Grade 11
Financial Function
Contents
Accounting Equation ..................................................................................................................................... 1
Statement of Comprehensive Income ............................................................................................................ 1
Business Costs.............................................................................................................................................. 2
Break-even Point ........................................................................................................................................... 2
Safety Margin................................................................................................................................................. 2
Feasibility Study ............................................................................................................................................ 2
Steps in a Feasibility Study ..............................3
Important Areas to Investigate.........................3
Return on Investment (ROI) .............................4
Monthly Income vs Capital Growth ................................................................................................................. 4
Insurance ...................................................................................................................................................... 5
Types of Business Insurance .......................................................................................................................... 5
Bad Debt ....................................................................................................................................................... 6
, -------- Financial Function-----
The financial function manages the businessÕs money. It records income
and expenses, prepares budgets and helps the business make financial
decisions.
Accounting Equation
Assets = OwnerÕs Equity + Liabilities
Assets: Everything valuable that the business owns.
OwnerÕs equity: Money or assets invested by the owner.
Liabilities: Money that the business owes to others.
Statement of Comprehensive Income
This statement shows the businessÕs financial performance over a specific
period.
Income: Money earned from selling goods or services.
Expenses: Costs paid to operate the business.
Net profit: The amount left after expenses are deducted from income.
Income − Expenses = Net profit
If expenses are higher than income, the business makes a net loss.Õ
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Financial Function
Contents
Accounting Equation ..................................................................................................................................... 1
Statement of Comprehensive Income ............................................................................................................ 1
Business Costs.............................................................................................................................................. 2
Break-even Point ........................................................................................................................................... 2
Safety Margin................................................................................................................................................. 2
Feasibility Study ............................................................................................................................................ 2
Steps in a Feasibility Study ..............................3
Important Areas to Investigate.........................3
Return on Investment (ROI) .............................4
Monthly Income vs Capital Growth ................................................................................................................. 4
Insurance ...................................................................................................................................................... 5
Types of Business Insurance .......................................................................................................................... 5
Bad Debt ....................................................................................................................................................... 6
, -------- Financial Function-----
The financial function manages the businessÕs money. It records income
and expenses, prepares budgets and helps the business make financial
decisions.
Accounting Equation
Assets = OwnerÕs Equity + Liabilities
Assets: Everything valuable that the business owns.
OwnerÕs equity: Money or assets invested by the owner.
Liabilities: Money that the business owes to others.
Statement of Comprehensive Income
This statement shows the businessÕs financial performance over a specific
period.
Income: Money earned from selling goods or services.
Expenses: Costs paid to operate the business.
Net profit: The amount left after expenses are deducted from income.
Income − Expenses = Net profit
If expenses are higher than income, the business makes a net loss.Õ
Page 1|6
