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

You're on a roll — 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. Got more? Send 'em!