ENTRY LEVEL CERTIFICATE

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1 ENTRY LEVEL CERTIFICATE IN BUSINESS STUDIES COURSEWORK UNIT 4 MONEY AND BUSINESS

3 Why do businesses need money? 1

4 WHY DO BUSINESSES NEED MONEY? Activity 1 People who wish to set up in business need money to start it up. An American Clothing Company, Buffalo Fashions has asked you to find out about the costs to open a shop in your area. A You have been asked to find out about what they will need to set up the business. List FOUR things you would need to open a shop. (i) (ii) (iii) (iv) 2

5 Activity 1 WHY DO BUSINESSES NEED MONEY? THE BUSINESS PREMISES Below are two advertisements for the sale or rental of a business premises B Study the newspaper extract and answer the questions below. (i) What is the cost to buy the first premise? (ii) What is the cost to rent the second premise? (iii) What is meant by per annum? (iv) Look in your local newspaper and find advertisements for business premises and include these in your folder. What information can you find out from these advertisements? 3

6 WHY DO BUSINESSES NEED MONEY? Activity 1 EQUIPMENT C List up to FOUR things needed for the inside of the business before Buffalo Fashions can begin trading. (i) (ii) (iii) (iv) 4

7 Activity 1 WHY DO BUSINESSES NEED MONEY? SECOND-HAND VAN In order to go to the Cash and Carry Warehouse to get stock you will need to buy a van. Look at the example of the advertisement selling a second-hand van. FOR SALE D (i) What does it cost to buy the van? FORD TRANSIT 2000 EXCELLENT CONDITION 12,000 miles (ii) List TWO ways of paying for the van BUYING A VAN CASH OR CREDIT E The cash price of the van is 2,000. Buying on credit costs an extra 20% interest to pay for the van over one year. (i) Calculate the amount of interest for one year. (ii) Calculate the total cost of buying the van. (iii) What are the monthly payments? 5

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9 Money and business 7

10 MONEY AND BUSINESS Activity 2 Below is a list of costs to set up a shop. Shop 30,000 Equipment 2,600 Van 2,400 Stock 5,000 A B Use a spreadsheet to find out the total costs Buffalo Fashions will have to meet to begin trading. Print a copy for your folder. 8

11 Activity 2 MONEY AND BUSINESS Buffalo Fashions have asked you to run the shop for them provided you have some money to invest in it. They have 20,000 to start the business. The total cost to set up the shop is 40,000. FINANCE FOR THE BUSINESS A How much do you need to find yourself to set up the shop? B List FOUR ways to get the money you need. (i) (ii) (iii) (iv) 9

12 MONEY AND BUSINESS Activity 2 C Look at the cartoon above. List FOUR things the bank manager would take into account before lending you some money. (i) (ii) (iii) (iv) 10

13 How does a business keep a record of its money? 11

14 HOW DOES A BUSINESS KEEP A RECORD OF ITS MONEY? Activity 3 Your shop Buffalo Fashions will need to order stock from the local wholesaler. A Look at the catalogue price list and complete the Order Form which follows. 20 Pairs Levis Buffalo Jeans 10 Pairs Wrangler Buffalo Jeans 5 Pairs Buffalo Special 1 Buffalo Track Suit MANDETTES CASH & CARRY - WHOLESALERS FORTHERGILL STREET, MAINTOWN, MT1 ABH CATALOGUE/PRICE LIST CATALOGUE NUMBER AZ1245 AZ1246 AZ1247 AZ1248 AZ1249 AZ1256 AZ1257 AZ1258 AZ1259 AZ1260 AZ1261 AZ1262 AZ1280 AZ1281 AZ1283 DESCRIPTION LEVIS BUFFALO JEANS WRANGLERS BUFFALO JEANS FALMERS BUFFALO JEANS BUFFALO JEANS STANDARD BUFFALO SPECIALS BUFFALO TRACK SUIT BUFFALO STREAMLINE SUIT BUFFALO FAST TRACK BUFFALO SWEATER BUFFALO POLO SHIRT BUFFALO TOP COAT BUFFALO FULL COAT BUFFALO TRAINERS A CLASS BUFFALO TRAINERS B CLASS BUFFALO TRAINERS EXCEL PRICE

15 Activity 3 HOW DOES A BUSINESS KEEP A RECORD OF ITS MONEY? MANDETTES CASH & CARRY - WHOLESALERS FORTHERGILL STREET, MAINTOWN, MT1 ABH ORDER FORM Telephone (01234) Fax (01234) Order No: Please supply QUANTITY DESCRIPTION CATALOGUE NO. UNIT PRICE Delivery: Signed: 13

16 HOW DOES A BUSINESS KEEP A RECORD OF ITS MONEY? Activity 3 B Look at the invoice and answer the questions. (i) Who sent the invoice? (ii) Who was the invoice sent to? (iii) Calculate: The total prices for each item ordered and fill in the figures on the invoice; the total price column and fill in on the invoice; and complete the cheque on payment of the invoice. Date The Midhire Bank plc Date Pay :13:

17 Activity 3 HOW DOES A BUSINESS KEEP A RECORD OF ITS MONEY? MANDETTES CASH & CARRY - WHOLESALERS FORTHERGILL STREET, MAINTOWN, MT1 ABH INVOICE Telephone (01234) Fax (01234) To: Buffalo Fashions High Street Main Town NEWTOWN NE1 TBO YOUR ORDER NO. INVOICE DATE TAX POINT INVOICE NO. DESPATCH DATE ZHS May 20 QUANTITY DESCRIPTION CAT NO. DESPATCH TOTAL PRICE 20 pairs Levis Buffalo Jeans AZ pairs Wrangler Buffalo Jeans AZ pairs Buffalo Special AZ pair Buffalo Track Suit AZ Total cost VAT Total amount due

18 HOW DOES A BUSINESS KEEP A RECORD OF ITS MONEY? Activity 3 At the end of each day you must bank your takings. This requires you to fill in a paying-in-slip before you can pay money into the Buffalo Fashions current account at the bank. Today you had to complete a paying-in-slip for the following takings: coins 50 50p coins Cheques Fill in the paying-in-slip below. The Midhire Bank plc Account Pay-in The Midhire Bank plc Account Pay-in Notes Over Notes Acknowledgement For credit of an account at this branch only 10 Notes 5 Notes Date 1 Coin Silver Paid in by Bronze Total Cash Cheques, Pos Total Credit Name and A/c No (See over) Credit Total Items Deferment Qualprint Ltd Please do not write or mark below this line : :

19 Direct Debit Debit Card Methods of Payment Credit Card Cheque Cash How does a business make and receive payments? 17

20 HOW DOES A BUSINESS MAKE AND RECEIVE PAYMENTS? Activity 4 A Complete the paragraph below on ways Buffalo Fashions can make payment. You visit the c _ and c w and purchase goods to the value of 600. At the w you must p for goods before taking them away. You have a choice of paying by: (i) (ii) (iii) You decide to pay by c _ and need to write this for 600 to Buffalo Wholesale Trading. B Complete the cheque below. Date The Midhire Bank plc Date Pay :13:

21 How are profit and losses calculated? 19

22 HOW ARE PROFIT AND LOSSES CALCULATED? Activity 5 A business needs to keep records of its purchases and sales so that it can calculate its profits. SALES - PURCHASES = PROFIT 3,500-2,000 = 1,500 A This profit is called G P _. B When Buffalo takes the daily expenses from the Gross Profit - this gives the Net Profit the business has made. For example: GROSS PROFIT - EXPENSES = PROFIT 1, = 500 This profit is called N P _. 20

23 Activity 5 HOW ARE PROFIT AND LOSSES CALCULATED? C Using the example below, work out Buffalo Fashions' Gross and Net Profits or Loss after one year of trading. Sales 100,000 Purchases 60,000 Closing Stock 10,000 GROSS PROFIT Rent 3,000 Electricity 2,000 Rates 2,000 Advertising 1,800 Insurance 1,200 NET PROFIT D Transfer this information to a spreadsheet to calculate the gross and net profit. Print out your spreadsheet and the formula used. 21

24 HOW ARE PROFIT AND LOSSES CALCULATED? Activity 6 Case Study Joy has worked in a florist's since leaving school at sixteen but she had always wanted to work for herself. Joy saw a small shop to let in her local shopping centre. She decided to buy the shop. In order to raise the money necessary to open her shop, Joy prepared a business plan which she took to her local bank manager. A Name FIVE items Joy would need to set up her shop? (i) (ii) (iii) (iv) (v) B What forms of finance could the bank offer Joy? (i) (ii) 22

25 Activity 6 HOW ARE PROFIT AND LOSSES CALCULATED? C Name THREE ways a customer could pay for goods. (i) (ii) (iii) D Joy buys goods from a w _ by faxing an o form. When the flowers arrive, Joy receives an i, which is a bill for the goods. At the end of the month Joy writes a c _ and receives a r as proof of payment. E Complete the chart below for Joy's florist shop. JANUARY FEBRUARY MARCH APRIL SALES 2,200 2,700 3,217 3,647 PURCHASES 1,000 1,200 1,610 1,294 GROSS PROFIT 1,200 EXPENSES ,076 NET PROFIT 500 IH/ME/W50(05) 24 May

Coimisiún na Scrúduithe Stáit State Examinations Commission

2014. M55 Coimisiún na Scrúduithe Stáit State Examinations Commission LEAVING CERTIFICATE EXAMINATION 2014 A C C O U N T I N G - H I G H E R L E V E L (400 marks) This paper is divided into 3 Sections: