22.4 SkillBuilder activity EVALUATING, CONCLUDING AND DECISION-MAKING After completing an apprenticeship in building and construction, and being employed by a medium-sized construction company, Hans has set up his own small building business with his business partner, Claire. Both Hans and Claire want to be able to make a living from running their own business. They want the business to make a profit. For this to happen, they must make sure that money received from selling goods and services is greater than what they pay in expenses to run the business. 1. Define each of the following in your own words: Gross profit a. Net profit b. Cost of goods sold c. Journal d. 2. Distinguish between cash inflows and cash outflows. 3. Explain the purpose of an income statement for a business owner. 4. Hans and Claire’s business has the following transactions during the week ending 31 March 2023.
Date
Details
Amount ($)
March25 March26 March26 March26 March27 March28 March29 March30
Purchased timber beams
500 100
Paid for supplies (plasterboard, nails, screws)
Deposit received from client
5000
Paid mobile phone bill
46
Paid for timber beams and concrete slab
550 150 250
Paid for replacement drill
Paid for renewal of building insurance
Paid weekly wages
1600
a. Determine the value of cash receipts for Hans and Claire’s business. b. Create a cash payments journal with columns for dates, details, reference numbers, materials purchased, advertising, utilities, wages and total payments. Record all cash payments for the week in the appropriate columns and add the columns. c. Use the information from the journals to create an income statement for the week for this business. d. Use the same information to create a cash flow statement for this business. e. Explain whether you think the business has had a successful week. Give reasons for your answer.
22.4
Exercise
Learning pathways LEVEL1 1, 2, 5
LEVEL2
LEVEL3
3, 4, 6
7, 8
REMEMBER AND UNDERSTAND 1. Identify the false statement. A. A cash inflow is cash coming into the business. B. A cash outflow is cash going out of the business to pay for costs. C. Cash inflows are payments and cash outflows are receipts. D. All of the above 2. Match the terms with their definitions by placing the correct letters in the left column of the table below. a. Gross profit b. Net profit c. Cost of goods sold d. Cash journal
642 Jacaranda Humanities Alive 8 Victorian Curriculum Third Edition
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