
The Economy: Standard of living
Needs & wants differ depending on a person’s lifestyle. A farmer on a farm has a
different need and wants to be teacher living in a city.
Goods & Services = satisfy needs & wants

1. Lifestyle
- The way people live: where they live, where they work, what they eat, how they
dress. Some people are rich and some are poor.
- Societies influence lifestyle
A. Self Sufficient Society
 Look after themselves
 Provide all their needs for themselves
 Don’t buy goods & services from outside
 Grow their own fruit & vegetables
 Solar panels and boreholes
B. Modern Society
 Have more needs & wants
 Constantly want to do things better and faster to improve lifestyle
 Technology very important
 Trade internationally
C. Rural Society
 Modest lifestyle
 No doctors, hospitals, water, electricity
 Schools far away
 Fewer needs & wants
 Focus on survival
 Few business

2. Impact of Development on Environment

Development = Standard of living improves
Increase industries = pollution
Growing population, technology, people moving to cities puts strain on the
environment

Everyone – Government, business and individuals must make sure the environment
is looked after. Everyone must be educated on the importance of keeping rivers
clean, to recycle, stop pollution, use solar panels, stop wasting resources

3. Unemployment
People who are able to work but can’t find work 2014 = 25, 4%
When unemployment is high – lots of poverty, low standard of living – people have
no money, crime increases

Reasons for high employment

 No education
 Lack of skilled labour
 High minimum wages – too expensive to employ people
 Using machines instead of people
 Protective labour laws
 Foreign workers – taking local jobs
  Population growth

4. Productive use of resources to promote a healthy environment

Growth has to happen but we have to look after resources and the environment
Increase in living standards = increase in use of resources and pressure on the
environment
Industry can have negative impact on environment and improve use of resources
 Don’t waste resources
 Re-use materials – recycle
 Using natural resources efficiently
 Using alternative energy resources – solar, wind, water

Module 5: Financial literacy: Accounting Concepts

Accounting - Recording business transactions

Sole trader
 Business owner
 They provide all the capital
 Make all the decisions
 Takes all risks
 Small businesses
 Can be goods or services
 Must have a separate bank account

Debit
 Left side of accounts in general ledger
 Each account has a debit & credit side in the general ledger

Credit
 Right side of accounts in general ledger
 Sum of debits must = sum of credits in the general ledger

Owner’s Equity
Net worth (value) of owner’s investment in business
 Business makes a profit – owner’s equity
 Business makes a loss – owner’s equity
Capital = money owner uses to start a company increases owner’s equity
Drawings = when the owner takes money out of the business for personal use –
decreases owner’s equity.

Assets
 Things a person or business owns – valuable
 Two types of assets
 1. Non-Current Assets (fixed)
2. Current Assets

1. Non-Current Assets
 last longer than one year
 fixed assets – land, buildings, vehicles equipment
 financial assets – fixed deposits

2. Current Assets
 cash or easily converted to cash
 inventory – good sold for a profit
 debtors – people owing business money
 money in the bank

Liabilities (debt)
Money owed to people or businesses
1. Non-Current Liability
2. Current Liability

1. Non-Current Liability
Debts owed for more than a year – loans, mortgage – property
2. Current Liability
Debts that must be paid back within a year – overdraft – suppliers account

The Accounting Equation

ASSETS = OWNER’S EQUALITY + LIABILITY
Every transaction affects two accounts

Transactions
Business occurrence that has monetary value = transaction

Income: Things that increase wealth E.G. sales, rent, commission, interest
Expenses: Things that decrease wealth
E.G. water, electricity, rent, advertising, stationery

Profit: When income is more than expenses

Income Expenses Profit
R100 000 R50 000 R50 000

Loses: When expenses is more than income

Income Expenses Loss
R100 000 R200 000 R100 000
Banking
Businesses need a bank account to make payments, receive payments -Usually a
current account. Businesses need the following services from a bank

Module 9: Factors of Production

Resources are scarce – must not waste

Resources divided into 5 groups

1. Capital
2. Labour
3. Natural Resources (land)
4. Entrepreneurship
5. Technology

1. Capital
Money used to start a business – owner buys – vehicles, equipment, machines,
stock
No money then borrow loans

2. Labour
 Workers to complete a job - fields, mines and offices, factories
 They get paid wages & salaries
 Supply of labour
- size of population
- education of population
- organized labour (unions)
- age of population
- where they live

3. Categories of labour
Unskilled semi-skilled skilled

Unskilled
 no education or training
 don’t earn a dot
 farm workers, domestic workers
 have to do simple jobs
 most of South Africa is unskilled
Semi-Skilled
 some training and education
 can use basic tools and machines
 training to become plumbers & electricians, waiters

Skilled
 special training and educated
 been to school, college, university
 teachers, doctors, plumbers

Roles of workers in business

- workers provide physical & mental skills added to capital plus natural
resources and equals the production of goods and services
Workers + capital + natural resources
Producing goods and services
Economy relies on the workforce to produce goods and services. If a country has
natural resources – still need labour to mine minerals
Labour intense: uses more labour E.G. uses more labour, farming, and
mining

High wages, strikes - puts pressure on these industries. Easier to us machines

In SA population too big – bigger than jobs – unemployment

Fair Employment
Basic Conditions of Employment Act
 protects workers
 makes sure they treated fairly
 working hours
 minimum wages
 safe working conditions
 leave
 fair termination
 benefits

Trade Unions
 Keep a check on working conditions
 Make sure workers are looked after

3. Natural Resources
 come from nature
 used to make things
 land fuel
water gas
air wood
sunshine fish
RENT = payment for using natural resources

4. Entrepreneurship
 owner of a business
 come up with ideas for businesses
 takes risks
 Profit = entrepreneurs payment

Remuneration of Factors of Production

1. Capital – interest
2. Labour – wages/ salary Reward
3. Land – rent Income
4. Entrepreneurship - profit Payment
5. Technology – Rent

Forms of Ownership
1. Sole Trader (Sole Proprietor)
 Only one owner
 Cheap to start
 Owner gets all the profits
 Liability unlimited
 Owner does all the work

2. Partnership
 2 – 50 partners
 Share the work & responsibility
 Share the profits
 Liability unlimited

3. Close corporation
 Company Act 2008 – no more CC
 1 – 10 owners
 CC after name
  Members are owners
 Limited liability
 Member share profits

4. Companies
 For large business
 Registered with CIPC (Companies and Intellectual Property Commission)
 Owners – shareholders
 Limited liability
 Board of Directors run company
 Private Company & Public Company

5. Private Company
 Has to have at least 1 shareholder
 (Pty) Ltd – Proprietary Limited after the name
 Limited liability
 Run by board of directors – elected at an AGM (Annual General Meeting)
 Financials must be audited

6. Public Company
 At least 7 shareholders
 Ltd – Limited after the name
 Very expensive
 Run by board of directors – elected at an AGM
 Large businesses
 Limited liability
 Financials must be audited

GRADE 8 EMS TERM 2

Accounting Cycle
1. Transaction
2. Source Documents
3. Journals
4. General Leader
5. Trial Balance
6. Financial Statement
1. Transaction
- money moves into or out of a business
- all transactions are recorded
E.G. paying for services or goods paying for property
paying employees receiving money for good & services

2. Source Documents
- record of the transactions
- proof of the transaction
- needing for auditing
E.G. cash or credit card receipt/ sales order/invoice – external source documents
petty cash/bank statements – internal source documents

3. Journals
4 type of Journals
1. Sales 2. Cash receipt 3. Purchase 4. Cash payments
Journal information summarised and posted to the general ledger

4. General Ledger
 Records all transactions
 Used to prepare financial statements
 Double entry bookkeeping method
 Posting = transferring information from journal to general ledger

5. Trial Balance
 first step – financial statements
 lists closing balances of ledger
 ledger balanced are debit or credit
 can help find mistakes

6. Income Statement
 work out profit & loss
 show financial position of company
 how many assets
 how much debts

7. Balance Sheet
 What the business is worth
 Summary of business
 Assets = liabilities + Owners’ Equity
A = OE + L
Purpose of Cash Journals
 First book of entry
 Cash receipts journal( cash coming in) cash payments journal( cash paid out)

Accounting Equation
Assets = Liability + Owners Equity
A = L + OE A = OE + L (same)

Accounting Concepts
Capital: money put in to start a business
Owners’ Equity: What the business owes the owner
Income: Money coming into the business
- Selling goods
- Services
- Interests
Expenses: costs to run the business
Profit: income higher than expenses
Loss: expenses higher than income
Transactions: exchange of goods & services
Assets: what the business owns
Current: cash and stock
Fixed: building, equipment
Liability: what a business owes

Source Documents
Receipts – cash receipt/ proof of payment
Deposit Slip – when you put money in the bank
Cash till Slip: receipt/ shows date, store name, what you bought
Cheque – order to bank to pay money
Cheque Counter Foil – receipt (reminder)/ keeping track
Cash Invoice – promise to pay
Bank Statement – summary of all transactions in a month/ date amounts etc…

Module 10: Markets

Markets = a place where goods and services are bought and sold
Can be online like market place on facebook
1. Goods & Services Market 4. Service MICT
2. Wholesale Market 5. International MKT
3. Retail Market 6. Labour MKT
7. Financial MKT

1. Good & Service Market

- Good & services exchanged for money
- a need & want is satisfied
- Technology has made trading easier – internet, email – can trade over long
distance
- Specialised markets: - cellphones, computers

Non-Durable Consumer Goods- purchase for immediate consumption

Durable Consumer Goods – lasts a long time E.G. cars, books, house
Capital Goods – physical assets – a company uses to produce goods and services
Personal Services – education, medical care, legal
Commercial Services – advertising, transport
Community Services – volunteers – working to help people

2. Wholesale Markets
- Buy goods in large amounts from factories and sell to shops
E.G.: Buying lots of T-shirts from a factory – selling them to a shop – the shop sells
the t-shirts to the public

3. Retail Markets
- Buy goods in smaller amounts and sell to the consumer
E.G: A shop buys 200 T-shirts and sells one at a time
Supermarkets, clothing stores, cell phone store. Distribution – getting goods to
shops from factory

Distribution channel
Manufacturer – Wholesaler – Retailer – Consumer

Service Markets: Place where services are sold

E.G: lawyer, doctor, school

International Markets
- Countries can’t supply all their needs so they trade with each other
If a country has lots of goods they export to other countries
SA: - Export: fruit, wheat, minerals Import: oil, coffee, electronic equipment

4. Factor Market
Factors of production:
Labour (wages & salary) Capital (interest) Natural resources (rent)
Entrepreneurship (profit)
These are exchanged on the factor market

5. Labour Market
Human resources exchanged for salaries and wages
Jobs advertised – newspaper/ internet/ agencies people send in CV’s (curricum
vitae)- best person gets job
More skills – higher salary
In SA many unskilled and not enough jobs
Labour costs are high so goods and services are expensive

6. Financial Market
- Trade Financial Assets – shares, bands, money