Activity 8: Group accounts as Income or Expenses. Activity 9: True/False statements about savings and investments.

here are the solutions for Activity 8 and Activity 9.

ACTIVITY 8: INCOME AND EXPENSES
Group the following accounts under the headings Income and Expenses:
Sales; Trading licence; Cost of sales; Rent Income; Telephone; Fuel; Salaries; Interest on fixed deposit; Insurance; Packing material; Rent expense.

• INCOME

  • Sales
  • Rent Income
  • Interest on fixed deposit

• EXPENSES

  • Trading licence
  • Cost of sales
  • Telephone
  • Fuel
  • Salaries
  • Insurance
  • Packing material
  • Rent expense

ACTIVITY 9: INCOME AND EXPENSES - SAVINGS AND INVESTMENT
Say whether the following questions are true or false:

• 9.1 When you save your money, you earn high interest because it carries high risk.

  • False. Savings typically carry low risk and therefore earn low interest. High interest is usually associated with high risk investments.

• 9.2 Investments mean making your money work for you.

  • True. Investing involves putting money into assets with the expectation of generating a return.

• 9.3 Savings are meant to fulfil a short-term need, such as when you want to buy an iPod.

  • True. Savings are generally used for short-term goals or emergencies.

• 9.4 Some people save their money so that they can have a monthly income when they retire. This is the best way to ensure an income when you retire.

  • False. While saving is part of retirement planning, investing (e.g., in pension funds, stocks, or property) is generally considered a more effective way to build a substantial retirement income due to higher potential returns over the long term.

• 9.5 Property carries relatively little risk; it almost always increases in value.

  • False. Property can be a good investment but carries significant risks (e.g., market downturns, illiquidity, maintenance costs) and does not always increase in value.

• 9.6 You can let out your property, thereby earning an income from your investment.

  • True. Renting out property is a common way to generate income from a property investment.

• 9.7 Investments satisfy short-term needs, such as when you want to buy a television set.

  • False. Investments are generally for long-term goals, as they involve higher risk and fluctuations. Short-term needs are typically met by savings.