Third Term Business Studies Lesson Note for JSS2
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Week 1 & 2
Topic: Insurance I
Contents:
- Meaning of Insurance
- Principles of Insurance
- Types of Insurance
- Importance of Insurance
A. Meaning of Insurance
Insurance can be defined as the process whereby there is protection against any risk that may terminate life or destroy the business or individual property. Loss of damage to property may arise from accident, theft, fire, flood and so on.
Insurance can also be defined as the transfer of risk of life or property from one person that insures himself (called the insured) to another person i.e. the insurance company (called the insurer) in return for a fixed amount (called premium) which the insured has made to the insurer.
Insurance is a contract between the insured and the insurer. If any property is lost or damaged, the insurer will pay the insurer insured an agreed sum of money called indemnity.
Insurance companies in Nigeria
Insurance companies can be divided into categories, which are
Life Assurance: It is a contract between the person who takes out the policy called the assured and the assurance company. Examples of Life Assurance Companies are: AIICO Assurance Policy, GNI Life Assurance Ltd, Mutual Benefits Life Assurance Company Ltd etc.
Non-life insurance: Non life insurance performs other insurance function. They include Cornerstone Insurance PLC, Sovereign Trust Insurance PLC etc.
B. Basic Insurance Principles
The following principles are used in guiding the contract of insurance
1. Principle of subrogation: This principle states that an insurance company can take the place of the insured after it has indemnified him by making necessary payments.
2. Principle of indemnity: This principle of indemnity states that in the event of any loss the insured has to be restored to the position he was before the loss.
3. Principle of proximate cause: This principle states that the cause of the loss or damage must be linked with the risk that was originally insured against.
4. Principle of utmost good faith: The principle of utmost good faith states that both the insured and the insurer must disclose all relevant information to each other.
5. Principle of insurable risk: This principle states that insurance can only entered if into if the risks involved are insurable.
6. Principle of insurable interest: This principle states that no person can be allowed to insure anything in which he has no insurable interest.
C. Types of Insurance
1. Motor vehicle insurance: Motor vehicle insurance is the most popular and commonest type of insurance policy in insurance Nigeria because it is compulsory for every vehicle to be insured in Nigeria.
2. Burglary/ Theft Insurance: Burglary or theft insurance policy provides protection against loss or damage to the property of the insured as a result of burglary or theft.
3. Marine Insurance: Marine insurance is a compulsory insurance that is taken for ships and boats on seas. It is one of the oldest forms of insurance. It covers loss or damage over goods, the ships or boats carrying the goods also.
4. Life Assurance Policy: This provides protection against loss caused by the death of the person (assured). It helps to reduce the financial problem which the death of the people can cause.
5. Agricultural Insurance Policy: Agricultural insurance is the newest insurance policy introduce into the insurance market by the federal government. It covers loss or damage to crops, livestock’s, pest inversion etc.
D. Importance of Insurance
The Importance of insurance are as follows:
- It helps to reduce risk
- It helps to motivate workers in their business or job
- It is a means of savings; it serves as a means that encourages people to save
- It facilitates international trade
- It is a provision of old age
- It is provision against lives and property
ASSESSMENT
1. The compulsory insurance is a compulsory insurance that is taken for ships and boats on seas. (a) marine insurance (b) motor vehicle insurance (c) life assurance (d) agricultural insurance policy
2. All the following are types of insurance except (a) food insurance (b) burglary insurance (c) marine insurance (d) motor vehicle insurance
3. All of the following are importance of insurance except (a) It helps to reduce risk (b)It helps to motivate workers in their business or job (c)It is a means of savings; it serves as a means that encourages people to save (d) it is a way of cheating people
4. The newest insurance policy in Nigeria is (a) marine insurance (b) burglary or theft (c) agricultural insurance (d) none of the above
5. the most popular and commonest type of insurance policy is (a) agriculture (b) marine (c) motor vehicle insurance (d) life assurance
6. The money paid by the insured to the insurer is called (a) interest (b) bonus (c) premium (d) wages and salaries
7. The insurer is the (a) insurance company (b) the person who wants to protect his properties (c) the workers in the insurance company (d) the manager of the company
8. All of these are principle of insurance except (a) insurable interest (b) proximate cause (c) utmost good faith (d) life assurance
9. The principle that states that the loss or damage must be linked with the risk that was originally insured against (a) insurable interest (b) proximate cause (c) utmost good faith (d) subrogation
10.Insurance is also a contract between the ———– and ———– (a) husband and wife (b) children and parents (c) insurer and the insured (d) teachers and students
Topic: Ledger Entries
Content
1. Meaning of a ledger
2. Items on a ledger
3. Classification of a ledger
4. Record cash transaction
Meaning of a ledger
A ledger can be defined as an important book of account in which all accounts are recorded . It contains account of individuals, account of properties (assets) of the business and also account of expenses and incomes.
Items on a ledger
The following are the items on a ledger
- Date: This is to record the actual time the transaction took place.
- Particulars: This explains the kind of transaction that took place, you will find sales, purchases, capital, cash under this column
- Folio: Folio is used to show the page of the book of original entry that was used to record the transaction before being transferred into the ledger
- Discount received or given: Discount allowed and discount received are presented under this column. This will provide a means of reconciliation when cost is being calculated.
- Amount: This is always shown with the unit of the currency being used. In Nigeria for instance you have the sign of the Naira
Classification of ledger
A ledger can be classified into two. They are:
1. Personal ledger : The personal ledger are accounts in which persons or organization transactions are recorded It consists of debtors and creditors.
2. Impersonal ledger: This is an account that relates to assets, liabilities,income and expenses . It is divided into nominal and real account.
Record cash transaction
Cash transaction are recorded in the cash book. A cash book is a ledger. It is a book of original entry where all cash received in a business should be recorded in the debit side of the cash account and all cash paid out of the business should be recorded on the credit side of the cash account, the difference between the total amount on the credit side and that of the debit side is the cash balance in hand at a particular time.
Test and Exercise
1. —————contains account of individuals, account of properties (assets) of the business and also account of expenses and incomes. (a) ledger (b) profit and loss (c) text books (d) notebook
2. ————explains the kind of transaction that took place, you will find sale (c) personal and impersonal (d) none of the above
3. In recording cash transaction of a business, all cash paid should be recorded on (a) debit side of the cash book (b) credit side of the cash book (c) both side of the cash book (d) should not be recorded on the cash book
4. All the following are items found on the ledger, except (a) amount (b) folio (c) particulars (d) license
Week 4
Topic: Petty Cash Book
Contents:
1. Meaning of petty cash book
2. Uses of petty cash book
3. Importance of keeping a petty cash book
Meaning of Petty Cash Book
A petty cash book can be defined as the book that is used to record expenses that are described as minor. The petty cash book is always kept by a petty cashier, who is in charge of making small cash payment.
It is used to record items of expenditure like postage, transport, stationary, transport fares, etc are first recorded in the petty cash book.
The petty cash book is a formal summarization of petty cash expenditures, sorted by date. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Thus, the book is part of a manual record-keeping system.
There are two primary types of entries in the petty cash book, which are a debit to record cash received by the petty cash clerk (usually in a single block of cash at infrequent intervals), and a large number of credits to reflect cash withdrawals from the petty cash fund. These credits can be for such transactions as payments for meals, flowers, office supplies, stamps, and so forth.
A somewhat more useful format is to record all debits and credits in a single column, with a running cash balance in the column furthest to the right, as shown in the following example. This format is an excellent way to monitor the current amount of petty cash remaining on hand.
Uses of petty cash book
The petty cash book is used for the following
1. It is used to record small amount of cash kept in the office for minor day to day use.
2. Petty cash book maintains records of all petty payments systematically.
3. Petty cash book supplies information regarding petty payments made on different heads more easily and quickly.
4. Petty cash book makes possible for making comparison of the petty expenses between two periods and helps in controlling such petty expenses more effectively.
5. Petty cash book helps in making the main cash book more informative, clean and clear by including only major transactions.
Importance of keeping a petty cash book
1. It allows for proper recording
2. It makes the task of cashier easier as items of expenditure are summarized, the balance is later transferred into the cash book.
3. It gives the chance of minor expenses to be paid for immediately instead of waiting for the casheir
Importance of Petty Cash
Petty cash are the small funds available all the time in your office cash box for meeting miscellaneous or emergency expenses during or after banking hours. Petty cash is of very high importance as certain immediate expenses come up for example someone gets hurt to provide immediate medication when senior managers are not available in the office. For the small office service materials. For any petty job where payment by check is not acceptable by the vendor.
Test and Exercise
1. Define petty cash book.
2. State the importance of petty cash book.
3. What are the uses of petty cash book?
Week 5
Topic: The Cash Book
Contents
1. Meaning of book keeping
2. Meaning of cash book
3. Rule of cash book
4. Types of cash book
5. Meaning of Contra Entries
Meaning of book keeping
Book keeping can be define as the art of recording business transaction . These recordings are done from source documents such as the invoice and credit note.
Meaning of Cash Book
Cash book means the cash account. It is part of the ledger which is kept by a cashier
Cash account is an account in which all receipts and cash payments transaction are recorded. The cash book has two sides namely, the debit side which is on the left hand side where all cash receipts are recorded , the credit side is on the right hand side where all cash payments are recorded. At the end of a given period, the cash book is to be balanced. To do this, the total of each side that is debit and credit side of the cash book is calculated. The smaller one which is the credit side is subtracted from the debit side to give the amount of money left in the cash book. The balance is then entered in the credit side as balance carried down to make the total of the debit and credit side equal. This amount must be the same as the amount left in the cash book. The balance is then brought down and carried forward in another period on the debit side.
The rule of preparing cash account
- Debit what comes in
- Credit what goes out
Types of cash book
1. The single column cash book
2. The double column cash book
3. The three column cash book:
Meaning of Contra Entries
Contra Entries, is a situation whereby money may be withdrawn from the bank for office use or part of the cash in hand may be paid into the bank. These are called contra entries of the two column cash book. For example, cas withdrawn from the bank for office use, two transactions will be recorded.
1. Cash column is debited as cash accounts receive the money
2. Bank column is credited as bank accounts gives the money
Test and Exercise
1. Define contra Entries
2. List the types of cash book
3. State the rules in preparing cash account
4. Define book keeping
IMPREST SYSTEM
Imprest System
This is a method used in controlling the amount of money to the petty cashier. A fixed amount called Imprest is given to the cashier weekly or monthly to pay for small expenses.
At the end of the period, the petty cashier gives account of what she spends and the balance remaining. The amount spent will be reimbursed. This process of giving a petty cashier some amount of money for petty items at the beginning of every month is called “Imprest system”.
Imprest System: This is an effective way of making money available for minor expenses and keeping accurate records in the petty cash book
The sum of money giving to a petty cashier is called “Cash float”. Also, the document used in raising petty cash is known as a “Petty Cash Voucher”
Petty Cash
Petty means small.
This is a small amount of money given , that is used for making immediate payments for small expenses. The petty cash is managed by an assigned person known as the petty cashier.
Reimbursement
This involves giving the petty cashier more money at regular intervals to cover the amount so far spent. Reimbursement is meant to maintain the level of the float.
Retirement
This is the process of returning the amount of money not spent after the actual money has been spent on a specific item. For example, account issue out/give out N10000 and out of this money, N8000 was spent on a particular item. The remaining N2000 which is not spent will be returned back to the accountant which is called retirement.
EVALUATION
1. Define a petty cash book.
2. List three items contained in a petty cash book.
3. Explain the following terms (i) petty cashier (ii) cash float (iii) petty cash voucher (iv) reimbursement (v) petty cash.
Topic: Speed Development And Accuracy Skills
Content
1. Introduction
2. Preliminary Instruction
3. Quick Operation of the Tabulator Key
4. Line space Regulator
Introduction:
One of the most essentials skills to have been discontinued from teaching during your schooling age is typing. Although people tend to underestimate the value of typing faster and accurately, it is one of the most fundamental skill required in any field you wish to pursue. Be it in writing Emails, writing a blog post, or writing copy, typing is one of the most important skills. As a blogger, typing faster and better will save you a tremendous amount of time spent proofreading your article for typo mistakes and crafting the article itself. While the average typing speed is around 38-40 Words Per Minute, the world-record for the fastest typing speed is of Stella Pajunas, who struck a whopping 216 WPM on an IBM Electric Typewriter! Typing accurately is also just as important as typing faster is. There is a speed-accuracy tradeoff that has to be considered when you begin practicing typing faster. Faster is not always better if your accuracy is getting compromised in the process. Aiming for a faster and accurate typing speed is essential. Finishing that assignment, blog article or just an Email quickly and saving yourselves some amount of time in the process is a great way to make room for other tasks. Having written over 10 million words in all forms off written words, I can justify how valuable improving your typing speed and accuracy is. With the majority of the audience here at ShoudMeLoud being bloggers or wannabe bloggers, it is the time that you work on your typing speed, while not compromising on the accuracy part of it.
Preliminary Instruction
- Remove any material that can disturb you in the course of your typing from your desk
- Insert a typing sheet with a backer into your typewriter
- Place your textbook at the right side of the typewriter
- Sit correctly
- Keep your eyes on the practical textbook
- Strike the typewriter keys and the space bar evenly
- Always remember to cover your typewriter after use
How to type faster & get things done fast
Now that you’re convinced about the importance of typing faster and accurately, let’s move on to the how’s of it. Here are six ways to significantly improve your typing speed and accuracy.
The first step to improving your typing speed and accuracy is to reconsider the way you approach typing. The moment you sit down to get some typing done is what decides everything that follows next. During our Ergonomics and human factors class, we’ve been walked through all the fundamentals of proper posture, backed by numbers, to avoid Cumulative Trauma Disorders (CTD). To begin with, proper posture is the first step in preparing yourself for success. Without working on a proper positioning and typing habit, one cannot achieve high typing speeds while maintaining acceptable accuracy levels.
Quick Operation of the Tabulator Key
When the tabulator key is operated, the carriage moves quickly to any predetermined position. The tabulator key can be set by hand at required positions on the rack.
When the tabulator bar is depressed, the carriage moves to the position for which the stop is set. In order to set the tabulator at 15, the space bar should be tapped five time from the left margin when this is 10, and a stop set at this point. If the tabular stop is is set wrongly or is no longer required, the setting can be cleared by using the clearing key or level provided.
Line Space Regulator
This is the level that regulates the spacing required between the line. The level may be set for single, double or treble line spacing . Half spacing can be set on modern machines. The required spacing should be set before you begin to work.
ASSESSMENT
1. Discuss
How to type faster & get things done fast?
Topic: Book-Keeping Ethics
Content:
- Meaning of Ethics
- Transparency, Accountability and Probity (TAP)
- Meaning of TAP
- The need for TAP in Business
- Attributes of TAP
- Problems created by TAP
INTRODUCTION
Working in a bookkeeping role means that you have a responsibility for behaving in the interest of the public. You need to behave ethically and professionally which, at times, can be difficult due to conflicts between what is best for the public and what is best for the client or company you work for.
Ethics refers to moral principles that govern a person’s behaviour or the conducting of an activity.
Transparency, Accountability and Probity (TAP)
Transparency is about being easy to understand, and being open, frank and honest in all communications, transactions and operations. It is possible to be accountable by providing a lengthy and technical explanation of every detail, but if this information is not easily understood by the audience, and if key facts are hidden by the sheer volume of information then the information is not presented in a transparent form. Accountability and transparency go hand-in-hand, and involve being aware of who charities are accountable to, what the important pieces of information are, and how they can be communicated most effectively.
Accountability is about being responsible to someone for actions taken; about being able to explain, clarify and justify actions. It implies that someone has a right to know and hold an organisation to account; and that the organisation has a duty to explain and account for its actions. Charities have this duty as they have a privileged status because their purposes must be for the benefit of the public.
Probity Strict adherence to a code of ethics based on undeviating honesty, especially in commercial (monetary) matters and beyond legal requirements.
The Need for TAP in Business
1. Accountability in business is critical, as the concept enhances the ethics of managers.
2. Being accountable means standing by decisions, actions, and the overall well-being of projects.
3. Accountability is also a management process that ensures employees answer to their superior for their actions and that supervisors behave responsibly as well.
4. Accountability addresses both the organization’s expectation of the employee and the employee’s expectation of the organization.
5. Accountability, transparency and probity help to increase performance of business as a whole and to maintain a positive company culture, vision, and ethics.
6. People and communities deserve to know the ins and outs of a company’s operation before they begin to patronize it.
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