Consumer ChoiceStage 5 Commerce

Students learn about:

• Decisions affecting the quality of our lives◦ Consumer ◦ Financial ◦ Business ◦ Employment◦ Legal ◦ Environmental

Students learn to:

• Investigate the scope of Commerce and choice

• Identify and classify examples of different types of commercial and legal decisions that people make on a daily basis

• Recognise the consequences of commercial and legal decisions on the quality of our lives and the environment

Consumer Choice – Commerce and Choice

Write definitions for the following terms and find a picture to illustrate each:

◦ Goods◦ Services◦ Needs◦ Wants◦ Consumers◦ Personal wants◦ Collective wants

Consumption of goods and services

This video gives you an overview of various factors that you may/not be aware of when making a purchasing decision

What things that have you consumed today?

Are they a good, service, need or want?

ClickView: Consumer Choice & Protection

Decisions Affecting The Quality Of Our

Lives CommercialPersonal

Consumer decisions Should I

purchase new clothes or save

money for a computer ?

Business decisions. Is there

a need I could meet by setting up a business ?

Employment decisions What should I do for

work experience ?

Financial decisionsWhere should I

invest my savings ?

Legal decisionsHow can I exercise my legal rights as

a consumer ?

Commercial Decisions

The main types of employment decisions a person makes:◦ Number of hours worked / number of hours for leisure activities.◦ Sector to work in.◦ Run business or work for someone.◦ Adapt to change in the job market.

How employment decisions impact on a person’s quality of life:◦ Number of hours with the family.◦ Friendship time.◦ Leisure activities.◦ Amount of money earned.

Outline 5 examples of flexibleworking practices and the advantages of each way of working.

Employment decisions

Income Labour Wages Enterprise Profit Savings

Lingo List

The key financial decisions consumers need to make and the importance of the decision.◦ Spend money – to satisfy needs and wants◦ Save money –

Personal satisfaction and security Superannuation and long term investment Buy expensive item Savings history to get a loan

Develop a poster on preparing a budget OR options for paying (cash, credit card, direct debit etc) OR making investment decisions OR deciding how to receive income (cash, fringe benefit, salary sacrifice)

Financial decisions

Credit Card Direct Debit Cash Debit Card Superannuation Budgets

Casual Part-time Flexible work hours FIFO (fly in fly out) Shift work

Lingo List

Protect consumer rights. Responsibility of suppliers. Contract – when purchase item enter

contract with retailer. Right to get what paid for.

Access the NSW Office of Fair Trading website www.fairtrading.nsw.gov.au. Outline the types of legal advice this site provides for consumers.

Legal decisions

choosing what to buy◦ types of goods and

services◦ different brands and

products

 

choosing where to buy◦ range of locations

and sources◦ types of retail

outlets◦ internet purchasing

and mail order◦ locally, interstate,

globally

Consumer decisions

Comparison shopping Retail outlet E-commerce Local Interstate National Global

Lingo List

Financial requirements Business skills including

technology Employee requirements Legal structure –

determines liability – sole trader, partnership, company, franchise, cooperative.

Production – where/how will it be produced (primary/secondary/tertiary/quaternary/quinary)

Marketing – Product (what consumers want), Price (what competitors charge and what consumers willing to pay), Promotion (how market), Place (where sell).

Quantity to produce – consider demand.

Distribution – shop front, direct mail, internet.

Business decisions

Primary Secondary Tertiary Quaternary Quinary Product Price Place Promotion Liability

Lingo List

Family decisions

How do my actions

impact upon others in my household?

Health decisions.

How can I stay fit and

ensure that I get enough exercise

?

Learning/education decisions.

What subjects should I choose for Year 11 and

12 ?

Decisions based on values and beliefs.

What are my attitudes towards

people from different cultural backgrounds ?

Legal decisionsHow can I

exercise my legal rights as a

consumer ?

Personal Decisions

Social life decisions. How will I respond

to pressures from my peers?

Environmentally aware consumers ask themselves the following questions:◦ Does the production or distribution process of this

product harm the environment?◦ Does the use of the product harm the

environment?◦ Is this product recyclable?

Brainstorm the strategies consumers can use to minimise the impact of their consumption decisions on the environment

Environmental decisions

Students learn to: research consumer information from a variety of

sources that may include the internet, advertising material, specialist magazines and comparison shopping surveys

select and apply appropriate criteria to rank alternative purchasing options

explain the factors influencing decisions to buy locally, regionally, interstate or globally, retail or wholesale or on the internet

research and report on comparison shopping processes and decisions using word processing applications

Consumer decisions

Consumers purchase two main types of goods – ◦ 1. Durable goods – goods that have a long lifespan and

do not need to be replaced frequently. For example a washing machine, furniture and motor vehicles.

◦ 2. Non-durable goods – goods that are purchased frequently and have a short lifespan. They are less expensive and bought with cash or EFTPOS. For example food and pens

Types of goods and services

Another way of naming or grouping goods is to look at the relationships between them.◦ Complementary goods – a good that is generally

consumed with another good. For example tomato sauce and meat pies.

◦ Substitutes – a good that can be purchased as an alternative to another good. For example butter instead of margarine.

Types of goods continued

Intangible goods provided to consumers by individuals or firms.

Some like education are transferable from one person to another.

Some are consumed at the point of sale like watching a concert so are not transferable.

Services

Make a list of the services

you consume on a weekly

basis.

Divided into producer or consumer services based on who the consumer is:◦ Those consumed by businesses like transport are

called producer services.◦ Those individuals consume in their everyday lives

like health are consumer services.

Producer or consumer services

Notable examples include Nike, Coke, Quik silver, Microsoft, Apple

Brand names can become so powerful they replace the original or generic name for the product for example vacuuming being referred to as hoovering.

Generic and own-label goods include ‘no frills’. They boost the reputation of supermarkets and reduce the power of manufacturing companies. They often cost less and are of comparable quality to the branded alternatives.

Different brands and products

Brand Is this good a need or a want ?

Is this good durable or non-durable ?

What is a substitute to this good ?

Is this a generic / own – label good ?

Activity

Select 10 goods you would purchase during a typical week and then copy and complete the table as shown above.

Impulse buying – where you purchase a good or service on the spur of the moment and later discover you cannot afford the product or do not really need it.

Choosing what to buy

Asking the following questions enables you to avoid impulse buying.◦ What exactly are my needs ?◦ Can I afford this ?◦ Have I compared prices ?◦ What after-sales service is available with the product ?◦ What are the features of the product and will it do all I want

it to do ?◦ How safe and reliable is the product ?

Design an educational pamphlet to outlinethe steps consumers take to avoid impulse buying. Include pictures and illustrations to help get your message across.

Strategies to avoid impulse buying

Retail stores can be placed in a hierarchy based on the types of goods they provide and how far consumers need to travel to get to them.◦ At the top are large regional shopping centres and stores

selling expensive consumer durables (sporting equipment)◦ Then come planned shopping centres like Westfield which

provide one stop shopping and a carpark.◦ Independent retailers and corner stores have largely been

replaced.

Choosing where to buy – range of locations and sources

Select a product sold in a range of locations and from different sources and report on comparison-shopping processes. Include a picture of the product.

General (corner) stores – small retail outlets that focus on selling everyday convenience items like milk and bread.

Supermarkets – (Coles) large self-service stores that sell a wide variety of food and other household products.

Department stores – (David Jones) retail outlets divided into a number of smaller units or departments selling a wide rage of goods and services.

Discount stores – (Big W) offer a range of goods through specific product departments which provide cut price promotions and value for money.

Independent specialty stores – (The Bike Barn) usually owner operators that focus on selling a specific product.

Category killers – (Toys ‘R’ Us) retail outlets often operating out of large warehouses that dominate the sale of one particular product type.

Choosing where to buy – types of retail outlets

Franchises – a type of retailing that involves selling the rights to use a business name, image or management system.

Periodic markets – large numbers of sellers in an informal market setting open only on the weekend and providing bargain and bulk-orders to save money.

Shopping strips – traditional shopping centres consisting of a range or retail outlets lining the main street of a town or suburb.

Planned centres – (Macquarie Centre) retail outlets that are planned, operated and managed as a single unit. They contain a couple of large anchor stores and a wide range of speciality stores under one roof with easy car parking.

Choosing where to buy – types of retail outlets continued

Develop a mind map of the different types

of retail outlets.

Using the following website ◦ www.castletowers.com.au (Castle Towers Shops) and your own knowledge

Write a report outlining the key differences between planned centres (Castle Towers) and other common retail formats (Knightbridge shopping centre). Comment on the following features:◦ How to get there and access to car parking.◦ Number and variety of retailers.◦ The format / layout of the centre.◦ Services and entertainment provided.

Activity

Anyone with a computer and internet access can purchase a range of goods from around the world and have them delivered direct from the warehouse or manufacturer to almost any location in the country.

Choosing where to buy – Internet purchasing

Choosing where to buy – Internet purchasing

Select one online shopping site and answer the following questions:

a) How easy is this site to use?

b) What types of goods are available from this site?

c) How are the goods delivered, how long does this take and what are the delivery charges?

d) What payment options are available?

e) How secure is the site?

Present your findingsin the form ofa report.

Direct marketing is where goods are sold directly to a customer rather than through a retail outlet.

Direct marketing includes mail order (sending customer offers, advertising or catalogues) and telemarketing (phone sales) and door-to-door sales.

Choosing where to buy – mail order

Choosing where to buy – direct marketing

Design a pamphlet or power point presentation informing consumers of the advantages and disadvantages of either direct marketing or internet shopping.

Consumers can choose whether to purchase locally manufactured or imported goods (goods produced overseas).

Improvements in communications technology and road, rail and air transport make it easier for consumers to purchase products regionally or from interstate.

In the mid-1990s Australian labelling was changed to make it easier for customers to identify products made in Australia◦ To be labelled ‘Product of Australia’ it needs to be produced and processed within Australia◦ To be labelled ‘Made in Australia” the product is manufactured in Australia but contains imported ingredients.

Choosing where to buy – locally, interstate, globally

Guides for making a decision include:◦ The price of the good or service◦ The quality of the good or service◦ The service provided including warranties and

after-sales advice.◦ Your ethical perspective – when we purchase

imported goods there is a flow of money out of the country to pay for them.

Choosing where to buy – locally, interstate, globally

access www.choice.com.au and www.consumersonline.gov.au and investigate ethical consumerism.

Students learn about: Key factors affecting consumer decisions

◦ Finance, price, marketing, age, gender, convenience, service◦ Environmental considerations

Students learn to: Explain the factors affecting consumer decisions. Examine factors which contribute to changes in

behaviour and practices by individuals and organisations.

 

Consumer decisions continued

Can I obtain finance to help me make this purchase ?◦ Funds come from your savings, a bank or financial

institution.◦ Some stores offer store credit cards and hire

purchase agreements (funds lent to customer by the store).

◦ Your disposable income, the amount of money you have to spend on goods and services. Disposable income (net income) =

gross income (total income) - tax

Finance

What is my budget? Can I afford this good?

◦ Obtain a minimum of three quotes before buying an expensive good or service.

◦ Don’t be rushed into making purchases.◦ Be aware of hidden costs like installation charges,

service costs and postage.

Price

Price continued Potato chips are available in the following package weights and prices. Use the unit pricing method to work out which is the best value?a) 500g

packet $2.50

b) 750g packet $3.60

c) 1kg box $5.30

The five P’s are used to alter the buying behaviour of consumers.◦ Price, ◦ Position, ◦ Product, ◦ Promotion and ◦ Place

Marketing

Consumers wants change as they get older.

Age

Babies

Toddlers

Pre schoolers

Primary School

Secondary School Write

down two wants relevant for each of the five age groups

Boys and girls often purchase different types of products.

Gender

Boys Girls

Many Australians use convenient shopping options like online shopping and ebay.

Convenience

Using word art list words to show options Australians could use to purchase a computer.

Consumers are demanding a more personalised shopping experience.

Businesses have responded by offering a range of mobile domestic services including pet grooming and gardening services. These services are available seven days a week and travel to a customer’s home or workplace at a time the customer chooses.

Service

Using the internet find the name and contact details of a mobile pet grooming and gardening service.

Consumers are considering the environmental impact of their purchases.

Manufacturers and retailers are selling ‘environmentally friendly’ products manufactured from recycled materials.

Environmental considerations

Using pictures from the internet create a collage of factors that influence consumer decisions.

Students learn about: The need for consumer protection – scams and rip-

offs Features of a simple contract Legal rights and protective legislation for consumers Organisations that provide assistance for consumers

◦ Government departments and organisations – state and federal◦ Independent organisations

The process of consumer redress◦ Remedies and their outcome

Consumer protection

Students learn to: Use the internet to research scams and rip-offs Identify the methods used in scams and rip-offs and

analyse the ethics involved Identify the features of a simple contract using at

least one legal case study. Investigate consumer laws and appropriate

processes for consumer protection. Work collaboratively to gather, interpret and present

information on the protection provided by consumer protection agencies and independent bodies.

Consumer protection

Unconscionable conduct – dishonest and unfair conduct by individuals or businesses providing goods and services to consumers.◦ Misleading advertising: bait and switch strategies

– attracted to store by low prices, once in the store told sale stock has run out and convinced to buy a more expensive item.

◦ Fake price reduction – when a retailer claims a price was $75.00 and is now only $50.00 they must guarantee the original selling price is accurate and that goods were sold for that amount.

The need for consumer protection –scams and rip-offs

Access www.scamwatch.gov.au and http://fido.asic.gov.au◦ Choose one scam from the website – pyramid schemes,

amazing offers scams, medical scams, internet scams, scam games – and explain how it is carried out

Access http://fido.asic.gov.au◦ Investigate the process of complaining about a financial

scam by accessing http://fido.asic.gov.au and going to the ‘how to complain’ page

Report a scam by participating in the Gull Awards and emailing their entry to: gullawards@asic.gov.au or fax hardcopy entries to ASIC

Activities

A contract is any written or spoken agreement to buy or sell goods and services.

Both the buyer and seller have important rights and responsibilities enforced by law.

Each person knows the other individual or business involved in the contract will perform their part of the agreement. For example when a seller hands over a good the seller is responsible for ensuring the good is of reasonable quality and fit for the purpose for which it is sold.

Features of a simple contract

Legal object – the purpose of the contract must be legal.

Possible to perform – it must be possible for both parties to carry out the contract.

Consideration – both parties must benefit in some way from the contract.

Legal right – people have a legal right to enter into a contract unless they are under 18 or are mentally unfit at the time of signing.

Intention – both parties must have intended to enter a legally binding contract.

Offer and acceptance – there must be an offer by one party that is unconditionally accepted by the other party.

Six essential elements of a contract

An example of a contractA contract has three elements:1.an offer – This may be made when you decide to buy something and offer to pay a price.

2.an acceptance – This may be done by the seller agreeing to supply the goods or services. The acceptance may be in words or an action.

3.consideration – this is the value (usually money) that is given in return for the goods or services offered to be supplied or acquired. It may also be the promise to pay at a later date.

Go to www.dft.nsw.gov.au/consumerhelp

What should parties consider before signing a contract?

Go to www.fairtrading .nsw.gov.au/consumers.

◦ What is a lay–by agreement?◦ How can a lay-by be terminated?◦ Look up the case study. Summarise it using dot

points

Lay bys

They come with a basic consumer guarantee. 

Goods must comply with product information and safety standards.

It is illegal for retailers to mislead you about products or use high-pressure selling tactics.

You are forming a contract. For example, when buying a car or TV.

Contracts may be in the form of a receipt, invoice or other document outlining terms and conditions such as deposits, cancellation fees, warranties, delivery and payment arrangements.

It is your responsibility to read and understand the terms and conditions of contracts.

Keep a copy of receipts, dockets, invoices or contracts in a safe place in case you want to return, repair or exchange the goods.

Rights and responsibilities when buying goods and services

http://www.moneystuff.net.au/Default.aspx?tabid=94

Go to Teachers Resources. Then Money Stuff Video Resources. Then Buying Stuff.

Activity 1: Marketing and Selling and Activity 2: How do we pay for goods and servicesRead introductionDownload the video and watchComplete table Activity 3: Shopping wiselyRead introductionDownload the video and watchRead the articleWrite your own set of shopping tips for buying a CD player. 

Activities on money stuff website

Key federal government laws – 1. Trade Practices Act 1974. This act aims to improve the

wellbeing of Australians. It deals with issues like anticompetitive and unfair practices, product safety, conditions and warranties and actions against manufacturers and importers.

2. The Prices Surveillance Act 1983. The ACT gives the ACCC power to monitor and report on the prices, costs and profits of companies and government authorities.

Legal rights and protective legislation for consumers

Select one of the laws above. Use the internet perhaps (NSW Office of Fair Trading) to find out:a) When and why the law was developed.b) Which level of government is responsible for

it.c) The penalties for breaking this law.d) The type of protection it provides for

consumers.

The NSW Office of Fair Trading outlines four important consumer rights:1. Goods and services should be safe and of merchantable

quality (fit for the purpose for which a good is bought).

2. You have the right to be protected from misleading and deceiving practices.

3. Information provided with goods and services should be accurate and give details of price, content and weight of package as well as care instructions.

4. Safety instructions should appear on dangerous products.

Consumer protection laws

Summarise these in your own words.

Consumer responsibilitiesDiscuss the rights and responsibilities of consumers in the following situation:

Jan purchased a new sleeping bag. The washing instructions read ‘Hand wash in mild detergent and warm water’. When the sleeping bag was washed according to these instructions it appeared to shrink and lose its colour.

Activity

Government departments and organisations◦ State government authorities

NSW Office of Fair Trading – advice about fair and ethical retail practices.

◦ Federal government departments The Australian Competition and Consumer Commission

handles issues such as anticompetitive and unfair market practices, mergers or takeovers of companies and product safety/liability.

Organisations that provide assistance for consumers

Australian Communications and Media Authority (ACMA)www.acma.gov.au

Australian Competition and Consumer Commission (ACCC)www.accc.gov.au

Consumer and Business Affairs Victoriawww.consumer.vic.gov.au

Consumer Affairs (NT) http://www.nt.gov.au/justice/consaffairs/index.shtml

The Department of Broadband, Communications and the Digital Economy (DBCDE)

www.dbcde.gov.au Fair Trading (ACT)

http://www.ors.act.gov.au/fairtrading/index.html Fair Trading (NSW)

www.fairtrading.nsw.gov.au Fair Trading (QLD)

www.fairtrading.qld.gov.au Fair Trading (WA)

www.docep.wa.gov.au Office of Consumer and Business Affairs

www.ocba.sa.gov.au Office of Consumer Affairs and Fair Trading

www.consumer.tas.gov.au

Government organisations that provide assistance for consumers

Go to two of these sites. Find out:

1. What are the aims of this government organisation?

2. What forms of practical support does the authority provide to consumers?

If you experience problems in dealing with a government department you can contact the ombudsman – an independent official appointed to deal with complaints against government departments or private businesses.

Ombudsmen

Define the term

ombudsmen in your own

words.

Australian Consumers’ Association◦ A non-profit organisation that aims to provide

consumers with information and guidance about goods, services, health and personal finances

◦ Conduct tests on products and publishes the test results in a monthly magazine, CHOICE

Independent Organisations

Access www.choice.com.au1. Describe the range of product reports available

on the website.2. What are the current consumer product alerts.3. Draw a mind map showing the range of

campaigns that the ACA is currently involved in.4. Make a list of the other consumer services

provided by CHOICE and the ACA.

Other organisations◦ Kidsafe (the Child Accident Prevention Foundation

of Australia) A non-profit, non-government organisation that provides information about the safety of products in order to prevent the unintentional injury or death of children.

Community organisations◦ Citizens’ advice bureaus◦ Financial counsellors◦ Legal centres

Independent Organisations

Consumer protection organisations

Federal government/state government/independent

Type of protection provided to consumers

Office of Fair Trading State Government

ACCC Federal Government

ACA Independent – non profit organisation

Organisations that assist consumers

Using these websiteswww.lawstuff.org.au, www.consumersonline.gov.au.add two more rows to the above table.

1. Identify the problem. Gather

relevant documents.

2. Contact the business without delay. Write to or phone the person you had a problem

with or the manager.

3. Contact the relevant industry

association or ombudsman.

4. Contact the state government’s

consumer affairs department. They can

inform you of your rights and suggest

further action to take.

5.Contact a mediation/conflict

resolution service. A mediator can hear both sides of the

dispute without bias and suggest an

acceptable solution.

Steps in resolving a consumer complaint

6. Contact a court or

tribunal. They can make a

legally binding decision.

However, this is costly.

Writing a letter of complaint

Using this letter as a

guide write a letter of

complaint to the

Department of Fair Trading (DFT) about faulty goods. This can be made up of something you have

bought that was faulty.

Use simple clear language and attach copies of relevant paperwork. (para1) Provide a clear description of the problem. (para2)

Be aware of your rights and communicate them clearly in your letter. (para3)

Propose a solution (paragraph 5)

Go to www.lawstuff.org.au

Select the topic shopping. Then read refunds, when can goods be returned and lodging complaints.

Use the above website and the relevant power point slides on consumer redress to develop an information pamphlet on what redress is available to consumers and how to go about getting assistance.

You could also visit the DFT sitewww.dft.nsw.gov.au/consumerhelp

Activity Access additional

worksheet on Consumer Redress on Edmodo.

Students learn about: Methods of payment.

◦ Cash, credit, cheque, direct debit, lay-by, electronic funds transfer, book up.

Methods of keeping records. Changes over time and the impact of

technology.

Payment choices

Students learn to: Identify the criteria that should be considered when

determining methods of payment for different suppliers. Research the criteria to determine the most appropriate

methods of payment in a range of contexts. Identify the advantages and disadvantages of book up. Propose options that could be taken to improve financial

services available to Aboriginal and Torres Strait Islander peoples and remote communities.

Develop and use spreadsheets and databases to maintain effective records and monitor monthly transactions including running totals of cash, direct debit and credit purchases.

Identify how technology has impacted on the payment process of businesses and consumers.

Payment choices

Cash – money in coins and notes

Credit –

Direct debit –

Lay-by – a service that allows you to purchase goods when you do not have the money to buy them upfront.

Electronic funds transfer – (EFPTOS) all types of financial transactions that are carried out electronically.

Book up – (informal credit given by a trader to consumers so that consumers can purchase goods or services from the trader). Small amounts of credit offered to customers so they can make purchases. Customers provide in return a form of security like a debit card and pin number.

Methods of payment

Go to dictionary on the dashboard. Complete the

list of definitions.

Cash

Credit

Advantages and disadvantages of cash and credit

Advantages Disadvantages

Immediate payment is possible

A bulky way to pay for expensive things

All shops accept Not very secure

Advantages DisadvantagesMoney stays in the bank earning interest until you pay your bill.

Easy to overspend and get caught in a ‘debt trap’

Safer. Can be cancelled if lost.

Can have high interest so should be used with caution

Cheques

Direct debits

Advantages and disadvantages of cheques and direct debits

Advantages Disadvantages

Convenient and easy to use.

Some retailers do not accept.

Added security – can be stopped when lost.

When deposited into an account you need to wait for it to be cleared.

Advantages DisadvantagesA convenient way to pay for household services.

You need to have sufficient funds in your account to cover.

Can be paid regularly automatically.

Amounts paid may not always be the same.

Lay-by

Electronic funds transfer

Advantages and disadvantages of lay-by and electronics funds transfer

Advantages DisadvantagesNo interest charges. Buy goods not needed.

Protects you against future increases in the price of the product.

Good must stay in the store until full payment has been made.

Advantages DisadvantagesCash free so minimises security concerns.

Significant increases in fraud cases recently.

Widely accepted. Allows personal information to be passed onto others.

Book-up

Advantages and disadvantages of book-up

Advantages DisadvantagesGives isolated communities another payment method.

Consumers lose the freedom to decide where they shop.

Can buy items when you see them.

Difficult to access funds when the shop is closed.

Complete each of the 7 tables above by adding an extra row – that is a third

advantage and disadvantage for

each.

Use the ASIC booklet on book up or go to www.fido.asic.gov.au. Click on ‘Financial Tips’, then ‘Loans and Credit’.

Research to what extent book up is practised and discuss its ethical and legal implications.

Book – up activity

Buying a newspaper Paying for a haircut Paying the monthly electricity bill Purchasing a formal dress Paying for a car Buying groceries Paying your bus fare Paying off a mortgage (housing loan) or personal loan.

Determine the most appropriate payment method for each situation

Services for indigenous Australians and remote communities

Read the yellow box.

Brainstorm and develop a mind map showing measures that could be used by industry, government and indigenous organisations to improve the banking services available to these people in remote areas.

Compare the amounts on withdrawals, cheques and deposits with the amounts on your receipts or cheque butts. Check off all canceled cheques and deposits.

Insert the last balance shown on your bank statement Add deposits. Deduct all cheques and withdrawals. Your adjusted balance should agree with the balance in your record book. If it doesn’t

check your addition and subtraction, then check to be sure you have entered all the numbers correctly.

 

  

How to check a bank statement and balance your bank account

Note assume currency in statement is $. $

Open bank balance Add Deposits

Less cheques and withdrawals

Closing bank balance

Activity – Complete the Bank ReconciliationDate Detai

lsDeposits

Wdls Balance

28/09/04 O/Bal 405.9301/10/04 590.9303/10/04 298.6407/10/04 100.0012/10/04 154.0015/10/04 58.9017/10/04 230.0021/10/04 127.8023/10/04 450.0026/10/04 240.0027/10/04 127.8028/10/04 45.7529/10/04 24.3030/10/04 C/Bal

There are several financial statements that are normally prepared by businesses. The most common ones are:◦ The profit and loss statement◦ The balance sheet.◦ The cash flow statement

Financial Statements

The profit and loss statement tells owners the differencebetween revenue (income) and expenses for a periodof time and whether they have made a profit or loss.

The Profit and Loss Statement

The balance sheet is like a set of scales that weighs the assets on one side and liabilities and owner’s equity on the other. Owner’s equity is basically what the business owes its owners.

The Balance Sheet

A cash flow statement summarise the details contained in a cash book.It summarises the inflows (income or deposits) and outflows (cheques or withdrawals) during a period of time. This whenadded to the bank balanceat the start of the periodenables the bank balanceat the end of the period to be determined.

The Cash Flow Statement

Cash ReceiptsLess Cash Payments = Cash surplus (deficit)Add Bank Balance (start of period) = Bank Balance (end of period)

Date Item Amount $April 1 Received cash from Joe Blow 40

April 3 Paid electricity bill 200

April 4 Received cash from Y Xeric 20

April 5 Received cash from L Montague 80

Paid wages to G Jones 250

April 6 Received donation from A Smith 100

April 7 Paid Telstra (phone bill) 350

April 8 Received payment from A Sims 450

April 9 Received cash from L Hewitt 400

April 10 Paid Energy Australia (Electricity bill) 50

April 13 Received cash from M Forces 200

April 14 Paid Telstra (phone bill) 80

April 25 Received donation from J Walker 100

April 26 Paid wages to G Jones 250

Activity - use this information to complete a cash flow statement

Definition – an estimate of income and expenses for a set period of time.

Reasons for making a budget◦ To track money when you are working to a plan.◦ To work out how to best use the money you earn.◦ To plan for your changing needs and wants.

Budgets

1. Determine money coming in (income).

2. Work out your fixed and variable expenses.

3. Write down your weekly cash flow.

4. Work out how much you can save.

5. Identify how to cut back.

6. Develop a cost benefit analysis to work out how to save for new wants.

7. Shop around to find the best deal for the goods and services you need and want.

8. Choose a suitable bank account.

9. Learn how to record your pay slip.

10. Decide how to keep records.

11. Develop a weekly, monthly and annual budget.

12. Monitor and change your budget at least once a month.

Activity - Use the document Budgeting: Ways to handle money (found at www.fpa.asn.au), the steps below and other relevant internet sites to develop a brochure for teenagers on the steps in budgeting.

Budgets – Complete your own weekly budget in Excel

Self-checkout Supermarkets

ActivityDescribe how a self-

checkout works.Outline the advantages

and disadvantages of self-checkout supermarkets.

Technology in retailing and payment options is continually developing and changing. Recent developments include:◦ Online and internet shopping◦ EFTPOS and debit and credit cards◦ Smart cards◦ Self-checkout supermarkets

Activities1. Develop a collage in word of recent technological

developments in retailing.2. Use Microsoft publisher or word to create a newspaper article

titled ‘Shopping in 2050’. Include words and illustrations.

Changes over time and the impact of technology