BBI2O1 - Business UNIT 3 Notes
➤ UNIT 3: Finance
》CHAPTER 12: Income Management
➢ What Is Money?
Money allows businesses to operate and consumers to buy products and services that
meet their needs and wants.
Forms of Legal Tender
Coins and paper money are classified as legal tender by the government of Canada and
must be accepted as payment for goods and services. Coins are minted and bank notes are
issued as paper money.
New Canadian Bank Notes
Since 2001, the Bank of Canada has been updating bank notes with sophisticated
security features. Canada’s culture, the queen and prime ministers are depicted on bank notes.
Special Features of Bank Notes
Ever changing state-of-the-art security features on Canadian bank notes discourage
high-tech counterfeiting (the production of fake money). However, features such as unique
textures on every note help visually impaired people to make distinctions between
denominations. Credit cards, traveler’s cheques, passports, and other identification are subject
to counterfeiting as well.
Money’s Changing Purchasing Power
Coins and banknotes have no true value. The paper is worthless as are the metals to
make coins. Both are only important to consumers because they accept that currency or
money has a standard value that allows them to purchase items or invest. Since prices tend to
rise, consumers’ money buys them less every year.
,➢ What Is Income?
Income is the money that an individual or business receives from sources, such as
wages or sales, interest, and dividends. Closely related to income is the need for a financial
plan that looks at how to make money grow.
Types of Personal Income
Forms of Employment Income
● Salary ● Commission ● Profit Sharing
● Wages ● Piecework
Employees Benefits
Other sources of income can include dividends, allowance, interest, gifts, part-time
jobs, and inheritance.
● Medical Insurance ● Paid Holidays
● Paid Sick Days ● Drug and Dental Plans
Gross Income
Gross income is the total amount of money received by a person before any deductions.
Disposable Income
Disposable income, or take-home-pay, is the amount of income that is left after
deductions of income tax, Canada Pension Plan (CPP), and Employment Insurance (EI).
Discretionary Income
Discretionary income is the amount of money that is left over after all necessities have
been paid. Necessities consist of rent or mortgage, food, transportation, insurance, electricity,
and so on.
,➢ Managing Money for Personal Use
Money management is the daily financial activities aimed at satisfying a person’s needs
and wants within a limited income. Individuals need to carefully plan, save, and spend their
money to get the most out of it.
Why We Buy
Consumers choose among marketplace alternatives. Five key factors that influence
consumer buying decisions include:
● Income and Price ● Current Trends ● Promotion
● Status ● Custom and Habits
➢ Spending Money
Today’s society is known as a consumer-driven one. This means that the economy
offers consumers a never ending supply of exciting and innovative goods and services.
Comparison Shopping
Comparing price, quality, features, and services helps consumers make smart
purchases.
Comparing Price and Quality
Comparison shopping means selecting the least expensive product or service that best
meets the consumer’s needs and wants.
Features
The features of goods and services are often the most important requirements for
consumers when they purchase these items.
Services
Retail stores often offer services that complement their merchandise. Some of these are
free delivery for large purchases or warranties on these items. Warranties are usually written
promises that products comply to high standards.
, Planning and Comparing
Prices and features of products or services can be compared using catalogues,
newspapers, calling stores, or Internet searches.
➢ When to Buy
When planning a purchase, consider clearance and promotional sales as well as
second-hand shopping. Consumers need to consider doing some comparison shopping for the
same or similar product at other stores.
Clearance Sales
Retailers often have clearance (end-of-season) sales where seasonal goods are sold
below the regular price to clear out old stock and to make room for new items.
Promotional Sales
Promotional sales happen when goods are sold below regular price to build acceptance
for new products or to publicize store openings. These sales can create opportunities to sell
future non-promoted products to consumers.
Second-hand Shopping
Second-hand shopping involves the purchasing of goods that have been previously
owned by someone else. Buying such merchandise supports the three Rs of waste
management - reduce, reuse, and recycle.
Avoid Impulse Buying
Impulse buying is purchasing items on the spur of the moment without considering
whether they are needed or wanted. Ways to avoid impulse buying include taking your time,
visiting many stores, checking the Internet, seeking out the best value, and, most importantly,
not rushing.
➢ Budgeting
A budget is a plan for smart spending and savings based on one’s income expenses.
➤ UNIT 3: Finance
》CHAPTER 12: Income Management
➢ What Is Money?
Money allows businesses to operate and consumers to buy products and services that
meet their needs and wants.
Forms of Legal Tender
Coins and paper money are classified as legal tender by the government of Canada and
must be accepted as payment for goods and services. Coins are minted and bank notes are
issued as paper money.
New Canadian Bank Notes
Since 2001, the Bank of Canada has been updating bank notes with sophisticated
security features. Canada’s culture, the queen and prime ministers are depicted on bank notes.
Special Features of Bank Notes
Ever changing state-of-the-art security features on Canadian bank notes discourage
high-tech counterfeiting (the production of fake money). However, features such as unique
textures on every note help visually impaired people to make distinctions between
denominations. Credit cards, traveler’s cheques, passports, and other identification are subject
to counterfeiting as well.
Money’s Changing Purchasing Power
Coins and banknotes have no true value. The paper is worthless as are the metals to
make coins. Both are only important to consumers because they accept that currency or
money has a standard value that allows them to purchase items or invest. Since prices tend to
rise, consumers’ money buys them less every year.
,➢ What Is Income?
Income is the money that an individual or business receives from sources, such as
wages or sales, interest, and dividends. Closely related to income is the need for a financial
plan that looks at how to make money grow.
Types of Personal Income
Forms of Employment Income
● Salary ● Commission ● Profit Sharing
● Wages ● Piecework
Employees Benefits
Other sources of income can include dividends, allowance, interest, gifts, part-time
jobs, and inheritance.
● Medical Insurance ● Paid Holidays
● Paid Sick Days ● Drug and Dental Plans
Gross Income
Gross income is the total amount of money received by a person before any deductions.
Disposable Income
Disposable income, or take-home-pay, is the amount of income that is left after
deductions of income tax, Canada Pension Plan (CPP), and Employment Insurance (EI).
Discretionary Income
Discretionary income is the amount of money that is left over after all necessities have
been paid. Necessities consist of rent or mortgage, food, transportation, insurance, electricity,
and so on.
,➢ Managing Money for Personal Use
Money management is the daily financial activities aimed at satisfying a person’s needs
and wants within a limited income. Individuals need to carefully plan, save, and spend their
money to get the most out of it.
Why We Buy
Consumers choose among marketplace alternatives. Five key factors that influence
consumer buying decisions include:
● Income and Price ● Current Trends ● Promotion
● Status ● Custom and Habits
➢ Spending Money
Today’s society is known as a consumer-driven one. This means that the economy
offers consumers a never ending supply of exciting and innovative goods and services.
Comparison Shopping
Comparing price, quality, features, and services helps consumers make smart
purchases.
Comparing Price and Quality
Comparison shopping means selecting the least expensive product or service that best
meets the consumer’s needs and wants.
Features
The features of goods and services are often the most important requirements for
consumers when they purchase these items.
Services
Retail stores often offer services that complement their merchandise. Some of these are
free delivery for large purchases or warranties on these items. Warranties are usually written
promises that products comply to high standards.
, Planning and Comparing
Prices and features of products or services can be compared using catalogues,
newspapers, calling stores, or Internet searches.
➢ When to Buy
When planning a purchase, consider clearance and promotional sales as well as
second-hand shopping. Consumers need to consider doing some comparison shopping for the
same or similar product at other stores.
Clearance Sales
Retailers often have clearance (end-of-season) sales where seasonal goods are sold
below the regular price to clear out old stock and to make room for new items.
Promotional Sales
Promotional sales happen when goods are sold below regular price to build acceptance
for new products or to publicize store openings. These sales can create opportunities to sell
future non-promoted products to consumers.
Second-hand Shopping
Second-hand shopping involves the purchasing of goods that have been previously
owned by someone else. Buying such merchandise supports the three Rs of waste
management - reduce, reuse, and recycle.
Avoid Impulse Buying
Impulse buying is purchasing items on the spur of the moment without considering
whether they are needed or wanted. Ways to avoid impulse buying include taking your time,
visiting many stores, checking the Internet, seeking out the best value, and, most importantly,
not rushing.
➢ Budgeting
A budget is a plan for smart spending and savings based on one’s income expenses.
