Copyright All material in this course is, unless otherwise stated, the property of the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH, Small Enterprise Development Agency and Department of Higher Education and Training. Copyright and other intellectual property laws protect these materials. Reproduction or retransmission of the materials, in whole or in part, in any manner, without the prior written consent of the copyright holder, is a violation of copyright law. This learning material was developed with the support from Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Government in partnership with the Small Enterprise Development Agency and the Department of Higher Education and Training.
Contents page Heading About this Module Topic overviews Supplementary material Section Understand accounting terminology 1 Establishing a basic bookkeeping system 2 The working capital cycle 3 Preparing for budgeting - costing and price determination 4 Budgeting 5 Opening a bank account 6 Funding 7 Cash flow forecast 8 Support structures and legal requirements 9 Monitor financial progress 10
About this Facilitator s Guide/ EDP Workbook Learning Objectives Module 05 Financial Management Establishing basic bookkeeping systems, managing cash flow accounts, working with basic financial statements 119674 Manage finances for a new venture This Facilitator s Guide is intended for use during the training of Entrepreneurial Development Practitioners (EDPs). For each topic there is a section that serves as a guide to the Training Provider/ Facilitator regarding the training and recommended methodology. These pages are clearly identified as the Facilitator's Guide. The worksheets required for exercises, activities and the EDP Learner s Portfolio of Evidence are provided for each topic. Worksheets may photocopied if additional worksheets are required. This Facilitator s Guide is comprehensive, but not necessarily exhaustive, and the Training Provider/ Facilitator is encouraged to add relevant and appropriate information, in the interests of continuous improvement. The objective for EDP Learners is to acquire a broad range of knowledge and skills related to financial management which will equip them to transfer to individual EE Learners the particular knowledge and skills relevant to their specific circumstances, and to assist EE Learners to apply such skills and knowledge in the context of their businesses. Assessment Activities for assessment are supplied for each topic. They provide opportunities for ongoing formative assessment, and together provide evidence of learning for the purpose of summative assessment. The activities for assessment cover the unit standard outcomes, and in some cases additional outcomes have been added in terms of BESD requirements. The learning methodology advocates group activities, but for assessment purposes activities are intended to be completed individually so that EDP Learners may demonstrate their competence in terms of the course outcomes.
Tips for the training provider/ facilitator: Structure class activities so as to involve EDP Learners actively in the learning process. Use the beginning of the class wisely. It is the best time to set a positive learning environment and is one of the times when a high level of learning takes place. Begin with a suitable introduction that is as experiential, lively and as low-risk as possible. Use groups wisely. Attend to the process of making these groups successful; teach EDP Learners how to operate in groups and monitor/ support their progress. Encourage them to take turns performing the various roles: group facilitator, scribe, reporter, quality controller, etc. As EDPs need to apply relevant facilitation, coaching and assessment principles when interacting with the EEs, EDP Learners should be given the opportunity to practice the relevant skills as much as possible during their training. Use group and pair activities and discussions to practice facilitation, coaching and assessment skills. Provide EDP Learners with opportunities to use oral communication for a variety of different purposes, such as starting conversations, using questioning techniques, imparting/ presenting information and giving feedback. When using direct/ lecture instruction, keep it short and make sure it is well organised and supported by audio/ visual aids. Check for understanding. Include regular and timely feedback points. Provide regular structured opportunities for EDP Learners to reflect on their learning. Round off group discussions with a variety of different writing and/or reporting activities, to consolidate information and encourage reflection. Include peer reviews and self evaluations of group and individual learning/ activities. Wherever appropriate, EDP Learners should use a computer during their training (to create documents, tables and presentations, do research, etc). As EDPs need to develop/ customise learning materials for individual EEs, EDP Learners should be given the opportunity to learn to work with information and to practice the skills needed as much as possible during their training. Involve EDP Learners in a variety of text-based activities such as reading, summarising, researching, organising, recording and presenting information. Encourage EDP Learners to build up a collection of resources to use with EEs. This should include original source documents (official forms, newspaper articles, advertisements) and local information on such issues as support available and how to access it, business conditions and role models. Provide opportunities for EDP Learners to develop learning aids to use with EEs, such as summaries of key points, lists of terminology in local languages, translations, checklists, examples, samples, charts, diagrams and posters. Wherever possible relate information to actual EE conditions. Show EDP Learners how to apply information in practice, and how they can support the EEs to implement the knowledge/ skills gained.
BESD CF EE EE Learner EDP EDP Learner FG/ LW LP RB WB Glossary Basic Entrepreneurial Skills Development Curriculum framework Emerging Entrepreneur An Emerging Entrepreneur on the BESD programme A practicing Entrepreneurial Development Practitioner An EDP-in-training Facilitator s Guide / Learner Workbook Learning Pack - templates, documents, exercises, case studies, etc. that learners are required to use as part of their learning experience Resource Book for standardised learning material Facilitator s Guide / Learner Workbook DISCLAIMER The information contained in this Learning material is of a general nature only. Due to the different nature of various types of business and the complexity of financial management it is not warranted complete or accurate, or that reliance can be placed on the results thereof. It is recommended that financial management of a business is done in conjunction with an expert. Anything done or not done based on the learning material is entirely at the users own risk, and GTZ, its employees, contractors, subsidiaries and any other associates of GTZ will not accept responsibility for any loss, damage or liability whatsoever in this regard.
Topic Overviews Topic 1: Understand accounting terminology Topic 2: Establishing a basic bookkeeping system Topic 3: The working capital cycle Topic 4: Preparing for budgeting costing, pricing Topic 5: Budgeting Topic 6: Opening a bank account Topic 7: Funding Topic 8: Cash flow forecast Topic 9: Support structures and legal requirements Topic 10: Monitor financial progress
Topic 1: Understand accounting terminology This topic introduces financial accounting and provides some background why it is necessary, and what is needed in order to keep accurate books (financial records). We look at some terminology related to financial accounting and explain the (important!) difference between cash flow and profit. EDP Learners will begin to understand the importance of keeping formal financial records and will become better equipped to transfer relevant knowledge to EE Learners. Topic 2: Establishing a basic bookkeeping system The information in this section is at aimed giving EDP Learners an understanding of the (financial) accounting environment in a business with regards to accounting policies and methods (Accrual Method, Cash Method), accounting procedures, terms and concepts, and various components of an accounting system. We also look at source documents (e.g., receipts) that are used for information for the accounting system and describe formal accounting activities such as bank reconciliations, posting to transactions, and compiling a trial balance and balance sheet. The advent of the computer has made accounting much easier, and we briefly look at examples of accounting software packages that are available. EDP Learners should understand and be able to extract and collate pertinent information to transfer to the EE learners. Topic 3: Understand the working capital cycle This topic deals with the working capital cycle in a business. We look at background information on what is meant by working capital, and managing the different aspects of the working capital cycle such as cash, receivables, inventory and payable accounts. Topic 4: Preparing for budgeting - costing and price determination The information in this section is aimed at giving EDP Learners an understanding of the cost of sales with regards to different categories of business (e.g., retail, manufacturing, etc.) Different types of costs that can be incurred by a business are also discussed. The concept of breakeven is explained. We describe what it is, different types of breakeven, how it is calculated, what factors influence breakeven, and the impact on how the business will price goods (pricing strategy). EDP Learners will need to ensure that they understand these concepts in order to extract and transfer relevant knowledge to EE Learners.
Topic 5: Budgeting This topic provides some background on what a budget for a business is and why it is necessary, as well as the elements that are required to make up a budget for a small business. As part of this information, and to assist EDP Learners to understand the budgeting process in order to better transfer the required knowledge to the EE Learners, the difference between start-up capital and working capital is also looked at in more detail. EDP Learners should understand and be able to extract and collate pertinent information to transfer to the EE Learners. Topic 6: Opening a bank account It is important to know about having a bank account for a business why it is necessary and what the disadvantages are of not having a bank account. The different types of bank accounts are briefly discussed. EDP Learners will begin to understand the importance of having a bank account and will be equipped to transfer relevant knowledge to EE Learners. Topic 7: Funding Based on the financial plan section of a business plan, the business owner will need funding to start/ grow the business. In this topic we discuss aspects of funding such as how much money (funding) the business owner will require, what it will be used for and for what period of time. EDP Learners will acquire more knowledge about different types of funding that are available and where to find bona fide funding. EDP Learners will therefore be in a position to understand factors affecting Emerging Entrepreneurs, such as the disadvantages/ downfalls of taking up funding and planning how to repay the loan. They will also be able to give the EE Learners some direction on what (information, documents, etc.) needs to submitted when applying for a loan, and factors affecting the success of a loan application. Topic 8: Cash flow forecast This topic provides some background on what a cash flow forecast is, and why it is necessary for a business, as well as the elements that make up a cash flow forecast for a small business. As part of this information, and to assist EDP Learners to understand the cash flow forecast in order to better transfer the relevant knowledge to EE Learners, the difference between the income statement and cash flow forecast is also looked at in more detail. EDP Learners should understand and be able to extract and collate pertinent information to transfer to the EE Learners.
Topic 9: Support structures and legal requirements In financial bookkeeping, whether they are employed by a business full-time or simply fulfil these functions on a part-time basis, there are certain people doing finance-related jobs, and they have to conform to certain laws. These would be e.g., auditor(s), accounting officer(s)/ accountant(s), accounting clerk(s), bookkeeper(s) and this topic deals with the relationship between type of legal entity and their financial responsibilities. This topic further deals with taxes - what taxes are, different types of taxes, and why and when taxes must be paid. There is also some information about e-filing, which is a way to complete a tax return on the internet. Topic 10: Monitor financial progress What does all the information entered into, and calculated within the accounting system tell the business owner about the financial health of his/ her business? In order to manage a business, the owner should have an understanding of the accounting process and terminology, basic financial statements, calculations and methods of measuring income, expenditure and cash flow, and the terminology that is used in these types of documents. EDP Learners should understand the above and how to compare actual results with planned results, and recognize when, and what type of, corrective action might be necessary in the case of problems. This will enable them to transfer pertinent information to the EE Learners.
Supplementary material Learning Pack items Title Mod 05 LP Topic 2-01 Example Cash flow forecast Mod 05 LP Topic 2-02 Example Cashbook Mod 05 LP Topic 2-03 Example Account receivable ledger Mod 05 LP Topic 2-05 Example Account payable ledger Mod 05 LP Topic 2-06 Example Pro-forma Invoice Mod 05 LP Topic 2-07 Example Petty Cash Voucher Mod 05 LP Topic 2-08 Example Petty Cash book Mod 05 LP Topic 2-09 Example Sales Journal Mod 05 LP Topic 2-10 Example Purchase Journal Mod 05 LP Topic 2-11 Example Bank Reconciliation Mod 05 LP Topic 2-12 Example Trial Balance Mod 05 LP Topic 2-13 Example Income statement Mod 05 LP Topic 2-14 Example Balance Sheet Mod 05 LP Topic 5-02 Example Budget Mod 05 LP Topic 6-01 Bank deposit slip Mod 05 LP Topic 7-01 Funding requirements checklist Mod 05 LP Topic 8-01 Cash Flow Projection Worksheet Example Mod 05 LP Topic 8-02 Cash Flow Projection Worksheet Mod 05 LP Topic 10-01 Cash Flow Forecast example Mod 05 LP Topic 10-02 Budget Mod 05 LP Topic 10-02(a) Budget (Answers) Mod 05 LP Topic 10-03 Vusi Hotdogs-Financial Statements Mod 05 LP Topic 10-04 Case Study-Financial Statements Mod 05 LP Topic 10-04(a) Case Study-Financial Statements (Answers)
Supplementary Material & Case studies File name Mod 05 CS-01 Using financial learning aids Mod 05 CS-02 Financial Bookkeeping Mod 05 CS-03 Financial Implementing Mod 05 CS-04 Financial Costing Mod 05 CS-05 Financial Information Title and Subject matter Using financial learning aids Recording information / coaching on bookkeeping Implementing bookkeeping practices Costing 4 Obtaining sensitive/ financial information Relates to topic/ module General relevance - do at beginning of module 2 General relevance - do at end of module
Understand accounting terminology 1.1 Understand accounting concepts 1.2 Distinguish between cash flow and profit
Learning objectives In this topic we are going to learn more about the following: 1.1 Understand the following accounting concepts: Income Expenditure Assets Liabilities Ownership Profit Cash Flow Profit forecast Debtors Creditors Receipts Payments Start-up capital Working capital 1.2 Distinguish between cash flow and profit What is the difference between cash flow and profit?
Facilitator s Guide 1.1 Understand accounting concepts Lecture: Using the Resource Book, and any other relevant information that you come across during your preparation, explain the meaning of the following accounting terms to the EDP Learners, during an interactive lecture. Income Expenditure Assets Liabilities Ownership Cash Flow Profit Profit forecast Debtors Creditors Receipts Payments Start-up capital Working capital Exercise: Use a group exercise to embed the knowledge acquired. Divide the group into 2 teams. Give each group 10 minutes to draw up a set of 10 quiz style questions and answers about the accounting concepts. The teams take it in turns to question each other, and to answer the questions, while you referee and keep score. Theoretical Questionnaire: Assess EDP knowledge of basic accounting concepts with a questionnaire RB Pg 1.1-1.3 PoE WB Pg 1.3 Page 1.1
Facilitator s Guide 1.2 Distinguish between cash flow and profit Lecture: Using the Resource Book, and any other information that you come across during your preparation, explain the difference between cash flow and profit to the EDP Learners, during an interactive lecture. Exercise: Use group exercises to embed the knowledge acquired. Divide the group into 2 teams. Give each group 10-15 minutes to prepare a short presentation explaining the difference between cash flow and profit. The teams take it in turns to present to the rest of the group. Theoretical Knowledge: Assess EDP s knowledge with regards to the difference between cash flow and profit.. EDP learners are required to write a short paragraph clearly explaining the difference between cash flow and profit, with specific reference to the impact on the viability of a business. Summary - Portfolio of Evidence Theoretical questionnaire basic accounting concepts Paragraph describing difference between cash flow and profit, and their impact on the viability of a business RB Pg 1.3 PoE WB Pg 1.5 Page 1.2
EDP - Portfolio of Evidence Module 05: Topic 1 Name and Surname of Learner ID Number: Date: Answer the following questions in the spaces provided Understand accounting concepts 1. List 3 reasons why accounting books have to be properly kept according to good accounting principles 2. Explain each of the following terms: Income Profit Expenditure Balance Cash Flow Page 1.3
EDP - Portfolio of Evidence Module 05: Topic 1 Understand accounting concepts (cont d) Name and Surname of Learner ID Number: Date: Assets Working capital Ownership Start-up capital Creditors Receipts Debtors Liabilities Profit forecast 3. List what you need to keep accurate books Page 1.4
EDP - Portfolio of Evidence Module 05: Topic 1 Name and Surname of Learner ID Number: Date: Write a paragraph clearly explaining the difference between cash flow and profit, with specific reference to the impact on the viability of a business Difference between cash flow and profit Page 1.5
EDP - Portfolio of Evidence Module 05: Topic 3 Name and Surname of Learner ID Number: Date: Difference between cash flow and profit (cont d) Page 1.6
Establishing a basic bookkeeping system 2.1 Understand accounting
In this topic we are going to learn more about the following: 2.1 Understand accounting Accounting environment Accounting policies and methods (Accrual Method, Cash Method) Accounting procedures Accounting terms and concepts Components of an Accounting System Source documents Books of first entry Bank reconciliation Posting to transactions Trial balance Income statement Balance sheet Accounting software packages that are available
Facilitator s Guide 2.1 Understand accounting Interactive Lecture: Using the Resource Book, supplied web links and any other information that you come across during your preparation, discuss the following aspects of accounting with the EDP Learners, during an interactive lecture. Use group discussions to/ emphasize/ reinforce the learning. Accounting environment Accounting Policies and Methods What are they? Why do we need them? Areas in which we need accounting policies Accounting Methods (Accrual Method, Cash Method) Accounting Procedures Cash Procedures Inventory and Asset Procedures Revenue Procedures Purchasing Procedures Accounting Terms and Concepts Double-Entry Accounting Supplementary information: As part of your preparation for the interactive lecture, go to the following website for further information about basic bookkeeping and accounting. Use group discussions to / discuss the learning. http://www.dwmbeancounter.com/tutorial/tutorial.html Knowledge Questionnaire: EDP Learners are required to answer the questions in the knowledge questionnaire. RB Pg 2.1-2.6 PoE WB Pg 2.5-2.8 Page 2.1
Facilitator s Guide Interactive Lecture: Continuing the theme of Understand accounting, and using all the resources listed on the previous page, discuss further aspects of accounting as per the topics listed below, with the EDP Learners, during an interactive lecture. Use group discussions to emphasize/ reinforce the learning. The items supplied in the Learning Pack (listed below) are used to illustrate the learning. [Mod 05 LP Topic 2-01 Example Cash flow forecast] [Mod 05 LP Topic 2-02 Example Cashbook] [Mod 05 LP Topic 2-03 Example Account receivable ledger] [Mod 05 LP Topic 2-10 Example Purchase Journal] [Mod 05 LP Topic 2-05 Example Account payable ledger] Components of an Accounting System Revenue Cycle [Mod 05 LP Topic 2-14] Order Entry Cash Receipts / Deposits [Mod 05 LP Topic 2-02] Accounts Receivable [Mod 05 LP Topic 2-03] Purchase Cycle Purchase Orders / Purchasing [Mod 05 LP Topic 2-10] Cash Disbursements / Cheques Accounts Payable [Mod 05 LP Topic 2-05] Payroll Cycle General Journal Cycle Interactive Lecture: Continuing the theme of Understand accounting, and using all the resources listed on the previous pages, discuss further aspects of accounting as per the topics listed below, with the EDP Learners, during an interactive lecture. Use group discussions to emphasize/ reinforce the learning. The items supplied in the Learning Pack (listed below) are used to illustrate the learning, by explaining or working through them. [Mod 05 LP Topic 2-06 Example Pro-forma Invoice] [Mod 05 LP Topic 2-07 Example Petty Cash Voucher] [Mod 05 LP Topic 2-08 Example Petty Cash book] [Mod 05 LP Topic 2-09 Example Sales Journal] [Mod 05 LP Topic 2-10 Example Purchase Journal] RB Pg 2.6-2.10 RB Pg 2.11-2.13 Page 2.2
Facilitator s Guide Source Documents [Mod 05 LP Topic 2-06] Books of first entry Cash Receipts Cash Payment Petty Cash [Mod 05 LP Topic 2-07; 2-08] Sales Journals [Mod 05 LP Topic 2-09] Purchase Journals [Mod 05 LP Topic 2-10] Interactive Lecture: Continuing with the subject Understand accounting, and using all the supplied resources, discuss further aspects of accounting as per the topics listed below, with the EDP Learners, during an interactive lecture. Use group discussions to emphasize/ reinforce the learning. The items supplied in the Learning Pack (listed below) are used to illustrate the learning. Divide the EDP Learners into groups and request them to work through the supplied examples. Bank reconciliation What is it? Importance How do I do it? [Mod 05 LP Topic 2-11 Example Bank Reconciliation] [Bank statement supplied by EDP Learner] Posting to transactions Interactive Lecture: Continuing the theme of Understand accounting, and using all the resources listed on the previous pages, discuss posting to transactions with the EDP Learners, during an interactive lecture. Use group discussions to emphasize/ discuss the learning. Posting to transactions: The EDP Learners are required to complete the exercise about Sipiwe s Movie Place: Journalize the supplied transactions Create appropriate ledger accounts and post the journal entries to the correct accounts RB Pg 2.11-2.13 RB Pg 2.14-2.15 RB Pg 2.16 PoE WB Pg 2.9-2.11 Page 2.3
Facilitator s Guide Financial Statements [Mod 05 LP Topic 2-12 Example Trial Balance] [Mod 05 LP Topic 2-13 Example Income statement] [Mod 05 LP Topic 2-14 Example Balance Sheet] Interactive Lecture: Using the examples supplied in the Learning Pack, the Resource Book and web links, continue with the subject Understand accounting, and discuss financial statements during an interactive lecture. Use group discussions to work through the supplied examples in order to reinforce the learning. Trial Balance [Mod 05 LP Topic 2-12] Income Statement [Mod 05 LP Topic 2-13] What is an Income Statement? Identify the elements of an Income Statement Balance sheet [Mod 05 LP Topic 2-14] What is a Balance Sheet? Identify the elements of a Balance Sheet EDP Learners are required to write a paragraph about each of the following financial statements: Trial Balance, Income Statement, Balance Sheet. The following should be clearly stated for each: Accounting software packages: Access an example of a small business accounting software package, and briefly discuss the advantages of electronic bookkeeping with the EDP Learners. Summary - Portfolio of Evidence Purpose Components When it is required What it tells you about the financial position of a business What documents you need to compile the particular financial statement Knowledge questionnaire Completed journals and posting to ledger accounts Paragraphs on financial statements (Trial Balance, Income Statement, Balance Sheet) RB Pg 2.17-2.19 PoE WB Pg 2.12-2.14 RB Pg 2.20 Page 2.4
EDP - Portfolio of Evidence Module 05: Topic 2 Name and Surname of Learner ID Number: Date: Knowledge Questionnaire Write the answers to the questions in the spaces provided for this purpose 1. What is meant by GAAP? Understanding accounting 2. Briefly compare the accrual and cash methods of accounting Accrual method 3. Briefly explain the following terms Cash Procedures Revenue Procedures Purchasing Procedures Cash method Page 2.5
EDP - Portfolio of Evidence Module 05: Topic 2 Name and Surname of Learner ID Number: Date: 4. What is meant by Double-Entry Accounting? Understanding accounting (cont d) 5. Give a short explanation/ description of each of the following Revenue Cycle Order Entry Cash Receipts / Deposits Accounts Receivable Accounts Payable General Journal Cycle Page 2.6
EDP - Portfolio of Evidence Module 05: Topic 2 Understanding accounting (cont d) Name and Surname of Learner ID Number: Date: 6. What is meant by source documents and give 3 examples: 7. List the books of first entry 8. Draw a diagram to show the steps in a bank reconciliation Page 2.7
EDP - Portfolio of Evidence Module 05: Topic 2 Understanding accounting (cont d) Name and Surname of Learner ID Number: Date: 9. What is meant by posting to transactions? 10. Briefly explain what each of the following is: Trial Balance Income statement Balance sheet Page 2.8
EDP - Portfolio of Evidence Module 05: Topic 2 Name and Surname of Learner ID Number: Date: Transactions Jan, 01 Jan, 04 Jan, 08 Jan, 08 Jan, 11 Jan, 11 Company received R 30000 cash and issued stock R 16000 Ticket Sales for the week R 2400 Refreshment sales for the week R 2400 DVD rental R 2900 Salaries R 1500 Paid Cinema Weekly for advertising Jan, 13 Paid electricity bill R 250 Accounts Cash Common Stock Refreshment Sales Revenue Salaries Expense DVD Rental Expense Advertising Expense Utilities Expense Ticket Sales Revenue You are required to journalize (compile the journal for) the financial information supplied below. Once you have complete the journal, create the required ledger accounts and post the transactions to the ledger accounts Posting transactions - Journal Page 2.9
EDP - Portfolio of Evidence Module 05: Topic 2 Posting transactions (cont d) Name and Surname of Learner ID Number: Date: Date Account/ Details Debit Credit Jan-01 Journal for Sipiwe's Movie Place Page 2.10
EDP - Portfolio of Evidence Module 05: Topic 2 Posting transactions (cont d) Name and Surname of Learner ID Number: Date: Ledger Accounts for Sipiwe's Movie Place Page 2.11
EDP - Portfolio of Evidence Module 05: Topic 2 Name and Surname of Learner ID Number: Date: You are required to write a paragraph about each of the following financial statements - Trial Balance, Income Statement, Balance Sheet - clearly stating: Purpose Components When it is required What it tells you about the financial position of a business What main documents are required to compile it Financial statements 1. Trial Balance [See Learning Pack: Mod 05 LP Topic 2-12 Example Trial Balance] 2. Income statement [See Learning Pack: Mod 05 LP Topic 2-13 Example Income statement] 3. Balance Sheet [See Learning Pack: Mod 05 LP Topic 2-14 Example Balance Sheet] Page 2.12
EDP - Portfolio of Evidence Module 05: Topic 2 Financial Statements (cont d) Name and Surname of Learner ID Number: Date: Page 2.13
EDP - Portfolio of Evidence Module 05: Topic 2 Financial Statements (cont d) Name and Surname of Learner ID Number: Date: Page 2.14
The working capital cycle 3.1 Understand the working capital cycle
In this topic we are going to learn more about the following: 3.1 Understand the working capital cycle Introduction Managing cash Managing receivables Managing inventory Managing payables (accounts) Understand the growth trap
Facilitator s Guide 3.1 Understand the working capital cycle Interactive Lecture: Using the information supplied in the Resource Book, and Learning Pack (where applicable), prepare and present an interactive lecture to the EDP s on the following aspects of the working capital cycle, the impact thereof and their role in the financial management of a business. Introduction to working capital cycle What is it? What is its importance? Different industries have different type of working capital needs Season fluctuations Managing cash Cash Flow Forecast Manage the plan Effect of debtors on cash flow Effect of creditors on cash flow Effect of inventory on cash flow Managing receivables Number of days within which Debtors have to pay their account. Interest rate that will be charged after the payment date Discounts for cash payments Managing payables (accounts) Number of days within which Creditors will be paid after receiving their invoice. Negotiate discounts for paying for cash or before due date Understand the growth trap Managing inventory Buy bulk for discounts Negotiate payments structure and timing Do not overstock RB Pg 3.1 RB Pg 3.2-3.4 RB Pg 3.5 RB Pg 3.6 RB Pg 3.7 RB Pg 3.8 BESD Module 05 (RB) Financial Management Page 3.1
Facilitator s Guide Exercise: Divide the class into small groups and facilitate discussions on the points that have been discussed on working capital cycle, what impact they think it can have on an EE s business. [A case study may be used see page 3.2] This can be done in short sessions after each main point has been discussed, or once the entire chapter has been dealt with, depending on the size and experience of the group. Theoretical questionnaire: Assess the EDP Learner s understanding of the working capital cycle by means of a knowledge questionnaire. Summary - Portfolio of Evidence Theoretical questionnaire working capital cycle PoE WB Pg 3.3 BESD Module 05 (RB) Financial Management Page 3.2
EDP - Portfolio of Evidence Module 05: Topic 3 Name and Surname of Learner ID Number: Date: Answer the following questions in the spaces provided 1. What is working capital? Understand working capital cycle 2. Draw a diagram to illustrate the working capital cycle 3. What is the cash flow forecast (projection)? Page 3.3
EDP - Portfolio of Evidence Module 05: Topic 3 Understand working capital cycle (cont d) Name and Surname of Learner ID Number: Date: 4. Name the 3 main processes in managing the plan, and give a brief explanation of each 5. Briefly explain the effect of each of the following on cash flow Debtors Creditors Inventory 6. What are the main problems that can cause longer delays in debtor payments? Page 3.4
EDP - Portfolio of Evidence Module 05: Topic 3 Understand working capital cycle (cont d) Name and Surname of Learner ID Number: Date: 7. Name 3 main actions you can take to manage creditors 8. What is the growth trap and how can you avoid it? 9. Name 4 measures you can take to manage inventory Page 3.5
Preparing for budgeting - costing and price determination 4.1 Understand cost of sales 4.2 Identify costs 4.3 Understand breakeven 4.4 Calculate breakeven (Rand; Volume) 4.5 Understand influence on breakeven BESD Module 05 (RB) Financial Management
In this topic we are going to learn more about the following: 4.1 Understand cost of sales with regards to: Manufacturing Retailing Service Venture 4.2 Identify costs: Fixed Costs Variable Costs Mixed Costs Overhead Costs Sunk Costs 4.3 Understand breakeven: Contribution margin Breakeven point in Rand Breakeven point in Volume (units) 4.4 Calculate breakeven: Breakeven (Rand) Breakeven (Volume) Contribution Margin 4.5 Understand the influence on breakeven: When changes occurs in variable costs, fixed costs or contribution margin Appropriate pricing strategies BESD Module 05 (RB) Financial Management
Facilitator s Guide Note: It is necessary to prepare very well for the facilitation session. It may be worth your while to invite a guest speaker with a financial background, to give a mini-presentation during the course of the lecture. Interactive Lecture: Using the Resource Book, and any other information that you come across during your preparation, explain the principles of costing w.r.t. each of the following sections to the EDP Learners, during an interactive lecture. Encourage learner participation. 4.1 Understand cost of sales What is cost of sales (goods sold)? Cost of sales w.r.t. Manufacturing Cost of sales w.r.t. Retailing Cost of sales w.r.t. Service venture 4.2 Identify costs Discuss the different types of costs under the following headings. Encourage the EDP Learners to try and identify these costs in a business. [A case study may be used - see page 4.2] Fixed Costs Variable Costs Mixed Costs Overhead Costs Sunk Costs 4.3 Understanding Breakeven Discuss break-even under the following headings. Keep the lecture interactive, Encourage the EDP Learners to try and identify these costs in a business [A case study may be used - see page 4.2] Contribution margin Breakeven point in Rand Breakeven point in Volume (units) RB Pg 4.1-4.2 RB Pg 4.3-4.4 RB Pg 4.5-4.6 Page 4.1
Facilitator s Guide 4.4 Calculate: With the EDP Learners, work through the examples in the Resource Book on how to calculate these items. Contribution margin Breakeven point in Rand Breakeven point in Volume (units) 4.5 Understand influence of breakeven In an interactive lecture discuss the influence on breakeven when changes occur in variable costs, fixed costs or contribution margin Further discuss appropriate pricing strategies, based on the information that has been shared with the EDP Learners in this topic (Topic 5). EDP Learners are required to complete calculations on costs, based on the following case study. Case study: Vusi has a mobile hot dog stand, which he tows to the local soccer field on weekends, and he parks it near the local Spaza shop during the week. Vusi has a helper, Lucky, who helps him make hotdogs, and who looks after the hotdog stand when Vusi is away running errands. Vusi has a small 2-plate gas stove in the hotdog stand, and he keeps the viennas, margarine and a few cold drinks in a cooler box. He also has a bucket for washing hands, and a few pieces of cutlery. Vusi makes the hotdogs by cutting open a bread roll, spreading some margarine on the inside, and placing a Vienna sausage in the roll (The vienna sausages are first placed in a pot with boiling water for a few minutes to warm them.) Vusi puts tomato sauce and/ or mustard on each hotdog, if the customer wishes. The hotdog is wrapped in a serviette and handed to the customer. Vusi works hard, and so does Lucky but let s get real can they make money? Use the information provided on the following page to start doing some calculations related to understanding costs. Summary - Portfolio of Evidence Calculations on costing as per case study RB Pg 4.6-4.7 RB Pg 4.8-4.10 PoE WB Pg 4.3-4.6 Page 4.2
EDP - Portfolio of Evidence Module 05: Topic 4 Name and Surname of Learner ID Number: Date: Case study: Vusi s Hotdogs Vusi has a mobile hot dog stand, which he tows to the local soccer field on weekends, and he parks it near the local Spaza shop during the week. Vusi has a helper, Lucky, who helps him make hotdogs, and who looks after the hotdog stand when Vusi is away running errands. Vusi has a small 2-plate gas stove in the hotdog stand, and he keeps the viennas, margarine and a few cold drinks in a cooler box. He also has a bucket for washing hands, and a few pieces of cutlery. Vusi makes the hotdogs by cutting open a bread roll, spreading some margarine on the inside, and placing a Vienna sausage in the roll (The vienna sausages are first placed in a pot with boiling water for a few minutes to warm them.) Vusi puts tomato sauce and/ or mustard on each hotdog, if the customer wishes. The hotdog is wrapped in a serviette and handed to the customer. Vusi works hard, and so does Lucky but let s get real can they make money? Use the information given on the next page for calculations related to understanding costs. You may use the space below for notes: Understanding costs - calculations Page 4.3
EDP - Portfolio of Evidence Module 05: Topic 4 Name and Surname of Learner ID Number: Date: Vusi s Hotdogs: Contribution Format Income Statement for Week Ended Sales (Total Revenue)? Less Variable Costs Cost of sales? Delivery charges 50.00 Total Variable Costs? Contribution margin? Variable Costs Contribution margin (%)? Less Fixed Costs (per week) Rent 150.00 Hire (for parking) 50.00 Salaries 500.00 Total Fixed Costs? Nett Operating Income? Information Bread rolls R 1.50 Sausages R 0.40 Tomato sauce R 0.10 Serviettes R 0.50 Gas (for cooking) R 0.50 Total variable expenses (per hotdog) Vusi sold 800 hotdogs this week. Using all the information that has been supplied to you, calculate the missing information in the income statement above, and following: (Note: Use the space provided on the following pages to show your calculations) Calculate: Calculate the information required below (based on the provided case study). Total Variable Costs (per week) Total Fixed Costs (per week) Price that Vusi must charge per hotdog to break even Number of hotdogs Vusi must sell (volume) to break even Contribution margin Contribution margin ratio Understanding costs calculations (cont d) R? Note: Vusi would like to make 50% profit Answer Page 4.4
EDP - Portfolio of Evidence Module 05: Topic 4 Understanding cost calculations (cont d) Name and Surname of Learner ID Number: Date: Page 4.5
EDP - Portfolio of Evidence Module 05: Topic 4 Understanding cost calculations (cont d) Name and Surname of Learner ID Number: Date: Page 4.4
Budgeting 5.1 Understand budgeting BESD Module 05 (RB) Financial Management
In this topic we are going to learn more about the following: 5.1 Understand budgeting: What is a budget? Why do we need a budget? What is the difference between start-up capital and working capital? Elements of a budget BESD Module 05 (RB) Financial Management
Facilitator s Guide 5.1 Understand budgeting Note to Facilitator: When preparing to present this section, supplement your notes and the information given in the Resource Book with extra information, should you feel it is appropriate. See the following web link: http://www.googobits.com/articles/690-building-a-small-business-budgetfrom-the-bottom-up.html Conduct an interactive lecture about budgeting, using the information supplied in the Resource Book and other references. Address the following points: What is a budget? Why do we need a budget? What is the difference between start-up capital and working capital? Elements of a budget Group Discussion: Divide the EDP Learners into small groups and facilitate a group exercise, where the EDP Learners are required to draw up a budget for Vusi s business see page 5.2. The EDP Learners may use the example budget supplied in the Learning Pack to get an idea of what a budget should look like. Learning Pack See [Mod 05 LP Topic 6-02 Example Budget] Case Study see page 5.3 and 5.4 of this workbook. Using the information supplied for the Case Study in Topic 5, EDP Learners are required to draw up a budget for Vusi s Hotdogs, showing all the elements of the budget. Summary - Portfolio of Evidence Budget based on case study (in Topic 5, pages 5.3 and 5.4) RB Pg 5.1-5.5 PoE WB Pg 5.2-5.3 Page 5.1
EDP - Portfolio of Evidence Module 05: Topic 5 Name and Surname of Learner ID Number: Date: Compile a budget for Vusi s Hotdogs, using the information supplied in Topic 5, on pages 5.3-5.4 Budgeting Page 5.2
EDP - Portfolio of Evidence Module 05: Topic 5 Budgeting (cont d) Name and Surname of Learner ID Number: Date: Page 5.3
Opening a bank account 6.1 Understanding bank accounts 6.2 Types of accounts BESD Module 05 (RB) Financial Management
In this topic we are going to learn more about the following: 6.1 Understanding bank accounts: Understand the purpose and importance of a bank account: 6.2 Types of accounts: Explain the different type of accounts that can be opened What are bank costs? Explain the different ways you can access your money Explain the safety measure of two signatures BESD Module 05 (RB) Financial Management
Facilitator s Guide 6.1 Understanding bank accounts: Lecture: Using the information provided in the Resource Book, and any other pertinent or useful information you have available, present an interactive lecture on the purpose and benefits/ uses of bank accounts. Discuss the information under the following headings: Why you need a bank account (including legal and FICA requirements) Consequences of not having a bank account Group discussion: Divide the EDP Learners into groups and facilitate group discussions about the importance of having a bank account with regards to the following: Personal capacity Business capacity Security Legislation (1) The EDP Learners are required to visit their bank (s), speak to a client consultant and determine: what is required to open a business account what is required to open a personal account how to calculate the real cost of a loan (2) During the bank visit the EDP Learners are also to obtain information about and make a comparison between the bank charges and costs of: having a cheque book and using internet/ cell phone banking (3) The EDP Learners are also required to obtain the following from the bank: blank cash deposit slip [Mod 05 Topic 4-01 Bank deposit slip] blank cash withdrawal slip Facilitator s note: Please refer to the exercise under 6.2, which also requires EDP Learners to obtain banking account information, so that it can be done at the same time. RB Pg 6.1 6.2 Page 6.1
Facilitator s Guide The EDP Learners are required to compile a checklist of all the documents that are required to open a bank account. (A copy should be filed for future use with EE Learners.) 6.2 Types of accounts In an interactive lecture explain the different types of accounts that can be opened at a bank to the EDP Learners. Cheque account Savings Account Credit Card Account Petrol Card Account Money Market Account Other investment accounts Exercise The EDP Learners are required to research the following (at a number of different banks) and present a brief summary of their information: The purpose, advantages and disadvantages of having each of the above types of accounts The terms and conditions of each of the above types of accounts, and one example of an investment account Comparison of bank costs/ charges Group discussion Divide the EDP Learners into small groups, ensuring that within the group the EDP Learners have information about at least two different banks. The EDP Learners are required to discuss and compare the information they obtained, and give a brief presentation on the main differences/ similarities between the banks in terms of the types of accounts (as listed in the exercise above). Ways to access money in the bank account In an interactive lecture explain the different ways that a person can access his/ her money, and give a brief description of how it is done. Also explain the safety measure of two signatures. Physically, in the bank ATM Cheque Book Cell Phone Banking Internet Banking PoE WB Pg 6.4 RB Pg 6.2 6.4 RB Pg 6.4 6.8 Page 6.2
Facilitator s Guide Group discussion Divide the EDP Learners into small groups, ensuring that within the group the EDP Learners have information about at least two different banks. The EDP Learners are required to discuss the different ways that a person can access their money from a bank (as listed in the exercise), and give a brief presentation on the information they have obtained EDP Learners are required to complete the following, using the information in the case study provided, and the blank forms obtained from banks (or in the case of the deposit slip, the example provided in the Learning Pack [Mod 05 Topic 6-01 Bank deposit slip] : (a) a deposit slip (b) a withdrawal slip EDP Learners are required to obtain the following and to interpret/ analyse them: The EDP Learners are required to complete the knowledge questionnaire about understanding bank accounts and types of accounts. Summary - Portfolio of Evidence Bank statement ATM slip (e.g. Balance enquiry/ mini-statement) Checklist of documents required to open a bank account Case study completed deposit and withdrawal slips Interpretation/ analysis of bank statement and ATM slip Knowledge questionnaire bank accounts PoE WB Pg 6.5-6.7 PoE WB Pg 6.8-6.9 PoE WB Pg 6.10-6.12 Page 6.3
EDP - Portfolio of Evidence Module 05: Topic 6 Name and Surname of Learner ID Number: Date: Name of Bank: Type of account: Documents required Compile a checklist of all the documents required to open a bank account. Write your information in the space provided below. Types of bank accounts documents required Check () Page 6.4
EDP - Portfolio of Evidence Module 05: Topic 6 Name and Surname of Learner ID Number: Date: Case study: Vusi s hotdogs Vusi needs to deposit the takings for the day (22 February 2008) in his bank account. His bank account number is 333000333111. The branch code is 003311. The business name is Vusi s Hotdogs. The reference is Saturday s takings. There was R1500 in notes, R35 in R5 coins, R50 in R1 coins, R22 in 50 cent coins. Vusi does not accept cheques or cards. Use the blank documents obtained in the previous exercise for the following: (a) Complete a blank deposit slip as if you were Vusi, and are depositing the money with the cashier in the bank. Alternatively, use the example of a deposit slip provided in the Learning Pack [Mod 05 Topic 4-01 Bank deposit slip] (b) Vusi needs to withdraw money from the business account to buy supplies. He needs to withdraw R550. Vusi s business registration number is cc1234567, and his ID number is 710304 1234 123. Using all the information supplied, complete a withdrawal slip correctly. Types of bank accounts ways to access your money Attach your completed deposit and withdrawal slips to the following pages. You may use the space below for notes: Page 6.5
EDP - Portfolio of Evidence Module 05: Topic 6 Name and Surname of Learner ID Number: Date: Complete a cash deposit slip correctly and attach it in the space provided below. Types of bank accounts ways to access your money (cont d) Page 6.6
EDP - Portfolio of Evidence Module 05: Topic 6 Name and Surname of Learner ID Number: Date: Complete a cash withdrawal slip correctly and attach it in the space provided below. Types of bank accounts ways to access your money (cont d) Page 6.7
EDP - Portfolio of Evidence Module 05: Topic 6 Name and Surname of Learner ID Number: Date: Interpret a bank statement. You may write your notes in the space provided below, or on the bank statement itself. Attach the bank statement to the back of this page. Interpret banking information bank statement Page 6.8
EDP - Portfolio of Evidence Module 05: Topic 6 Name and Surname of Learner ID Number: Date: Interpret an ATM statement. You may write your notes in the space provided below. Attach the ATM statement to this page. Interpret banking information ATM statement Page 6.9
EDP - Portfolio of Evidence Module 05: Topic 6 Name and Surname of Learner ID Number: Date: Answer the following questions in the spaces provided Understand bank accounts 1. List 3 consequences of not having a bank account 2. Name at least 4 types of documents that are required by the bank for you to open a bank account. 3. Give a brief explanation of each of the following: a) Current account Page 6.10
EDP - Portfolio of Evidence Module 05: Topic 6 Name and Surname of Learner ID Number: Date: b) Debit card c) Credit card d) Hire Purchase (HP) accounts e) Personal loans f) Petrol cards Understand bank accounts (cont d) 4. List five ways you can access your money and give a brief description of each a) Physically at the bank cashier Page 6.11
EDP - Portfolio of Evidence Module 05: Topic 6 Name and Surname of Learner ID Number: Date: Understand bank accounts (cont d) 5. List five ways you can access your money and give a brief description of each (cont d) b) ATM c) Cell phone banking d) Internet Banking e) Cheque 6. Completing a cheque correctly You are a business owner, John A Doe. You need to pay your supplier, ACME Stationers, R525-32, today 31 January 2008. Complete the following example cheque correctly. Page 6.12
7.1 Understand funding Funding
In this topic we are going to learn more about the following: 7.1 Understand funding: How much money do you need? What do you need it for? For how long? Types of funding available Where to find bona fide funding The downfalls of taking up funding Planning for repayment of loan What do you have to submit to apply for a loan?
Facilitator s Guide 7.1 Understand funding Interactive Lecture: Using the Resource Book, supplied web links and any other information that you come across during your preparation, discuss the following aspects of funding with the EDP Learners, during an interactive lecture: How much money will be needed? What do you need it for? Start-up Working capital For how long? Types of funding available Where to find bona fide funding (e.g. Apex) The downfalls of taking up funding Planning for repayment of loan What do you have to submit to apply for a loan? Learning Pack: [Mod 05 LP Topic 7-01 Requirements for funding Checklist] The EDP Learners are required to research and find at least five sources of legitimate funding for small businesses. Details of the funding organization are required to be noted under the following headings: Note to Facilitator: Ensure that the EDP group researches a variety of different sources, and includes local sources of funding. Summary - Portfolio of Evidence Details of organization Types of funding offered by the organization Requirements for qualifying for, and obtaining the various types of funding offered by the organization - complete the checklist supplied in the Learning Pack, adding in any additional information Repayment conditions Information on funding organizations RB Pg 7.1 7.7 PoE WB Pg 7.2 7.7 Page 7.1
EDP - Portfolio of Evidence Module 05: Topic 7 Name and Surname of Learner ID Number: Date: You are required to research a list of at least 5 possible funding organisations, and compile notes w.r.t. the following: Details of organization Types of funding offered by the organization Requirements for qualifying for, and obtaining the various types of funding offered by the organization Repayment conditions Understand funding Page 7.2
EDP - Portfolio of Evidence Module 05: Topic 7 Understand funding (cont d) Name and Surname of Learner ID Number: Date: Page 7.3
EDP - Portfolio of Evidence Module 05: Topic 7 Understand funding (cont d) Name and Surname of Learner ID Number: Date: Page 7.4
EDP - Portfolio of Evidence Module 05: Topic 7 Understand funding (cont d) Name and Surname of Learner ID Number: Date: Page 7.5
EDP - Portfolio of Evidence Module 05: Topic 7 Understand funding (cont d) Name and Surname of Learner ID Number: Date: Page 7.6
EDP - Portfolio of Evidence Module 05: Topic 7 Understand funding (cont d) Name and Surname of Learner ID Number: Date: Page 7.7
Cash flow forecast 8.1 Understand cash flow BESD Module 05 (RB) Financial Management
In this topic we are going to learn more about the following: 8.1 Understand Cash Flow: What is a cash flow forecast? Why do we need a cash flow forecast? Elements of a cash flow forecast What is the difference between the income statement and cash flow forecast? BESD Module 05 (RB) Financial Management
Facilitator s Guide 8.1 Understand Cash flow Interactive Lecture: Using the Resource Book, supplied web links and any other information that you come across during your preparation, explain the meaning of the following to the EDP Learners, during an interactive lecture: What is a cash flow forecast? Why do we need a cash flow forecast? Elements of a cash flow forecast What is the difference between an income statement and a cash flow forecast? Go to this link to download an example of a cash flow forecast, or use supplied examples from the Learning Pack. http://www.businesslink.gov.uk/finance_files/cash_flow_projection_worksheet.xls [Mod 05 LP Topic 8-01 Cash Flow Projection Worksheet Example] [Mod 05 LP Topic 8-02 Cash Flow Projection Worksheet] Exercise: Divide the class into small groups. The EDP Learners are required to use the spreadsheet provided to compile a cash flow projection as for an EE. [Mod 05 LP Topic 8-02 Cash Flow Projection Worksheet]. Items may be eliminated or added as required. Group members should select a hypothetical EE business that would provide a broad selection of ideas/ information to work with, and discuss this together/ advise each other. The groups present their cash flow projection to the rest of the Learners. Case study: The EDP Learners are required to use the spreadsheet provided to compile a cash flow projection for Vusi s Hotdogs. See the case study on page 4.3 (Topic 4). [Another case study may be used if preferred]. The cash flow projection should be done in such a way that it can be used for an EE s business as part of the entrepreneurial development programme. [Mod 05 LP Topic 8-02 Cash Flow Projection Worksheet]. Summary - Portfolio of Evidence Completed cash flow projection based on case study RB Pg 8.1-8.3 PoE WB Pg 8.2 Page 1.1 8.1
EDP - Portfolio of Evidence Module 05: Topic 8 Name and Surname of Learner ID Number: Date: Compile a cash flow projection for the case study, using the supplied Excel Spreadsheet. [Mod 05 LP Topic 8-02 Cash Flow Projection Worksheet] Eliminate or add items as you require, and do the calculations within the worksheet as indicated. (use a larger printout of this sheet if you wish) Monthly Cash Flow Projection for (period): Business Name Compiled by: 1. CASH ON HAND [Beginning of month] 2. INCOME (a) Cash Sales (b) Collections from Credit Accounts (c) Loan or Other Cash Injection 3. TOTAL CASH RECEIPTS [2a + 2b + 2c=3] 4. TOTAL CASH AVAILABLE [Before cash out] (1 + 3) 5. OUTGOINGS (a) Purchases (Merchandise) (b) Gross Wages (excludes w ithdraw als) (c) Payroll Expenses (Taxes, etc.) (d) Outside Services (e) Supplies (Office and operating) (f) Repairs and Maintenance (g) Advertising (h) Auto, Delivery, and Travel (i) Accounting and Legal (j) Rent (k) Telephone (l) Utilities (m) Insurance (n) Taxes (o) Interest (p) Other Expenses [Specify each] (q) Miscellaneous [Unspecified] (r) Subtotal (s) Loan Principal Payment (t) Capital Purchases [Specify] (u) Other Start-up Costs (v) Reserve [Specify] (w ) Ow ner's Withdraw al 6. TOTAL CASH PAID OUT [Total 5a thru 5w ] 7. CASH POSITION [End of month] (4 minus 6) ESSENTIAL OPERATING DATA [Non-cash flow information] A. Sales Volume [Rand] B. Accounts Receivable [End of Month] C. Bad Debt [End of Month] D. Inventory on Hand [End of Month] E. Accounts Payable [End of Month] F. Depreciation Cash flow projection Page 8.2
Support structures and legal requirements 9.1 Legal entity and financial responsibility 9.2 Types of taxes
In this topic we are going to learn more about the following: 9.1 Understand the relationship between type of legal entity and financial responsibility: Identify the support structure that needs to be in place: Auditor Accounting Officer Accounting Clerks Bookkeepers 9.2 Know the different types of taxes that you have to register for: What is a tax? Why do I pay taxes? Types of taxes When should the taxes be paid? E-Filing
Facilitator s Guide 9.1 Understand the relationship between type of legal entity and financial responsibility Conduct an interactive lecture session: Facilitate an interactive lecture in which you discuss the (financial management) support structures that need to be in place in a business, to ensure proper management of the business s finances. Items to address: a) Legal entity vs. financial responsibility b) Support structures needed to make organisation financially viable Auditor Accounting Officer Accounting Clerks Bookkeepers Theoretical questionnaire: Assess the EDP s understanding by means of a knowledge questionnaire. 9.2 Know the different types of taxes that you have to register for: Guest Speaker interactive presentation Invite a tax consultant or a consultant from the nearest branch of SARS as a guest speaker, and facilitate a presentation by this person in which they discuss the different types of taxes that a business owner has to register for/ pay. Address the following: What is a tax? Why do I pay taxes? Types? Personal Tax Business Tax PAYE, SDL, UIF VAT Etc. When should it be paid? Manual submission vs. E-Filing RB Pg 9.1 PoE WB Pg 9.3 RB Pg 9.2-9.5 Page 9.1
Facilitator s Guide Question and answer session Arrange for a question and answer session at the end of the presentation. Allow the EDP Learners 10 minutes or so to compile some questions in groups, and then to select the most critical questions to address to the guest speaker. The EDP Learners are encouraged to ask questions pertinent to an informal small business situation, or queries from their previous experience or an EE s business situation. Documentation Request the guest speaker to bring information and copies of the appropriate documentation for the various types of taxes that are being discussed, and that the business owner will have to register for. Copies of the forms are required to be incorporated in the Learning Pack, in a folder marked [Mod 05 LP Topic 9-02 Tax Forms] Field Exercise: The EDP Learners are required to research information at the nearest SARS office, re the following: Summary - Portfolio of Evidence Types of tax a hypothetical EE will need to register for How to register Obtain the registration documents and complete them What tax returns the EE is required to complete, and the documents required Obtain the tax return forms and complete them What tax payments the EE is required to make, how and why; documents that must accompany the payment What is involved in e-filing Contact details of the person who assisted them at SARS Blank copies of the forms are required to be incorporated in the Learning Pack, in a folder marked [Mod 05 LP Topic 9-02 Tax Forms] Sample forms are then required to be completed for the hypothetical EE, and incorporated in the same Learning Pack folder. Theoretical questionnaire support structures Types of taxes; completed tax documents PoE WB Pg 9.4 Page 9.2
EDP - Portfolio of Evidence Module 05: Topic 9 Answer the following questions in the spaces provided Name and Surname of Learner ID Number: Date: Support structures Briefly explain what each of the following mean: Auditor Accounting Officer Accounting Clerks Bookkeepers Page 9.3
EDP - Portfolio of Evidence Module 05: Topic 9 Field Exercise - Types of taxes Research information at the nearest SARS office, re the following, and write your notes in the space provided below: Name and Surname of Learner ID Number: Date: Types of tax the EE will need to register for How to register Obtain the registration documents and complete them What tax returns the EE is required to complete, and the documents required obtain the forms and complete them What tax payments the EE is required to make, how and why; documents that must accompany the payment What is involved in e-filing Contact details of the person who assisted you at SARS Types of taxes Page 9.4
EDP - Portfolio of Evidence Module 05: Topic 9 Types of taxes (cont d) Name and Surname of Learner ID Number: Date: Page 9.5
EDP - Portfolio of Evidence Module 05: Topic 9 Types of taxes (cont d) Name and Surname of Learner ID Number: Date: Page 9.6
Monitor financial progress 10.1 Planning 10.2 Measure actual results 10.3 Compare/ report results BESD Module 05 (RB) Financial Management
In this topic we are going to learn more about the following: 10.1 Planning: First step in Monitoring Process Financial Plans are set in relation to business aims, objectives and strategy Ongoing process Types of plans Setting standards 10.2 Measure actual results: Interpret Financial Statements Calculations Measure actual income and expenditure Measure actual cash flow 10.3 Compare/ report results: Compare actual results with plans Corrective action
Facilitator s Guide 10.1 Planning Interactive Lecture: Using the Resource Book, supplied web links and any other information that you come across during your preparation, explain the meaning of the following to the EDP Learners, during an interactive lecture. Ways of monitoring financial performance of a business Setting financial Plans re. business aims, objectives and strategy Ongoing process of monitoring the business Types of plans that can be used to monitor the performance of the business (re. key performance indicators) Learning Pack: See the supplied documents: [Mod 05 LP Topic 10-01 Cash Flow Forecast example] [Mod 05 LP Topic 10-02 Budgeting] For Facilitator use only: [Mod 05 LP Topic 10-02a Budgeting answers] Exercise The EDP Learners are required to work through the exercises supplied in the Learning Pack: Cash flow forecast Budgeting 10.2 Measure actual results Interactive Lecture: Using the Resource Book, supplied web links and any other information that you come across during your preparation, explain the meaning of the following to the EDP Learners, during an interactive lecture. Encourage EDP Learners participation. Interpreting financial statements Calculate the following Solvency Profitability Operating ratios Measuring actual income and expenditure Measuring actual cash flow RB Pg 10.1 PoE RB Pg 10.7 Page 10.1
Facilitator s Guide Learning Pack: 1.[Mod 05 LP Topic 10-03 Vusi Hotdogs-eg Financial Statements] 2.[Mod 05 LP Topic 10-04 Case Study-Financial Statements] 3.For the Facilitator only: [Mod 05 LP Topic 10-04a Case Study-Financial Statements (Answers)] Example - financial statements Work through the example financial statements supplied in the Learning Pack/ workbook with the EDP Learners (see (1) above), in preparation for the activity in the next section. 10.3 Compare/ report results Interactive Lecture: Using the Resource Book, supplied web links and any other information that you come across during your preparation, explain the meaning of the following to the EDP Learners, during an interactive lecture. Comparing actual results with plans Taking corrective action Discussion: Divide the EDP Learners into groups and initiate discussions as to how they would go about implementing/ recommending corrective action for an EE. Complete financial statements The EDP Learners are required to work through and complete the financial statements supplied in the Learning Pack/ workbook with the EDP Learners (see (2) above), using the supplied account information and based on the example they worked through in (1). They may complete the information in the supplied MSExcel worksheets or on the pages supplied in the workbook. Summary - Portfolio of Evidence Cash flow forecast, budget Completed financial statements RB Pg 10.15 10.19 PoE WB Pg 10.3 10.4 Page 10.2
EDP - Portfolio of Evidence Module 05: Topic 10 Name and Surname of Learner ID Number: Date: Revenue Expenses Net Income Case Study: Khumalo s General Services Income statement Statement of retained earnings Balance Sheet Financial Statements Khumalo's General Services Income Statement as at 31 July 2006 Khumalo's General Services Statement of Retained Earnings as at 31 July 2006 Page 10.3
EDP - Portfolio of Evidence Module 05: Topic 10 Financial Statements (cont d) Name and Surname of Learner ID Number: Date: Assets Liabilities Khumalo's General Services Balance Sheet as at 31 July 2006 Total Liabilities and Shareholders equity Page 10.4