Business and Accounting Studies

Teachers' Guide

Grade 11
(To be implemeted from 2016)

Department of Commerce
Faculty of Science and Technology
National Institute of Education
Maharagama
Sri Lanka

Web:www.nie.lk
Email: [email protected]
Business and Accounting Studies

Teachers' Guide

Grade 11
(To be implemeted from 2016)

Department of Commerce
Faculty of Science and Technology
National Institute of Education
Maharagama
Sri Lanka
Business and Accounting Studies

Grade 11

First Edition -2016

National Institute of Education

ISBN

Departmrnt of Commerce
Faculty of Science and Technology
National Institute of Education
Maharagama
Message from the Director General ……………….

The first phase of the new competency based curriculum, with an 8 year curriculum cycle was introduced to
secondary education in Sri Lanka in 2007 replacing the existing content based education system with the basic
objective of developing the national level competencies recommended by the National Education Commission.

The second phase of the curriculum cycle to be introduced to grades 6 and 10 starts in 2015. For this
purpose, National Institute of Education has introduced a rationalization process and developed rationalized
syllabi for these grades using research based outcomes and various suggestions made by different stakeholders.

In the rationalization process, vertical integration has been used to systematically develop the competency
levels in all subjects from fundamentals to advanced levels using the bottom up approach. Horizontal integration
is used to minimize overlapping in the subject content and to reduce content overloading in the subjects to
produce more student friendly and implementable curricula.

A new format has been introduced to the Teachers’ Guide with the aim of providing teachers with the required
guidance in the areas of lesson planning, teaching, carrying out activities and measurement and evaluation.
These guidelines will help the teachers to be more productive and effective in the classroom.

The new Teachers’ Guides provide freedom to the teachers in selecting quality inputs and additional activities
to develop the competencies of the students. The new Teachers’ Guides are not loaded with subject content
that is covered in the recommended textbooks. Therefore, it is essential for the teacher to use the new
Teachers’ Guides simultaneously with the relevant textbooks prepared by Education Publications Department
as reference guides to be more aware of the syllabi.

The basic objectives of the rationalized syllabi and the new format of the teachers’ guide and newly developed
textbooks are to bring about a shift from the teacher centred education system into a student centred and more
activity based, education system in order to develop the competencies and skills of the school leavers and to
enable the system to produce suitable human resource to the world of work.

I would like to take this opportunity to thank the members of Academic Affairs Board and Council of National
Institute of Education and all the resource persons who have immensely contributed in developing these new
teacher guides.

Director General
National Institute of Education

i
Message from the Deputy Director General

Education from the past has been constantly changing and forging forward. In recent years, these changes
have become quite rapid. Past two decades have witnessed a high surge in teaching methodologies as well as
in the use of technological tools and in the field of knowledge creation.

Accordingly, the National Institute of Education is in the process or taking appropriate and timely steps with
regard to the education reforms of 2015.

It is with immense pleasure that this Teachers' Guide where the new curriculum has been planned based on a
thorough study of the changes that have taken place in the global context adopted in terms of local needs
based on a student-centered learning-teaching approach, is presented to you teachers who serve as the pilots
of the schools system.

An instructional manual of this nature is provided to you with the confidence that, you will be able to make a
greater contribution using this.

There is no doubt whatsoever that this Teachers' Guide will provide substantial support in the classroom
teaching-learning process at the same time. Furthermore the teacher will have a better control of the classroom
with a constructive approach in selecting modern resource materials and following guide lines given in this
book.

I trust that through the careful study of this Teachers Guide provided to you, you will act with commitment in
the generation of a greatly creative set of students capable of helping Sri Lanka move socially as well as
economically forward.

This Teachers' Guide is the outcome of the expertise and unflagging commitment of a team of subject teachers
and academics in the field Education.

While expressing my sincere appreciation of this task performed for the development of the education system,
my heartfelt thanks go to all of you who contributed your knowledge and skills in making this document such
a landmark in the field.

M.F.S.P. Jayawardhana
Deputy Director General
Faculty of Science and Technology

ii
Introduction

According to the present policy with regard to the Curricala of SriLanka the entire
curricclum has to be revised once everyeight years. A new revision of this nature has
become necersary because of the meaningful expection that a generation of students
capable of facing local as well as global challenges taking place needs to be produeced.
Further the recent past has witnessed immense economic, politcal, social and trade
related changes on a global scale. As a result the stage has arisen for all curricula to be
revised in 2015.

Taking the situation above into consideration I am extremely pleased that the Grade 11
Business and Accounting studies, Teachers Guide has been written and forwarded in
such a short time. I would like to extend my vary sincere thanks especially to the panel
of writers for functionning with such commitment to the Director Genaral for his
Instructions and guidance for the fulfilment of this task successfully, to the Deputy
Director General and to all those who supported the speedy conclusion of this respon-
sible endeavour.

It is my firm belief that this Teaches Guide on Business and Accounting for Grade
11will prove an immense support to subject Directors Insevice Advisors and Teachers
in the provision of learning experiences suceessfully to students.

Dr. A. Sivanesharaja
Director,
Commerce Department,
Faculty of Science and Technology,
National Institute of Eduation

iii
Guidance and Approval ( Academic Affairs Board
National Institute of Education

Guidance : M.F.S.P. Jayawardena

Deputy Director General

Directing ( Dr.A. Sivanesharajah

Director

Subject Co-ordination ( P.H.Kusumawathie

Senior Lecturer
Department of Commerce
S.K. Prabaharan
Lecturer
Department of Commerce

Writing Pannel ( Internal

P.H.Kusumawathie
S.K. Prabaharan

External
Sirima Nanayakkra,
ISA,Zonal Education Office, Elpitiya

C.L.M.Navas,
ISA,Zonal Education Office, Ibbagamuwa.

M.H.M.Buhary,ISA(retired)

Language Editing ( S.A.D.Gunapala

Lecturer, Bed Degree Program
National Institute of Education'

K.D. Percival
Rtd. Lecturer

iv
Instruction for the Use of the Teachers' Guide

This Teachers Guide has been prepared for Grade 11 based on the syllabus for Business and Accounting
Studies proposed to be implemented for G.C.E. (O/L) from 2016.

Model activities have been included here as guidance in the planning of teachers' learning-teaching process so
as ensure the development of the students' competencies.

This Teachers' Guide has been prepared in keeping with the order in which the learning-teaching process
should be implemented in the classroom. Learning outcomes have been presented for every competency
Level in the syllabus. It is expected that teacher will implemented a student-centered learning-teaching proce-
dure to ensure that all the students achieve these learning outcomes and the relevant competencies. For this
purpose the learning-teaching process has been presented under each competency level in order to provide
you with guidance. It is by no means compulsory that you conform to these instructions in that very form itself,
you, as a creative individuals, have complete freedom to conform to any other student-centered learning-
teaching procedure you consider for students.

Similarly, included in this teachers' guide are the basic terms and concepts related to the subject area under
each competency level. They will serve as guidance to the subject matter you should elicit through the activi-
ties in the classroom as well as for the notes you give the students.

Subject Coordinators
Department of Commerce
National Institute of Education

v
 Content

Page

Message from the Director General i

Message from the Deputy Director General ii

Introduction iii

Curriculum Committee iv

Instruction for the Use of the Teachers' Guide v

Syllabus vi - xx

Guidence for Learning-Teaching Process 01 - 74

Business and Accounting Studies

Syllabus

Grade 11
(To be implemeted from 2016)
1.0 Introduction

This syllabus is to be implemented in 2015. Through this syllabus it is expected to provide theoretical and
practical knowledge to the student that would give him guidance in his future livelihood, through the provision
of business knowledge, recording of transactions, evaluation of business results, information technology, de-
velopment of desire for saving and investment and business management. Similarly, it is expected that the initial
foundation will be laid for the creation of entrepreneurs as well as other professionals by teaching this subject.
Through this, it is also expected to build the human resources necessary for the economic and social develop-
ment of the country.

Similarly, through the pedagogical approach, it is expected to build in the students on integrated personality
with focus on student centered, competency based activities. Further, it is expected that this syllabus will serve
in the creation of a citizen who posses no burden to society, acts with social responsibility, has the capability of
conforming to the conditions of the changing world and enjoys to the end of one's life the results of the
combinations produced by changing the subject content.

2.0 National goals

1. The achievement of a functioning sense of National Cohesion, National Integrity and National Unity
2. The establishment of a pervasive pattern of Social Justice and active elimination of inequities.
3. The evolution of a Sustainable Pattern of living - A sustainable Life Style.
4. Seeking a livelihood and work opportunities that are, at one and the same time, productive and give
avenues of self – fulfilment
5. Participation in human resource development that will support socio- economic growth of the country.
6. Involvement in nation building activities: learning to care.
7. Cultivation of an element of adaptability to change - learn to learn and adapt, developing competence
to guide change.
8. Coping with the complex and the unforeseen; and achieve a sense of security and stability
9. Securing and honourable place in the international community

(ii) Competencies relating to the Personality Development

- Generic skills such as creativity, divergent thinking, initiative, decision making, problem-solving,
critical and analytical thinking, team work, inter-personal relationships, discovering and exploring
- Values such as integrity, tolerance and respect for human dignity.
- Cognition

vi
3.0 Basic Competencies

The following competencies promoted through education will help to achieve the above mentioned National
Goals.

(i) Competencies in Communication

This first set of competencies is made up of four subsets - Literacy, Numeracy, Graphics and information
communication skills :

Literacy : Carefully listening, Speaking clearly, Reading for comprehension, writing

clearly and accurately.
Numeracy : Using numbers to count, calculate, code and to measure, matter, space
and time.
Graphics : Making sense of line and form, expressing and recording essential data,
instructions and ideas with line, form, colour, two and three-dimensional
configurations, graphic symbols and icons
ICT Competencies : Knowledge on computers, and the ability to use the information
technology skills at learning or work as well as in the private life

(ii) Competencies relating to the Personality Development

- Generic skills such as creativity, divergent thinking, initiative, decision making, problem-solving,
critical and analytical thinking, team work, inter-personal relationships, discovering and exploring
- Values such as integrity, tolerance and respect for human dignity.
- Cognition

(iii) Competencies related to the Environment.

This is the second set of competencies related to the Social, Biological and Physical Environments.

Social Environment : Awareness, sensitivity and skills linked to being a member of multi
cultural plural society, social relationship, personal conduct, general
and national heritage, legal conventions, rights, responsibilities, duties
and obligations.
Biological Environment : Awareness, sensitivity and skills linked to the living world, man and
the ecosystem, trees, forests, seas, water, air and life - plant, animal
and human life.
Physical Environment : Awareness, sensitivity and skills related to space, energy, fuels, matter,
materials and their links to human living, food, clothing, shelter, health,
comfort, respiration, sleep, relaxation, rest, wastes and excretion,
media of communication and transport.
Included here are the skills in the use of tools to shape and
materials for living and learning.

vii
(iv) Competencies related to Preparation for the world of work
Employment related skills to maximize their potential and to enhance their capacity to contribute to
economic development; to discover their vocational interests and aptitudes; to choose a job that suits
their abilities and; to engage in a rewarding and sustainable livelihood

(v) Competencies related to religion and ethics

This fourth set of competencies are laden with values and attitudes. It is essential for individuals to
assimilate values, so that they may function in a manner consistent with the ethical, moral and religious
modes of conduct, rituals and practices in everyday living, selecting the most appropriate.

(vi) Competencies in Play and Use of Leisure

Competencies that link up with pleasure, joy, emotions and such human motivations. These find expression
in play, sports, athletics and leisure pursuit of many types. These also link up with such values as
cooperation, team work, healthy competition in life and work. Included here are such activities that are
involved in aesthetics, arts, drama, literature, exploratory research and other creative modes in human
living.

(vii) Competencies related to ‘Learning to learn

These competencies flow directly from the nature of a rapidly changing, complex and interdependent
world. Whatever one learns, that learning will need updating and review. This requires that one
should be aware of, sensitive and skilful in sustained attention, and be willing to persevere and attend
to details that matter in a given situation.

viii
4.0 Aims and objectives of the subject

Aims of the subject

(1) Provision of the ability for orientation to a business related vocation or to commence a business of one’s
own.
(2) Preparation of the background necessary to conduct a well managed business with social understand-
ing.
(3) To transform one into a businessman consumer who acts with a sense of social responsibility.

Objectives of the subject

(1) To study the nature of businesses.

(2) Inculcate a desire for investment.
(3) Record and copy business transaction reports.
(4) Prepare the final financial statement of a business.
(5) Acquire basic ability regarding electronic commerce and accounting.

ix
Competency 6 : Develops a basis regarding how Business
activities are implemented with the assistance
of auxiliary services.

Competency Level 6.1 : Inquires about the contribution of Banking Services in

making business activities efficient.

No. of Periods : 03

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes.
• Classifies types of bank accounts emphasizing the ne-
cessity of Banking.
• Shows the steps necessary to commence a Savings Ac-
count.
• Shows the steps to be followed when opening a Fixed
Deposit Account.
• Explains the importance of services related to Electronic
Money
• Shows the limitations of Electronic Money.

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Banking
services Types of
e-Cash
Types of Bank
Accounts Credit
Teller cards
Cards Debit
cards
Current Fixed
Savings
Deposits

Importance of
Electronic Money
related services
Comparison of
various
Bank Accounts
Limits/
Restriction
Destruction of
data
Lack of knowledge of
New type Security methods to
frauds prevent fraud

1
The following accounts are generally maintained by a commercial bank.
- Savings accounts
- Current accounts
- Fixed deposits

Currently, a maximum and an attractive service is rendered to their customers by the banks
utilizing information and Communication Technology. Among these the following are very
significant.

Credit Cards
Using these cards, issued by a commercial bank on a credit basis, goods and services can be
bought from any authorised business firm. Not only that, but also an amount of cash under a
predetermined limit can be drawn out through Automated Teller Machines (ATM). Mainte-
nance of a bank account is not necessary in this regard.
ie: Visa Credit Card, Master Credit Card

Debit Card
The electronic card which is issued by a bank on the basis of deposits in the account of the
customers is known as a debit card. Goods and services could be purchased from any authorised
business institute up to the balance in the account using this debit card. Cash from the customer’s
account is transferred to the bank account of that institute (seller’s account)
i.e. PET Visa Debit Card, BOC Visa Debit Card

Automated Teller Machine Cards

An electronic card which is issued by a bank so as to receive a service equivalent to that
receivable from a savings passbook for a customer, is known as an Automated Teller Machine
Card. Arrangements can be made with the bank to use this card as a debit card also. Here,
all the services are rendered by an automated teller machine activated using the computer
(ATM).

More efficient and more systematic services could be rendered through electronic cash ser-
vices. There are some limitations as well in these services using electronic cash services. Since
all the data are computerised, there is the risk of these data being destroyed. Further, the
chances of fraudulent deeds is great. The need for applying appropriate technical devices to
prevent such malpractises and other disadvantages also has come to the surface.

Instructions on Planning Activity :

• At the approach to the first lesson inform the students regarding the necessity of banking
services and give a brief introduction of the various categories of accounts.
• Give a brief explanation of electronic money.
• Provide a set of documents needed to open a savings account and fixed account.
• Considering the teacher as the bank and the students as the customers willing to open
accounts, practice how to open accounts by filling up of the relevent documents.
• Lead a discussion highlighting the following facts using the completed documents.
• that a passbook is issued by the bank. (There are some accounts for which a pass-
book is not issued)
• Mandate card is issued.
• That an identity card is needed.

2
Give out annex 6.1.1 and instruct the students to answer the questions by studying the subject
matter contained in the grade 11 text book.

Annexture 6.1.1

1. Complete the table below

Criteria Savings Account Fixed Deposit Account

1. Interest Percentage

2. Related documents
issued by the bank

3. Depositing cash

4. Withdrawing cash

5. Other facilities

List the Features and Services of the cards below

Card Features Services

Debit cards

Credit cards

ATM cards

3
Quality Inputs :

• Grade 11 Business and Accounting Studies Text Book.

Criteria for Assessment and Evaluation:

• Showing the steps in starting a Savings Account.
• Showing the steps in starting a Fixed Deposit.
• Showing the difference between a Saving Account and a Fixed Deposit.
• Describing three services provided by a bank in relation to Electronic Money.
• Pointing out two limitations related to Electronic Money.

4
Competency 6 : Develops a basis regarding how business
activities are implemented with the assistance
of auxiliary services.

Competency Level 6.2 : Inquires about the advantages of maintaining a Current

Account and the implications of the cheque.

No. of Periods : 04

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes :
• Lists the advantages of a Current Account.
• Names parties related to cheques.
• Describes the procedures to open a current account.
• Completes a model Cheque.
• Describes the steps involved in depositing a cheque in
the bank.

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map is shown in the following page.

5
 Concept Map

Commercial Bank

Current Account

Opening a Current Advantages of

account current account

Receipt of cheque
book Overdraft Receipt of bank Direct Standing
facility statement summarizing Remitances order
transactions facility

Security

Parties connected to Drawing/Writing

the cheque a cheque

Drawer Drawee Payee Entering Writing the Amount to Entering Crossing

the Date name of the be written correct cheque
payee/ correctly in signature
writing the numerals & of
word letters Drawer
“cash”

General Special
crossing crossing

Must have two Inclusion of a

parallel lines name of a
drawn commercial
bank

6
Advantages of maintaining a Current Account

• Carrying out transactions through cheques is more secure and time saving, convenient than
cash transactions.
• Various types of income and cheques received on behalf of the account holder can be
directly credited to the account. This facility is refered to as direct remittances.
• Current account holders can request the bank to settle payments such as the loan instalments,
insurance premiums etc through own current account. Such arrangements are called stand-
ing orders.
• Even though there aren’t adequate funds in the current account, payments can be made
through cheques after obtaining the permission of the Bank. This facility is called a short-
term loan or a Bank Overdraft.
• At the end of a specific period of the current account the summary of all transactions made
through the Account sent to the current account holder is called the Bank statement.
Through receipt of details of one’s current account, the current account holder gets the
ability to manage his/her money in the current account.

Current Account
A type of account which facilitates carrying out transactions using cheques for business pur-
poses is referred to as current accounts.

Bank Statement
The summary of transactions of one’s current account sent to the Account Holder at the end of
the period of time (usually one month) is called the Bank Statement.

Cheques
“The written order made by a current account holder to the bank for the payment of a fixed
amount of money to a definite individual, is a cheque.”

Parties connected to the cheque

Drawer - Current Account Holder
Drawee - Relevant Commercial Bank (Current Account holder’s bank)
Payee - Individual, to whom the cheque is drawn

Writing a Cheque
In order to be eligible for payments, cheques have to be written following the conditions given
below

These conditions are

• Signature on the cheque must be similar to the specimen signature available at the Bank
• Amount of the cheque shall be equal both in numerals and letters
• Writing clearly/ Printing
• Inclusion of date in the correct format (DD/MM/YYYY)
• Endorsement of rectifications

7
Crossing a Cheques
Drawing of two parallel lines or writting the name of a commercial bank on the face of the
cheque is called crossing a cheque. Cheques can be crossed to ensure security of the transac-
tion. There are various ways of crossing cheques.

General Crossing - Drawing two parallel lines across the face of the cheque is general
crossing. It is seen on the face of the cheque as below.

only
le ee
tiab ay
go p
nt
t Ne cou
No Ac

Special Crossing - The crossing made by noting the name of a commercial bank with
or without parallel lines on the face of the cheque is special crossing.
This is as below,

n n
eylo eylo
C C
k of or k of
n n
Ba Ba

Endorsing Cheque

Writing the name written on the face of the cheque in the same manner on the separate space
at the back of the cheque, is termed cheque endorsement. The endorsement is required when
transfering the cheque to another person, or depositing it in a bank account.

Instructions on Planning Activity :

When commencing the lesson relevant to this competency level, lead a discussion directing the
questions below to the students.
• What are the types of accounts an individual can open in a Commercial Bank?
• What type of account is suitable for a businessman?
• What are the advantages of such a type of account to a business?
• How are transactions carried out through that account?
• Direct students to study the subject matter relevant to the Grade 11 Lesson.

Inform the students to pay greater attention to the following points.

• Date • Bank Number • Endorsement

• Payee • Branch Number
• Amount • Current Account Number
• Drawee • Crossing (General, Special)
• Signature of Drawer • Magnetic Ink Character Recognition Strip
• Cheque Number • Counterfoil

8
• Prepare an enlarged poster of a cheque along with the counterfoil and display on the black
board. Exhibit the incident given in 6.2.1 on the black board and present that incident to be
heard by the students.
• Distribute to the students the instructions in 6.2.2 and provide adequate time to study it.
• Lead the students in the task according to the instructions below.
• Give an opportunity to students to complete the cheque displayed on the board pro-
viding questions. Get the student participation in completion of the cheque writing to
the number of students in class.
• After the students have provided answers to all the questions, summarize the lesson ac-
cording to the points below.
• Elements of a cheque
• Parties attached with a cheque
• Writing of cheques
• Endorsing cheques
• Crossing cheques

Annex 6.2.1

Amal Perera is a businessman. He assigned the task of issuing Cheque No. 200125 on behalf
of P. Kamal for the purchase of goods valued at Rs. 50,000 on 2014.05.30, to his clerk
Namal Gajanayake. Further, Kamal Shantha needed to use this cheque to settle another
transaction.
Bank of Ceylon Bank number : 7010 Branch No. : 055

Instructions for students

• Read the case put up on the board carefully

• Study the questions below refering to the case
• Write the name of the payee
• Write the amount in figures
• Write the amount in letters
• Place the signature of the drawer
• Mark the magnetic ink character recognition strip
• Write the date the cheque was drawn
• Mark the bank number
• Mark the branch number of the bank.
• Write the cheque number
• Complete the counterfoil
• Mark the drawee of the cheque
• Apply a general crossing to this cheque
• Convert it to a special crossing
• It has become necessary to transfer this cheque to another. Make an
endorsement for that purpose.

9
• Write/complete on the cheque displayed on the board the answer relevant to the question
provided to you.
• Observe whether the answers written/completed by the other students to the questions
they had recieved are correct.
If the answers are incorrect, show how they should be answered correctly

Quality Inputs :
Business and Accounting studies Grade 11 text book lesson

Criteria for Assessement and Evaluation

• Write 5 advantages of maintaining a current account, for a businessman
• Showing the steps involved in banking a cheque
• Showing the steps involved in starting a current account
• Exhibit five items based on a model cheque
• Inclusion of Date
• Writing name of payee (Imaginary name)
• Writing amount in letters and figures clearly (Imaginary amount)
• Placing signature of drawer
• Marking magnetic ink character recognition strip
• Marking the drawee
• Placing given number as bank number
• Completing counterfoil
• Placing special or general crossing
• Endorsing cheque

10
Competency 6 : Develops a basis regarding how Business
activities are implemented with the assistance
of auxiliary services.

Competency Level 6.3 : Builds a basis for risk Management by inquiring into the
importance of insurance.

No. of Periods : 03

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes below:
• Explain the concept of Insurance
• Show the difference between life assuarance and prop-
erty insurance.
• Explain the principles of insurance.

Instructions for the Learning-Teaching Process :

Key Concepts and terms

Concept Map

Need for Define

Insurance
Insurance Insurance

Life Principles of Property

Assurance Insurance Insurance

Utmost Insurable
Indemnity
good faith interest

Exchange of important Legal right to be insured Payment of compensation

information between commmensurate with loss
insurer and Insured
regarding the insurance
agreement

11
Insurance - Insurance is the mutual sharing of the damage caused to a
single party through the cumulation of damage.

Life Assurance - Is insurance provided against the risk attached to human life.

Property Insurance - Property insurance is the risk insurance cover against the quantum
of damage to property.

Property Insurance Life Assurance

• The value of the deed of insurance is • The value of the Deed of Insurance is
decided on the value of the property decided on the individual capacity and
wish
• Deed of Insurance can be transfered
• Deed of Insurance cannot be transfered
• Compensation is paid according to the
amount • Whether damage is caused or not com-
pensation is paid.
• Indemnity principle is related
• Indemnity principle is not related
• Is not entitled to other benefits
• Is entitled to other benefits
• Policy is obtained for a period less than
one year • Policy covers more than a one year pe-
riod
Principles of Insurance
The principles that apply to the implementation of an Insurance agreement are as folows.

Insurable Interest - The legal right to insure Life or Property. It needs to have eco-
nomic benefits through the sustenance of life or property and that
economic loss can be caused by their destruction.
Utmost good faith - That both parties related to insurance have to disclose information
on all ownerships related to the insurance without suppressing any
information.
Indemnity - In instances where insured property is damaged, it is necessary
that compensation is paid to enable the damage to be brought
back to its original state. (This is in relation to propert y only)
Need of Insurance
Covering a financial loss for an insured life or for a property by unexpected event.

Instructions on Planning Activity :

• Engage in the lesson related to these competencies presenting visuals of vehicles that had
been damaged in accidents and of business premises destroyed by fire.

• Discuss about action that can be taken in order to face such risks that businesses would
have to face.

12
• Explain the following terms in brief.
• Insurance
• Principles of Insurance
• Property insurance
• Life assurance
• Provide the students with the activity sheets in Annex 6.3.1
• Direct the students to read the Flash Card.
• Provide the questions below to the students
• State whether the statement in the Flash Card you got is about a personal risk or about
a risk to property.
• Direct the student to read the relevant chapter of the Grade 11 text book and to name
the principle of insurance life and property insurance classified above.
• Direct them to compare the difference between life and property insurance

Life Assurance Property Insurance

1. 1.

2. 2.

3. 3.

4. 4.

5. 5.

Annex 6.3.1

Flash Cards

Damage to a large number of shops in the city through a sudden fire.

Extensive damage to life and property through the collision of two trains.

Extensive damage to homes and cultivations through heavy/rainfall

The death of two individuals struck by lightning

13
Quality Inputs :
• Grade 11 Business and Accounting Studies, text book
• Brochures released by various insurance companies

Criteria for Assessment and Evaluation :

• Explains the concept of Insurance
• Explains the types of insurance
• State the principles of Insurance

14
Competency 6 : Develops a basis regarding how Business
activities are implemented with the assistance
of auxiliary services.

Competency Level 6.4 : Inquires into the basis of communication and

prepares the groundwork necessary for its use.

No. of Periods : 03

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:
• Explain the concept of communication
• Name the fields of communication
• Show communication mode and methods
• Describe the elements of communication listing its
process.
• List factors that should be taken into consideration in
the selection of a method of communication

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map is given in the following page

15
 Concept Map

Communication
Elements of
communication
process Feed
Back
The Message Response
Areas/fields
Sender Reciever
Internal External
Mode
Mode
Mode
Verbal Signs &
Symbols Verbal Signs &
Written Symbols
Electronic
Methods Written
Methods Electronic
Methods
Methods Methods Methods
• Road signals Methods Methods
• Various • Road Signals
Letters symbols and
Notices • Movements
Signs
Notice Boards Signs
Meetings Reports Meetings
Discussions Handouts/ Discussions Digital Screens
Workshops Leaflet Workshops Fax
Seminars Internet
Loud speaker Seminars E-mail
Telephone
Digital screens Circulars Radio
Letters TV
face book
Intercom Handouts Face Book
Banners Telephone
Posters Loudspeakers

16
Communication – Exchange of messages, information, ideas between two parties through
a particular mode.

Ways of communication used in business organizations

Internal Communication

Exchange of messages, information and ideas between parties with in

an institution, through different media.

External Communication

Exchange of ideas, messages, information by an organization with

another organization/institution or individual.

Communication Mode Ways/Methods of communication

Verbal - Meetings, Discussions

Written - Notices, Letters, Circulars

Electronic - TV, Radio, Loudspeaker, Internet, Cell Phones,Telephone

Signs, Signals - Road signs, manipulatory signs

Elements included in the communication process

• Sender of the message

• Message

• Mode

• Reciever of the Message

• Response

• Feed back

Factors taken into consideration in selecting a communication method

• Suitability/Relevance

• Speed

• Cost

• Clarity

• Ease of use

• Comprehensibility

17
Instructions for Planning Activity :

• Engage students in the lesson on this competency inquiring about the methods used to
exchange messages/ information and inform them that these can be classified as internal
and external and similarly, as written, oral, electronic and signs/signals.

• Explain, the term communication in breif

• Explain that communication is a process
• Distribute the table in annex 6.4.1 among students or student groups and instruct them
to study the relevant lesson in the text book grade 11.

• Direct the students to answer the relevant questions

• Based on the answers provided by the students, explain the subject matter below.
• Introduces Communication
• States the field of communication and modes of communication
• Deriving the elements of communication based on the communication process
• Factors to be taken into consideration when selecting a communication method
Annex 6.4.1

Specimen Table

(1) Write down as many methods of communication as you know

18
(2) Classify methods of communication mentioned above in terms of a business
organization

Internal External

(3) Divide the method of communication in table (1) into communication mode

Written Verbal Electronic Sign

(4) Write down the factors be considered in selecting communication methods for a
business organization.

19
Read the case below

“The manager of a business forwarded an email to all assistant managers informing them that a
meeting for assistent managers will be held at 10.30 a.m. on 14.03.2015 at the Conference
Hall. Assistant managers have sent their confirmation on their participation.

• Write in the boxes examples of elements relevant to the communication process.

Sender (1) Message (2) Mode (3)

Feedback (6) Response (5) Reciever (4)

Quality Inputs :

• Business and Accounting Studies text book grade 11

20
Assessment and Evaluation Criteria.

Study the table below containing methods of communication, identify communication mode
and communication field and mark (  ) as relevant
Mode Field
Communication
Methods Written Verbal Electronic Signs & Internal External
Symbols
01 Text/Letters

02 Internet

03 Meetings

04 Television

05 Banners

06 Radio

07 E-mail

08 Discussion

09 Fax

10 Loudspeakers

11 Leaflets

12 Telephone/

Cell Phone

13 Notice Board

14 Circulars

15 Posters

16 Facebook

17 Workshops

18 Digital Boards

19 Seminars

20 Bell
21 CCTV
22 Electronic Bell
• Presentation of the communication process with examples
• State 5 factors that need to be considered when selecting a communication method.

21
Competency 6 : Builds a basis regarding how Business Activities should
be implemented while receiving the assistance of
auxiliary services

Competency Level 6.5 : Receives the basic ability to implement Transport Service
for Business activities effectively.

No. of Periods : 03

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• Explain the concept of Transport

• Name the Element of Transport.
• Describe the factors to be considered when selecting a
suitable Transport Method.
• Discuss the advantages and disadvantages of different
fields of transport.

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Transportation
Selection of
a suitable
transport
method
Elements of
Transportation
Ways Cost
Security
Roads
Water-
ways Capacity
Railway Speed
Air routes
Lines Energy
Availabiliy
Gas
Mode Fossil Terminal Railway
Fuel Coal
Vehicles Station
Ships/Barges
Electricity Airport Bus Stand
Trains
Airplanes
Harbour

22
Transportation - Transfer of goods or passengers from one particular place to
another place is referred to as transport.

Elements of Transportation - Elements of transportation are the factors that influence on the
efficiency of a transport system.

Ways - Avenues and roads used for purposes of transport.

Mode - Vehicles used for purposes of transport in different ways

Power - Power required to use transport modes.

Terminals - Locations used in handling transport modes

Factors be considered when selecting a suitable method of transport.

- Cost
- Capacity
- Security
- Speed
- Availability

23
Advantages and Disadvantages of mediums of transportation.

Transpotation Ways Advantages Disadvantages

• Can be used for the whole • Incidence of congestion/

journey (trip) traffic jams
Road
• Being available for use at any • Incidence of road accidents
time • Causes environmental pollu-
tion

• Being able to transport a large • Not being available till end

volume of passengers and of journey
goods • Being operated according to
Railway • Availability of passenger com- a fixed time-table/unavail-
fort ability
• Availability of special services
for long-distance trips
• Low cost method

• Being able to transport a large • Takes a number of days to

volume of passengers and transport passengers and
goods goods
Water • Low transport cost compared • Not being applicable to
to airways countries/regions that do not
• Supports international trade have a sea, Rivers, Streams.
• Ability to transport heavy
items

• High speed • High-cost

Air • Increase in passenger comfort • Accidents being destructive
• Helpful in international trade • Impossibility of transporting
extremely heavy goods

24
Instructions for Activity Planning :

• Inquire about how students get to school and highlight elements of transportation.
• Distribute copies of the four pictures given in Annex 6.5.1 among four groups and let
them study them.

• Instruct the students to write the relevant answers in the blank spaces in the table
below against the elements shown in the pictures (1), (2), (3), (4) in annex 6.5.1 based
on the elements of transport.

Plane, Helicopter, boats, Maradana railway station, Diesel, Colombo-Badulla

railway line, Electric train, ships, Electricity, Katunayaka - Dilli flight path, coal,
Colombo Central Bus stand, train, Hambantota Harbour Kaduwela - Matara
highway, Petrol, Katunayake Airport, Colombo - Trincomalee Sea route, Buses,
Motor bicycle.

Quality Inputs :

• Business and Accounting Studies : Grade 11 Text book

Criteria for Assessment and Evaluation

• Explanation of the concept of transportation

• Describes elements of Transportation
• States factors to be considered when selecting a suitable mode of transport.
• List the factors to be considered in order to handle transportation effectively for business
activities
• Discussion of the advantages and disadvantages of different ways of transport.

25
 Annex 6.5.1

Picture A

Elements of transpotation
related to the picture Examples

1. ...............

2. ...............

3. ...............

4. ...............

26
Picture B

Elements of transpotation
Examples
related to the picture

1. ...............

2. ...............

3. ...............

4. ...............

27
Picture C

Elements of transpotation
Examples
related to the picture

1. ...............

2. ...............

3. ...............

4. ...............

28
Picture D

Examples
Elements of transpotation
related to the picture

1. ...............

2. ...............

3. ...............

4. ...............

29
Competency 6 : Develops knowledge of the implementation of
Business while receiving the assistance of
auxiliary services

Competency Level 6.6 : Exhibits basic ability to become a real party in

Domestic trade and Foreign trade

No. of Period : 04

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:
• Explains domestic trading.
• Explains retail trading.
• States the importance of retail trading
• States the importance of wholesale trade
• Shows the difference between retail trading and whole-
sale trading
• Explains foreign trading
• Gives examples of foreign trade

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Trade

Foreign
Domestic

Import Export
Whole sale Retail

Examples
Examples

Differences

Features

30
Domestic Trading

All business activities taking place in a country belong to this category

Retail Trading

Trading carried out with the objective of consumption

Features of Retail Trade

• Purchased by the customer for consumption

• Satisfaction of consumer needs in small quantities when required
• Consumer is able to purchase requirements easily
• Proximity of the market to the consumer
• Availability of several types of goods
Importance of Retail Trade

• Satisfaction of the day to day needs of the consumer.

Wholesale trade

• Trade carried out with the objective of re-selling

Features of Wholesale Trade
• Purchase items with re-selling purpose
• Purchase and sale of a large stock of goods
• Relatively low unit price
• Supply selected goods

Differences between Retail and Wholesale trade

Retail Wholesale

• Sale for final consumption • For resale

• A variety of types of items available • Sale of limited types of items
• Relatively high price • Entitled to discounts
• Normally, not entitled to discounts • Relatively Low Price

31
Foreign Trading

This implies trade transacted between two or more countries. Foreign trading can be
divided as import and export.

Examples of import and export items of Sri Lanka.

Import Export

Textiles (raw materials) Finished garments

Food Tea

Rubber
Motor vehicles
Copra/desicated coconut
Machinery
Small scale export crops
Electric equipment Gems

Wheat flour Granite

Pharmaceuticals Tyres (Lotus)
Milk Powder

Fuel

Perfumes

Tyres

Gold

Timber

Cement

Iron

32
Instructions for Learning-Teaching Process :

• Engage in competency level inquiring about the students’ view about the transaction in-
volving the purchase of an exercise book by a student, from the school Co-operative
Society and the purchase of that book from the manufacturer by the Co-operative store
for sale to the student.
• Based on their views, explain retail trading and wholesale trading in simple form. At the
time, explain involvement in foreign trade if those books are exported to a foreign country.
• Provide the instruction sheet in Annex 6.6.1 to the students and get them involved in the
activity.
• After the students have presented their answers, elaborate subject matter based on the
presentation.

Annex 6.6.1

Student Instruction Sheet

1. Make a list of the business ventures operating in your area.
2. Based on that list classify the businesses as wholesalers and retailers.
3. What is the basis used for above classification?
4. Prepare a list of characteristics relevant to retailing and wholesaling.
5. Explain the importance of retail trade refering to the above observation.
6. Make a presentation on your observation.

Quality Inputs :
• Relevant Lesson of the Grade 11 Accounting and Business Studies text Book

Criteria for Assessment and Evaluation:

• Defines domestic trading

• Explains retail trading
• States the importance of retail trading
• Writes 3 examples of retail trading
• Explains wholesale trading
• Differenciates between retailing and wholesaling
• Describes foreign trading
• Presents four examples of foreign trading

33
Competency 7 : Develops basic capabilities of Management.

Competency Level 7.1 : Acquires basic capabilities in Management

No. of Periods : 03

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• Explain the concept of Management in simple terms

• Names four Management functions

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Management

Definition

Functions

Controling
Planning

Orginizing Leading

Management

Management is the efficient and effective planning, organizing, directing and controling of
resources in order to achieve a particular objective, of a business. Making maximum use of
resources, can be considered as efficiency. The achievement of objectives, with minimum
resources within a set time frame can be called effectiveness.

Management Functions

Planning
Organizing
Leading
Control

34
Planning

Planning is the process of determining the aims of an organization and deciding on the more
suitable ways and means of achieving them. Planning is illustrative of how the activities of a
company are related to the future.

Organising

Organising is the process of assigning the duties, responsibilities and authority of the organization
so as to enable the achievement of the aims of the organization. The division of the resources
of the organization so as to ensure the achievement of each aim, is organising.

Leading

Leading is the process whereby influence is brought upon the human resources of the
organization, in order to achieve the objectives of the organization. Handling of the human
resources of the organization for the achievement of its objectives, is what is meant here.
Through this motivation is given for the achievement the organization’s objectives.

Controling

Investigating whether necessary action is being taken for the actualization of the targeted
objectives of an organization and, if this is not so, taking necessary action in that regard, is
controling.

Instructions on Planning Activity :

• In order to commence the lesson relevant to this competency level, lead a discussion
based on the note in Annex 7.1.1 regarding how management takes place in school.
Based on that discussion elicit views regarding management functions.

• Explain to the students, in simple terms, that management takes place in any organization
or program. In this regard, confirm that management does take place in the class
room, laboratory, library, canteen, during educational trips, sports meets, even in the
context of the school. Similarly, emphasize that there is management in business, retail
trade stall, or hospital.

• Involve the students in activity 7.1.2 in order to understand this well. For this purpose
decide on the provision of topics in the text book appropriate to the students.

• For this purpose make arrangements for the study of the incident in Annex 7.1.3 and
the subject matter relevant to this competency level in the student text.

• After the student activity provide them with the opportunity to present their group
findings to the class in a suitable form.

• Evaluate the students’ presentation.

35
1. Planning Principal
•Deciding on the objectives of a school
- Creating a good citizen
- Producing disciplined students Vice Principal Vice Principal

- Producing students with leadership (Education (Administration)

skills development)
- Creating students with friendly
attitudes to the environment
- Instituting a friendly enviroment in Sectional Head Sectional Head

the school surroundings

• Deciding on the most appropriate

Subject Head Subject Head
methods employed to achieve objectives.

- Sports meets
- Aesthetic programmes
- Religious programmes
- Friendly learning environment
- Conduct attitude development
programmes for developing attitudes
2. Organizing
• Sharing of the duties by the individuals in
a,school in order to achieve the aims above
(allocation of posts)
- Principal
- Sectional Head
- Subject Head
- Teachers
- Prefects
- Monitor
- Office Assistant
- Security
- Clerks etc

36
3. Leading 4. Controling

• Taking leadership and functioning • Control means investigating

in order to carry out properly the whether the means laid down for
tasks assigned under each post the achievement of the objectives
of a school, takes place of the use
• The school being of remedial measures where such
directed by the principal
doesn’t take place.
•The students being directed • The prefect investigating
by the teachers
whether the daily cleaning is
• The class monitor directing performed well. If such
the students in the class doesn’t happen taking
remedial measures.

• Investigating whether the

learning –teaching process of
the school is properly
implemented. If such doesn’t
happen taking remedial
measures.

• Investigating whether the

school inter-house sports
meet is properly conducted If
such doesn’t happen taking
remedial measures.

37
 Annex 7.1.2

Instruction sheet for students

• Out of the topics below, identify the topic you got.

• Retail shop
• Garment factory
• Private hospital
• School class room
• Collect information for the questions below, relevant to the topic provided to you.
• Describe the most appropriate line of action to be taken for the aechievement of aims
of the place/organization relevant to the topic provided to you.

• What are the posts awailable for the execution of the functions in the place/organization
provided to you?

• How do you handle the activities of that place/organization property?

• How do you investigate whether the functions of the place/organization provided to
you are being properly implemented?

• How do you investigate what the functions of the place/organization provided to you
have been properly implemented?

• State in brief what is meant by management, according to the information you collected,
on the topic.

38
 Annex 7.1.3

Planning

Planning is the process of determining the aims of an organization and deciding on the more
suitable ways and means of achieving them. Planning is illustrative of how the activities of a
company are related to the future.

Organising

Organising is the process of assigning the duties, responsibilities and authority of the organization
so as to enable the achievement of the aims of the organization. The division of the resources
of the organization so as to ensure the achivement of each aim, is organising.

Leading

Leading is the process whereby influence is brought upon the human resources of the
organization, in order to achieve the objectives of the organization. Handling of the human
resources of the organization for the achievement of its objectives, is what is meant here.
Through this motivation is given for the achievement the organization’s objectives.

Controlling

The process of investigating whether the activities necessary for the actualization of targets
decided on are being implemented and the organization of necessary action if this is not so, is
control.

Quality Inputs:

• Relevant lesson of Business and Accounting Studies Grade 11- Text book

Criteria for Assessment and Evaluation:

• Explains Management in brief

• Names Management functions

39
Competency 7 : Develops the Basic Capabilities of Management

Competency Level 7.2 : Investigates the Basic Foundation of Marketing

No. of Periods : 03

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• Explains the concept of Marketing in simple terms

• Name the components of the Marketing Mix.

Instructions related to the Learning-Teaching Process :

Concept Map

Marketing

Marketing mix

Product Price Place Promotion

Marketing

“Marketing is the process of Manufacturing Pricing, Promotion and distribution of products

for the satisfaction of human needs and wants”

Marketing is an important concept that every businessman should follow.

40
Marketing Mix

The blend of a collection of variables that can be controlled by an organization, employed to

elicit conducive responses through the satisfaction of the needs of the target market, is called
the Marketing Mix.

The Target Market is the segment of consumers whose needs are expected to be satisfied.
Marketing Mix comprises four main components.

Production - Anything introduced to the market to satisfy needs and wants for
consumption/acquisition, is called product. That is, they can be considered
as goods or services.
Price - The amount of money the consumer is willing to pay for the purchase of a
particular good or service.
Place - The location related to the distribution of the good or service is called the
place.
Promotion - Strategies employed for the purpose of sales of a business is called
promotion.

Instructions on Activity Planning :

When approaching the lesson in order to achieve this competency level, present the diagram of
mobile phone in annex 7.2.1 and lead a discussion.

• Explain to the students that the importance of the marketing mix in the satisfaction of
human needs and wants, It’s main aspects:-

- Product

- Price

- Place

- Promotion can be considered as key components

• Subsequently, provide the students the Market Mix in Annex 7.2.3 and the instruction
sheet in Annex 7.2.2 and get them involved in the activity.

• Divide the students into four groups according to the wishes of the teachers. Provide
all the groups with one of the products (A packet of Milk Powder, Pen, Book etc)

41
 Annex 7.2.1

What are the What are the

strategies used attributes
to market this? diversities, brands,
packaging, size,
services and other
aspects?

What are the

1 2 3 4 5 What are the
methods used to
conditions related
distribute this to 9
6 7 8 to prices,
the consumer?
discounts, payment
0
period, other
allowances?

Annex 7.2.2
Instructions for the Students
• Study the note in the Marketing Mix, well.
• Discuss about the topic received by you out of marketing mix mentioned below.
• Product
• Price
• Place
• Promotion

42
 • In the Marketing Mix related to the good provided to you, provide answers to the
questions below relevant to your topic

• Introduce in brief, the topic provided to you.

• Present, based on the Marketing Mix notes/Text book, important facts related
to the topic provided to you

• Present, to the class, the information collected by you, subject to the instructions
of the teachers.
Annex 7.2.3

Distribution P P Quality
L O
Location Attributes
A D
Stocks Style
C U
Transport Container
E C
Region Covered Brand Name
T
Marketing Quantity
Mix Guarantee
P
Services
R P
O R
Advertising Discounts
M I
Personal sales Allowances
O C
Public Relations Listed Price
T E
Sales Promotion I Credit Conditions

O Payments
N

Quality Inputs

• Relevant lesson -Business and Accounting studies, Grade 11, text book

Assessment and Evaluation Criteria

• Explains the concept of Marketing in Brief

• Names the components of the Marketing Mix

43
Competency 8 : Prepares financial statements of a business

Competency Level 8.1 : Prepares trading account of a business

No. of Periods : 05

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• Name the financial statements of a business

• Calculate the cost of goods sold
• Prepare trading account and calculates gross profit or
loss

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Financial Statements

Income Balance sheet/

Statement of
statement Trading account financial position

Profit and
Loss account

Net Profit/
Net Loss

44
Financial Statements

The final output of the Accounting process is financial statements. It includes trading, profit
and loss account and the Statement of Financial position (Balance Sheet).

Trading Account

A Trading account is an account that is prepared for the calculation of gross profit or loss for an
accounting period, by a business which is engaged in trading.

It includes cost of good sold and sales income.

Format of Trading account

……………………. Business
Trading account for the year
ended 31 December 2014
Rs. Rs. Rs.
Opening stock xx Sales xx
Add Purchases xx
Carriage inwards xx xx
xx
Less Closing stock (xx)
Cost of goods sold xx
Gross profit c/d xx
xx xx

Instructions on Planning Activity:

• Present the information on the business in annex 8.1.1 to the students to engage in the
lesson pertaining to the competence level and discuss the results of the calculations of
both businesses
• Explain to the students the calculation of a gross profit or loss of a business using sales
and cost of goods sold. In this regard explain to the students how cost of good sold is
calculated.
• Next get the students to engage in the preparation of the trading account based on
business transactions, follow the instructions given in annex 8.1.2
• Find out the accuracy of the information collected by the students. Guide the students
if they have made errors.
• Get students to engage in similar exercises.

45
 Annex 8.1.1

Chandani Business Piyadasa Business

Sales Purchases Sales Purchases

Rs. 100,000 Rs. 60000 Rs. 75000 Rs. 60000

Carriage inwards Carriage inwards

Rs. 25000 Rs. 25000

Annex 8.1.2

Information on a business
Information on Mohan’s business for the year ended 31.12.2015

Rs.
Sales 150000
Stock 01.01.2015 45000
Stock 31.12.2015 15000
Purchases 88000
Carriage inwards 2000

Guidance for Students :

• State sales income of the business
• Calculate cost of good sold by the business
• Calculate gross profit or loss for the year ended 31.12.2015
• Prepare Trading account for the year ended 31.12.2015

46
Quality Inputs:

• Relevant lesson - Business and Accounting Studies, Grade 11, Text book

Criteria for Assessment and Evaluation

• Explains the aim of preparation of trading account
• Records the opening stock, purchases, carriage inwards and sales, in the trading account
• Calculates the cost of goods sold
• Prepares trading account calculating gross profit or loss with given information

47
Competency 8 : Prepares financial statements of a Business.

Competency Level 8.2 : Prepares Profit and Loss account of a business

No. of Periods : 10

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• To explain the profit and loss account

• To record distribution expenses

• To record administration expenses

• To record financial and other expenses

• To add other income to the gross profit

• To prepare trading, profit and loss account
• To calculate Net Profit or loss
• Show how gross profit/loss is transfered to the capital
account.

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

48
Mind Map is shown in the following page

Concept Map

Trade profit and Loss Account

(Income statement)

Trading account

Gross profit/
Gross Loss

Profit and
Loss Account

Less
Add
• Distribution expenses
• Other Income
• Administration expenses
• Financial and other
expenses

Net Profit/
Net Loss

Adjusted to the
Capital Account

Profit and loss account

Profit or loss account is prepared to decide whether the business earns profit or takes a loss.
Profit or loss account is prepared based on balances of income and expenses after the
preparation of Trading Account.

Net profit is calculated after adjusting the operating expenses and income of the accounting
period for the gross profit or loss.

49
 XY Business
Trading and Profit and Loss Account for the year ended 31 December 2015
Rs. Rs. Rs.
Opening stock (2015.01.01) xx Sales xx
Add Purchases xx
Carriage inwards xx xx
xx
Less Closing stock (xx)
Cost of goods sold xx
Gross Profit c/d xx
xx xx

Gross Profit b/f xx

Distribution Expenses Other Income

Sales employee wages x Discount Recerved x
Discount allowed x Commision Received x
Bad Debt x Interest Income x xx
Vehical Depreciation x xx
Administration Expenses
Rent and Rate x
Insurance x
Administration x
Stationary x
Buiding depreciation x xx

Financial and Other Expense

Bank Interest x
Bank overdrafts Interest x
Bank Charges x xx

xx
Net Profit Transferd to the capital
Account xx
xxx xxx

50
 XY Business
Trading and Profit and Loss Account for the year ended 31.12.2014
Rs. Rs. Rs
Sales xxxx
Cost of good sold
Opening stock xx
Purchases xx
Add Carriage inwards x xx
xx
Less Closing stock (x)
Cost of good sold (xx)
Gross profit/Gross Loss xxx
Other income x
xxxx
Distribution Expenses
Sales employee wages x
Discount allowed x
Bad Debts x
Vehical Depreciation x (xx)
Administration Expenses
Rent and Rate x
Insurance x
Administration x
Stationary x
Buiding depreciation x (xx)

Financial and Other Expense

Bank Interest x
Bank overdrafts Interest x
Bank Charges x (xx) (xxx)

Net Profit Transferd to the capital xxx

Account

51
 Income statement shown in vertical formati
.......................Business
Trading and Profit and Loss Account for the year ended 31.12.2014

Sales xx
Cost of goods sold
Purchases xx
Less Closing stock (xx)
Cost of goods sold (xx)
Gross Profit or Loss xx

Distribution Expenses
Sales wages x
Discount allowed x
Bad Debt x
Vehical Depreciation x
xx
Administration Expenses
Rent and Rate x
Insurance x
Administration x
Stationary x
Buiding depreciation x xx

Financial and Other Expense

Bank Interest x
Bank overdrafts Interest x
Money fraud x
Bank Charges x
xx (xx)
Net Profit Transferd to capital
Account xx
xxx

52
Trading and Profit and Loss account

Although the trading account and the profit or loss account are studied separately, in general,
trading account and profit and loss account is prepared as a single statement.

Instructions for Activity Planning :

 Based on the information on Mohamed’s business in annex 8.2.1, get the students to
prepare the trading account
 Provide the questionnaire in annex 8.2.2 and get students involved in an activity
 Check the accuracy of the student’s answers and get them to prepare a trading account
and Profit and Loss account as a single statement

53
 Annex 8.2.1
Mohommad’s Business
Trial Balance as at 31 December 2015

Account Name Dr Rs Cr Rs
Cash Balance 6000
Bank Balance 3000
Petty Cash Balance 100
Building 20000
Stock 01.01.2015 4000
Purchases 30000
Bank Loan 15000
Sales 55000
Debtors 12000
Creditors 20000
Discount Allowed 2000
Discount Received 4000
Wages and Salary 5500
Furniture 15000
Insurance 1200
Transportation 800
Electricity 1000
Other Income 1500
Stationary 500
Bank Charges 900
Building Reparing 2000
Motor Vehicle 25000
Capital 35000
Advertising 1000
Bank Loan Interest 500
130500 130500
P.N. All stocks have been sold

54
 Annex 8.2.2

Questionnaire for the students

1. List out Income and expenses separately included in the trial balance

2. Calculate the cost of good sold.

3. Classify expenditure under the following sections

 Distribution expenses

 Administrative expenses

 Financial and other expenses

4. Prepare Trade, Profit and Loss Account for the year ended 31.12.2015.

5. Write the journal entries for posting the gross profit or loss of this business to the capital
account

6. Compare the students answers on gross profit or loss with the answer given

7. Present the information in the profit and loss account through the Income Statement

Answers
1. Income Rs. Expenses Rs
Sales 55000 Purchases 3000
Discount received 4000 Stock 01.01.2015 4000
Other income 1500 Discount allowed 2000
60500 Wages and salary 5500
Insurance 1200
2. Cost of Goods Sold Rs. Transportation 800
Opening stock 4000 Electricity 1000
(2015.01.01) Stationary 500
+ Purchases 30000
Bank Charges 900
Cost of Goods 34000 Building repairing 2000
Sold
Advertising 1000
Bank loan interest 500
49400

55
Administration expensess Rs. Finance other Experses Rs.
Wages and salary 5500 Bank charges 900
Insurance 1200 Bank loan interest 500
Electricity 1000
Building repairs 2000 1400
Stationary 500
10200
Distribution Expences Rs.
Discount Allowed 2000
Transportation 800
Advertisement 1000
3800

56
 Mohommad business
Trading, profit and loss account for the year ended 31.12.2015
Rs Rs. Rs. Rs.
Opening Stock 4000 Sales 55000
Purchases 30000
Cost of Goods Sold 34000
Gross Profit c/d 21000
55000 55000
Distribution Expenses Gross Profit b/f 21000
Discount Allowed 2000 Discount Received 4000
Transpotation 800 Other Income 1500 5500
Advertisement 1000 3800 26500
Administration Expenses
Wages and Salary 5500
Insurance 1200
Electricity 1000
Stationary 500
Building repairs 2000 10200
Fnance and Other
Expenses
Bank Charges 900
Bank Interest 500 1400
15400
Net Profit transferred 11100
to the Capital Account 26500 26500

Rs. Rs.
(4) Profit and Loss Account Dr 11100
Capital Account Cr 11100

57
Quality inputs :
• Relevant lesson in the grade 11 student text.

Criteria for Assessment and Evaluation

• Explains aim of preparing profit and loss account
• Posting gross profit or loss to the profit and loss account
• Records expenses and income in the profit and loss account
• Prepares an income statement using given information

58
Competency 8 : Prepares financial statements of a Business

Competency Level 8.3 : Adjusts payable expenses and receivable income for the
accounting period

No. of Periods : 05

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• To explain the accrual basis simply

• To adjust the expenses payable
• To adjust the reciveable income

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Financial statements

PayableExpenses Receivable Income

Accrual basis

Ex: Ex:
• Rent payable • Rent income receivable

• Electricity bill payable • commission income

receivable

59
Accrual basis
Whether all income and expenses relevant to a fixed period of time in a particular period of
time in a business is received in cash or not, whether paid in cash or not, it relevant to the
accounting period, it should be employed in the calculation of the operating result. This is
called accural basis.
Payable Expenses / Accrued Expenses
Expenses relevant for the given accounting period which are not paid at the end of that
period is considered payable expenses
Double Entry
Expenses account Dr
Expenses Payable account / Cr
Accrued Expenses Account
Reason - Debited as expenses increase credited as accrued expenses are a liability
Income Receivable
Income relevant for the given accounting period which are not received at the end of that
period is called receivable income
Double Entry
Income Receivable Dr
Income Account Cr
Reason - Debited as, receivable income is an assets, credited as, increase in Income is noted
on the credit side of the income account.

Instructions on Activity Planning :

 Pertaining to the competency level presented on the transaction of the house in
annex 8.3.1 for the students and Brainstorm the students to calculate the total
income and expenditure for the month.
 List the student’s responses on the chalk board
 Considering the students answers, calculate total income and expenditure for the
month of January, the payable expenses and the receivable income for January
should be adjusted.
 Calculate the profit of the house once again.
 Provide transaction list of the Krishna’s business annex 8.3.2 for the students and
give them adaquate time for reading.
 This activity proceeds in 4 steps. Engage the students in this activity in sequential
order.
 Engage the students in the activity according to the following instructions.
 Instruct the students to prepare a table or provide photo copies of the table
given in the annex 8.3.3 in answering.

60
Instructions for the teachers
 After answering the first question get the students to compare their answers with the
answer in annex 8.3.4
 Check students’ responses and get them to correct answers when correction is required.
 Get the students to answer the questions and compare them step by step

Annex 8.3.1
Transactions of a house in January
 Electricity bill for the month of January is Rs. 12000. But Rs. 1000 due to be paid
 Received only Rs. 4000 as rent on premises rented out at Rs. 5000 per month.

Annex 8.3.2

Krisna’s Business

Transactions for the year ended 31.12.2015

A. Monthly Insurance expences is Rs. 2500/-, but the Business has paid only Rs. 25000/
- for the year

B. Monthly rental expence on the building is Rs. 15000/-, but the Business has paid only
Rs. 150000/- for the year

C. Recived Rs. 100000/- rental income for a land in the year but the monthly rental
income is Rs. 10000/-

D. Recived Rs. 500000/- rental income for a vehicle for the year, but the monthly vehicle
rental income is 60000/-

61
 Annex 8.3.3
Step 1

Mark “” for the correct answer

Transaction Expenses payable Income receivable

D
(Check your answer with the answer
given by the teacher)
Step 2
Indicate the value that should be adjusted relevant to the transaction

Transaction Adjustment with amount

D
(Check your answer with the answer
given by the teacher)
Step 3
Double Entry for the adjusted value.
Transaction Account to be drebited Account to be credited
A

(Check your answer with the answer

given by the teacher)

62
 Step 4
The Ledger Accounts
Post double entered to ledger accounts
Transaction Ledger accounts

(Check your answer with the answer

given by the teacher)

63
 Annex 8.3.4
Table of answers
Step 1
Answer for Question 1

Transaction Expenses Payable Income Receivable

(Compare with your answer)

Step 2
Answer for Question 2

Transaction Adjusted amount

A Insurance Payable Rs. 5000

B Rent Payable Rs. 30000

C Rent income Receivable Rs. 20000

D Vehicle Rental income Receivable Rs. 220000

(Compare with your answer)

64
 Step 3
Answer for Question 3

Account to be debited Account to be credited

Transaction Dr Cr
A Insurance Account Rs. 5000 Insurance Payable Account Rs. 5000
(Accrued Insurance account)
B Rent express Account Rent Payable Account
Rs. 30000 Rs. 30000

C Rent Income Receivable Account Rent Income Account Rs. 20000

Rs. 20000

D Vehicle Income Vehicle Income Account 220000

Receivable Account Rs. 220000

(Compare with your answer)

65
 Step 4
Answer for Question 4
A.
Dr Insurance Account Cr Dr Insurance Payable Account Cr

CashBook 25000 Insurance 5000

Account
Insurance 5000
Payable
Account

B.
Dr Rent Account Cr Dr Rent Accrued Account Cr
CashBook 15000 Rent 5000
Account
Rent 30000
Payable
Account

C. Rent Income Receivable

Dr Rent Income Account Cr Dr Account Cr
CashBook 100000 Rent 20000
Income
Rent 20000 Account
Income
Receivable
Account

D. Vehicle Income Receivable

Dr Vehicle Income Account Cr Dr Account Cr
CashBook 500000 Vehicle 220000
Income
Vehicle 220000 Account
Income
Receivable
Account

66
Quality Inputs:

• Business and Accounting Studies - Grade 11 Class text

Criteria for Assessment and Evaluation :

• To explains accrued basis

• Adjusts transactions relevant to payable expences
• Adjusts transactions relevant to receivable income

67
Competency 8 : Prepares Financial statements of a Business

Competency Level 8.4 : Adjusts bad debts for the period

No. of Periods : 03

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• Explain bad debts

• Explain how a bad debt is written off
• States the double entry regarding the adjustment of bad
debt
• Adjusts bad debts

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Bad Debts

Decreases
Increases
debts Asset
Expenses

Increases
Distribution
expenses

Bad debts

If a business finds that it is impossible to collect a debt, then that debt should be written off as
a bad debt. This could happen if the debtor is dead or has gone bankrupt and is thus unable to
pay the debt. A bad debt is, therefore an expense on the business that is owed the money. On
the other hand Debtors assets decrease.

68
The double entries are shown below.

Double Entry Explanation

Bad debts account Dr To transfer the amount of unpaid debts to the bad
debts account. Bad debts is an expense to the
business. Increasing expences are debited to
the expense account.

Debtors account Cr To reduce the debtor assest of the debtor who

is unable to settle the debt

Debtors account is an assets. If assets decrease

they are credited to the assets account.

Instructions for the activity plan:

 When you engage in the first lesson of this competency level, provide the following
statement for the students and discuss with them.

What is to be done to the amount of money which will not be received owing for
credit sales for a long period?

 Explain that amount should be considered as bad debt and recorded as an expenses of
the business.
 To emphasise the above, engage the students in the following activity providing the case
studies in annex 8.4.1

Instructions for the students

Annex 8.4.1

Draw attention to the case study given to your group out of the following case studies.

- Case Study 1

- Case Study 2

- Case Study 3

69
  What are the reasons for the occurance of the problems in your case study.

 What are your suggestions to solve the problem.

 What is its influence on performance and assets of the business

 State the relevant Journal Entries and the Ledger Accounts in order to record the
identified
problem.

 Present your findings creatively and cooperatively to the class

Case Study 1
Jayawardene, a businessman owner of the “Jayawardena Stores” sells goods on cash and as
well as on credit for his friend Rs 20000 is owed from his friends on credit sales of goods.
And also he couldn’t collect Rs 4000 from a customer, Sandun who died of a heart attack.

Case Study 2
Businessman Situwardena’s sells on cash base and on credit base. The amount of credit sales
is Rs 35000 and cash sales is Rs 80000.

A debtor, Deepal went bankrupt due to squandering and Deepal owes Rs. 1000 to the business.

Case Study 3
Dhanawardena is a businessman who sells on cash base and on credit.
The accounts clerk reported that credit sales is Rs 24000 and cash sales is Rs 60000. A
debtor, Amal is missing for a long period of time. The accounts Clerk reported that Amal
owes Rs 4000 to the business.

Quality Inputs :
• Business & Accounting - Grade 11 class text
• Photo-copies-8.4.1 Annex

Criteria for Assessment and Evaluation :

• Explains bad debt
• Presents three reasons for bad debit to occur
• Makes journal entries of written off bad debt
• Recording bad debts
• States the influence of bad debts on profit and assets of the business

70
Competency 8 : Prepares Financial Statements of a Business

Competency Level 8.5 : Depreciation of Long Term Assests relative to the

accounting period.

No. of Periods : 05

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• State causes for the depreciation of Property, Plant and

equipment (PPE).
• Calculate depreciation according to the straight line
method
• Account for depreciation based on a provision for de-
preciation account
• Describe the impact of depreciation expenses on prof-
its and assets

Instructions related to the Learning-Teaching Process :

Key terms and Concept

Concept Map

Depreciation of
Long term assets

Causes for
Depreciation

Straight Line
Obsolescence Depreciation
Method
Deterioration Costs
Decay Residual value
Useful Lifetime

71
Depreciation of Property, Plant and Equipment (PPE)
Assets that are employed in a business for long-term use in the absence of any objective of
re-sale, are long term assets. Buildings, machinery, motor vehicles, furniture etc are long-
term use assets of the business. Depreciation is the systematic provision of depreciable
amount on the useful of an asset.

Depreciation is the amount by rich the value of an asset reduces due to usage or becoming
outdated.

Causes of Depreciation
• Outdated/Obsolescence • Deterioration • Wear and Tear
• Erosing • Decay

Economic factors • Obsolescence

Physical factors • Decay, Deterioration

Calculation of depreciation according to the straight line depreciation method

Amount of depreciation relevant to Accounting period = Cost-Residual value

Useful Life of an asset
Journal entries for depreciation
Depreciation account debit
Provision for depreciation account credit

N.B.

At G.C.E (O/L) a simple discussion of the 3 areas Depreciation of PPE, straight line
depreciation method and recording of depreciation only, are expected.

Instructions for Activity Planning:

• Present the expression below to the students when entering this competency level.

What could be the condition of a motor vehicle purchased for Rs. 200000/- 5 years
ago?

• List student views on the chalk-board

• Through this, try to realize the causes for depreciation
• State that depreciation has to be accounted and present the journal entries required
for the purpose.
• Provide the case study in Annex 8.5.1 in order to confirm the activity related to
depreciation and Annex 8.5.2 and get the students involved in the activity.
• After the students have responded, discuss with them about maintaining accounts
for that purpose.

72
 Case Study
Annex 8.5.1

Sunimal is the owner of a cement-block manufacturing industry. He purchased a machine for

Rs. 30000/- for his production purposes. Useful life of the machine has been estimated as
5 years. Sunimal intends to sell scraps of that machine for Rs. 5000/- , after 05 years.

He purchases a hand tractor for Rs. 80000/- to transport raw material. According to the view
of the company, the tractor can be used for 10 years. He intends to sell it for Rs. 10000/- at
the end of 10 years. With the growth of his business, he intends to sell this hand tractor and
purchase a lorry.

Annex 8.5.2
Instructions for Students
• Out of the topics below, pay attenction to the topic provided to your group
• Cement Block making machine
• Hand tractor
• Read the case study (Annex 8.5.1)
• Show, according to your view, why the asset in the topic given to you, was purchased.
• What can be said would influence the value of an asset through its use over a long period
of time?
• Give reasons for the given answer.
• Give reasons for the depreciation of the value of the PPE.
• Calculate the charge for depreciation relevant to the accounting period
• Post the journal entries, recording the charge for depreciation, in the ledger accounts
below

Vehicle Account Vehicle Depreciation Account

Dr Cr Dr Cr

Provision for Vehicle Depreciation Account

Dr Cr

73
 Machinery Account Machinery Depreciation Account
Dr Cr Dr Cr

Provision for Machinery Depreciation Account

Dr Cr

Quality Inputs:
• Business and Accounting studies Grade 11 Text Book
• Photocopies of relevant Annexes.

Assessment and Evaluation Criteria

• Presentation of 03 causes of depreciation of a PPE
• Calculation of the depreciation of an asset according to straight line method
• Recording depreciation relevant to year
• Explains the influence of annual Depreciation of profit and relevant assets

74
Competency 8 : Prepares financial statements of a
Business.

Competency Level 8.6 : Discloses the financial position and profitability of the
Business

No. of Periods : 07

Specific Learning Outcomes : At the end of this lesson, students should be able to
acquire the following learning outcomes :
• State the capital in the Statement of Financial Position.
• Classify items of statement of Financial position as cur-
rent and non-current
• Prepare Statement of Financial Position with
adjustments

Instructions related to the Learning-Teaching Process :

Key terms and Concepts
Concept Map

Statement of Financial position

Interpretation
Content
Equity
Stock Assets
Liabilities
Current
Debtors Assets Non-Current Owner’s
Liabilities Equity
Current
Cash
Accrued Liabilities
Income Bank over
Bank draft
Balance Non Current
Assets Bank
Loan
Creditors Payable
Property: Plant Expenses Capital
& Equipment Investments

Capital De-
Land
Furniture creases due to
Motor Drawings
Vehicles Capital De-
Machines creases due to
Buildings Capital increases Net Loss
due to Net profit

75
Statement of Finacial Position
The statement which shows the value of assets, liabilities and equity of a business at particular
date is referred as Statement of Financial Position.

The Statement of Financial Position is prepared with the balances of the accounts of assets,
liabilities and equity (capital) remaining in the trial balance after preparing the income statement.

The format of a Statement of Financial Position is as follows

XY Business

Statement of Finacial Posotion as at ...........

Non-current Assets Cost Accumulated Net

Depreciations Value

Rs Rs Rs. Rs. Rs.

Non-Current assets
Capital x
+ Net Profit x Land x - x
xx Building x x x
- Drawings (x) Motor vehicles x x x
xx Machinery x x x
Non Current Furniture x x x
liabilities x x x

Bank Loan x Investments x

Current Liabilities
Creditors x Current Assets
Payable Expenses x xx Inventory (Stock) x
Debtors x
Accrued income x
Bank Balance x
Cash balance x
xx Total Assets x xx

76
 XY Business

The Statement of Finacial Position as of ...............

Cost Accumulative Net

Depreciations Value

Rs. Rs. Rs.

Non-current Assets
Land and building xxx xx xx
Motor vehicles xxx x xx
Machinery xxx x xx
xxxx xx xxx
Investments xx

Current Assets
Inventory x
Debtors x
Receivable income/Accrued income x
Bank Balance x
Cash in hand x xx

Total Assets xxxxx

Capital and Liabilities
Capital Account xx
Add Net Profit xx
xx
Less Drawings (xx) xx
Non current Liabilities
Bank Loan xx
Current Liabilities
Creditors xx
Payable Expenses/Accrued expenses xx xx
Total Equity and Liability xxx

77
Instructions on Activity Planning :

To engage in the activity related to this competency level, write the following accounting equation
on the chalk board and instruct the students how to present it as a statement.
Assets = Capital + Liabilities
Rs Rs Rs
Buildings + Debt + Cash = 140000 + 9000
91000 + 37000 + 21000

 Provide the information on Bimal’s business in Annex 8.6.1 to the students

 After completing, give time for students to read and understand these transactions provide
of in the table in annex 8.6.2
 Provide the instructions and adequate time for the students to answer the first step in that
table
 Show the answer for the first step from the answer table in 8.6.3 and guide the students to
compare same with their answers.
 Follow the same procedure to get answers for all 6 steps and get the students to compare
their answers with the answers provided.

Annex 8.6.1

The assets, liabilities and equity of the business in mushrooms carried out by Bimal as of
31.12.2015 are as follows

Rs

Land 400,000

Buildings 200,000

Machinery 300,000

Motor Vehicles 400,000

Furniture 150,000

Investments 100,000

78
Provisions for depreciation

As of 31.12.2015

Buildings 20,000

Machinery 60,000

Motor Vehicles 80,000

Furniture 15,000

Inventory 220,000

Debtors 80,000

Cash at bank 65,000

Cash in hand 34 000

Bank Loan 400 000

Creditors 51,000

Electricity expenses payable 4,000

Rent receivable 6,000

Capital as of 01.01.2015 1,000,000

Net profit for the year ended

31.12.2015 3490,00

Drawings 24,000

Prepare the Statement of Financial Position for Bimal’s business as of 31.12.2015 using the
above information.

Instructions to students

 Answer the questions step by step on the table provided to you for answering.

 Confirm the correctness of your answer compared to the teacher’s answers after answering
the first step

 Carry on the activity following the same procedure, step by step.

79
 Annex 8.6.2

Tables to be answered
Step 1
Non current Assets Cost Accumulated Net Value
Rs. Depreciation (Rs.) (Rs.)

Land 400,000 400,000

Buildings 200,000 20,000 180,000
Machines ----- 60,000 -----
Motor Vehicles 400,000 ----- ------
Furniture ------ ----- -----
------ ----- -----
Investment -----

Step 2
Current Assets Rs Rs
Inventory 220,000
Debtors ------
Rent receivable ------
Cash at Bank ------
Cash in hand ------
------

Step 3

01.01.2015 Capital 1000000

Add: Net Profit -------
--------
Less: Drawings (24000)
31.12.2015 Capital --------

80
Step 4
Non Current Liabilities Rs. Rs.
Bank Loan ---------

Step 5
Current Liabilities Rs. Rs.
Creditors ------
Electricity Expenses Payable ------

------

81
Step 6
Bimal’s Business
Statement of Financial Position as of 31.12.2015

Non current Cost Accumulated Net

Rs. Rs. Assets Rs. Depreciations Value
01.01.2015 Land ----- _____ -----
Capital ------- Building ----- ------ -----
+ Net Profit ------- Machines ----- ------ -----
Motor Vehicle ----- ------ -----
- Drawings ( ) Furniture ----- ------ -----
31.12.2015 ----- ------ ----
Capital -------
Investments -----
Non Current Current Assets
Liabilities
Bank Loan ------ Inventory ------
Current Debtors ------
Liabilities Rent receivable ------
Creditors ----- Cash at Bank ------
Electricity ----- Cash in Hand ------
Expenses -------- -----
Payable
------- -----

82
 Annex 8.6.3
Answers for Step 1

Non Current Assets Cost Accumulated Net

Rs. Depreciation Value
Rs. Rs.
Land 400,000 400,000
Building 200,000 20,000 180,000
Machines 300,000 60,000 240,000
Motor Vehicles 400,000 80,000 320,000
Furniture 150,000 15,000 135000
14,500,00 175,000 1,275,000

Investment 100,000

Answers for Step 2

Current Assets Rs. Rs.
Inventory 220,000
Debtors 80,000
Rent Receivable 6,000
Cash at Bank 65,000
Cash in hand 34,000 405,000

Answers for Step 3

Rs.
01.01.2015 Capital 1,000,000
Add : Net Profit 349,000
1,349,000
Less : Drawings (24,000)
31.12.2015 Capital 1,325,000

83
Answers for Step 4
Non Current Liabilities Rs.
Bank Loan 400,000

Answers for Step 5

Current Liabilities Rs. Rs.
Creditors 51000
Electricity-Payable 4000 55000

Bimal’s Business
statement of Financial Position as at31.12.2015
Non current Cost Accumulated Net
Assets (Rs.) Depreciations Value
(Rs.) (Rs.) (Rs.) (Rs.)

01.01.2015 Land 400,000 400,000

Capital 1000,000 Buildings 200,000 20,000 180,000

+ Net Profit 349,000 Machinery 300,000 60,000 240,000

1,349,000 Motor Vehicle 400,000 80,000 320,000

- Drawings (24,000) Furniture 150,000 15,000 135,000

Capital (31.12.2015) 1,325,000 1,450,000 175,000 1,275,000

Investment 100,000
Non current

Liabilities

Bank Loan 400,000

Current
Liabilities

Creditors 51,000
Payable Current Assets
Electricity 4,000 55,000 Inventory 220,000
Debtors 80,000
Rent Receivables 6,000
Cash at bank 65,000
Cash in hand 34,000 405,000

1,780,000 1,780,000

84
Quality Inputs :

 Grade 11 Business and Accounting Studies text book

Criteria for Assessment and evaluation

 States the capital in the statement of Financial Positin .

 Categorizes the items of statement of Financial Positin as current and non-current.

 Preparing the Statement of Financial Position based on the information given.

Provide a few exercises to the students including Income Statement and statement

of Financial Position.

85
Competency 8 : Prepares Financial Statements of a Business

Competency Level 8.7 : Prepares the receipts and payments account/cash account
of a Non-profit making organization

No. of Periods : 05

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• Explain a non-profit making organization

• State the objectives of a non profit making
organization
• Name the financial statements of a non-profit making
organization
• Shows the aims of preparing receipts and payments
account/cash account
• Prepare the receipts and payments account/cash
account

Instructions related to the Learning-Teaching Process :

Key terms and Concepts
Concept Map

Non-Profit Making
Organizations

Examples
Objectives Sources of
Income Financial
Statememts

Members & • Religious

Social Receipts of Income Organizations
Welfare Donations Statement • Youth Clubs
Receipts • Sports Clubs
and • Welfare Societies
Subscription Payments
Account/
Cash Income & Expenses
Cash Receipts and account Relevant for the
Cash Payments Period

86
Non profit making organizations

Charities such as sports clubs, welfare societies, religious organizations, youth clubs and school
development societies etc… which are being carried out with the main purpose of rendering
service to its members in need without aiming at profits are known as Non-profit making
organizations.

The Financial Statements of Non-profit making Organizations

Cash Account/Receipts and Payments Account
This is quite similar to the cash book summary which is prepared in a general business firm.
Income Statement / Income & Expenditure Account
This account is prepared based on all the income and expenses relevant to the considered
accounting period. By preparing Income Statement the organization can find the surplus or
deficit for the relevant accounting period.
Subscriptions
The fee charged from the members annually is called the subscription. This is the main
source of income for the Non-profit making Organization.

The format of the Receipts and payments Account/Cash Account

................. Society
Cash account/Receipts and Payments
for the year ended 31.12.20....

Receipts Amount Payments Amount

Rs Rs
Opening cash balance b/d x Rent x
Subscriptions x Purchases of equipment x
Donations x Payments for Entertainment x
Balance c/d x
xx xx

87
Instructions for Activity Plan

Engage in the lesson by inquiring about the transactions that take place in a student association
in school and in a normal business firm inquiring into the relationship between the transactions
in a profit making business and a non-profit objective business. Give a simple introduction to
the aims, accounts maintained and how cash transactions are recorded.

 Let the students study the details provided in annex 8.7.1 very carefully

 After reading the details given in 8.7.1 provide annex 8.7.2 to the students and ask
them to answer same with the help of the details they have already gone through.

 Elaborate on the subject matter based on the findings of the students

Annex 8.7.1

The details of “Ira-handa” sports club for the year ended 31.12.2015 are given below

1. Payments Rs
Travelling expenses 1,500
Wages of watcher 7,500
Postage 500
Purchased of sport equipment 2,000
Insurance 1,500
Printing cost of lottery tickets 2,000

Receipts
Subscription 4,000
Donations 9,000
Proceeds from lottery tickets 5,000

2. Cash in hand Rs 2000 as at 1st January 2015

3. The number of members in the club is 100 and an annual subscription Rs.50/- is
charged per member.
4. Wages and insurance are payable per Rs. 500/- each as of 31.12.2015

88
 Annex 8.7.2

Write the correct answers in the relevant places in the following account

Ira-handa sports club, Receipts and Payments Account/Cash Account for the year
ended 31.12.2015

Receipts Rs. Payments Rs.

Balance b/f 2000 ------------------------ -----------

----------------- ------------ ------------------------ -----------

----------------- ------------ ------------------------ -----------

----------------- ------------ ------------------------ -----------

Balance c/d -----------

------------ -----------

Quality Inputs :

 Grade 11 Business and Accounting Text book.

Criteria for Assessment and Evaluation:

 Introduces the non-profit making organizations

 Writes four example of Non-Profit making organizations

 Writes the objectives of a non profit Making Organization

 States the need for preparing the Receipt and payment account

 Prepares a receipts and payments account/cash account based on given details

89
Competency 8 : Prepares Financial Statements of a Business

Competency Level 8.8 : Prepares the Income and Expenditure account Income
statement of a non profit making organization.

No. of Periods : 04

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• Explain the Income and expenditure account/Income

statement

• State the need of preparing an income and expenditure

account/Income statement

• Shows the need for the preparation of a Income and

Expense Account/Income statement

• Prepare the Income and Expenditure account/Income

statement

• Compute the surplus or deficiency

Instructions related to the Learning-Teaching Process :

Key terms and Concepts
Concept Map

Income and Expenditure

Account / Income statement

Objectives
Expenses
Income

• Rent
• Electricity
• Subscription • Other Expences
• Receipt of Donations
• Other Income

Surplus/
Deficit

90
Income and Expenditure Account/Income statement

This account is prepared based on all the income and expenditure relevant to the accounting
period. The objective of preparing this account is to compute the surplus/deficit for the
period. This statement/account is prepared on the accrual basis.

The format of an Income statement.

………………….. Business
Income Statement
For the year ended 31.12.20……………

Rs. Rs.
Income
Subscription x
Donations x
Other Income x
Sales of old news papers x xxx

Expenses
Rent and Rate x
Wages x
Telephone x
Telephone x (xxx)

Surplus / Deficit xxx

Instructions on Planning Activity :

 Instruct the students to prepare the income and expenditure account following the
same instructions given in the teaching-learning process in 8.7.1 above
Let them prepare the Cash account and the IncomeStatement providing
several exercises

Quality Inputs : Business and accounting Studies grade 11 class text

Criteria for Assessment and Evaluation:

 Introduces of the income and expenditure account/Income Statement

 States the objectives of preparing the income and expenditure account/Income

Statement

 States 6 transactions contained in an income and expenditure account/Income

Statement

 Prepares an Income and expenditure account/Income Statement

91
Competency 8 : Prepares Financial Statements of a Business

Competency Level 8.9 : Prepares a Statement of Manufacturing cost

No. of Periods : 10

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• Explain Production cost

• Name and explains the elements of production cost
• Calculate prime cost of a product
• Calculate production overheads
• Calculate unit cost of product
• Determine the selling price of a unit
• Present how to compute selling price of a unit using a
spread sheet or a suitable method

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Total Cost of
Production

Direct Cost
Elements of
Production Indirect
Cost Cost
Direct Other
Material Direct
Expencess Production
Direct overhead Cost
Labour

Total
Prime Cost Production Selling Price
Production
Cost per unit per unit
Cost

92
A statement of production cost is prepared with the objective of computing the cost incurred
in the production of a good by a business.

Direct Cost : Costs directly identifiable in a finished good

Indirect Cost : Cost that are not directly identifiable in a finished good.
Prime Cost : Sum of all direct costs incurred in the production of a good.
Direct Material Cost : Cost of physical resources that are directly identifiable in a
finished goods.
Direct Labour Cost : Wages paid to those who are directly involved in production
of a good.
Other Direct Cost : Expenses directly indentifiable in the production of a good other
than direct material and direct labour cost.
Production Overheads : Expenses that are not directly identifiable in a produced good
Cost

Example
: factory rent
factory insurance
depreciation of factory equipment
factory electricity
salaries of superivisors
depreciation of machines

Example : Manufacturing cost of printing of a book

Direct material cost : Papers and ink
Direct labour cost : salaries of the printing machine operator
Direct other cost : author’s royality

lubricant oil for printing machines.

Manufacturing overhead salaries of supervisors

electricity bill of the factory

Total production cost = Prime cost + Production overheads

Total production cost

Manufacturing cost of a unit =
Total number of units produced

Sales price of a unit

The selling price of a unit is determind based on the profit margin of a unit

Selling price of a unit = Production cost of a unit + profit margin of a unit

93
 Statement of production cost for the ....................

Description Rs Rs

Direct material cost x

Direct labour cost x
Other direct cost x
Prime cost xx

Rent & rates for factory x

Supervisors’ salary x
Depreciation of machines x
Manufacturing overhead cost xx

Total production cost xxx

Instructions on Planning Activity :

 Engage in the lesson related to this competency level by inquiring about the things
utilized to produce goods like the teacher’s table/chair/black board/a cupboard/a book/
a pen and highlight the direct material, direct labour, other direct cost and the overhead
cost of production (indirect expenses).

 Let the students study annex 8.9.1 carefully.

 Distribute Annexture 8.9.1 & 8.9.2, questonnaire and instructions to answer questions
in 8.9.1

 Discuss the answers one by one.

 Let the students compare their answers to the question in the 1st step with the answers
provided by the teacher in the annex 8.9.3. The constructive contribution of the teachers
is required in this regard.

 Accordingly, let the students answer from the 2nd step to the 6th step first and then
compare these answers with the teacher’s answers in annex 8.9.3. The constructive
contribution of the teacher is required in this regard.

94
Preparation of the cost statement using a spread sheet is as follows.

Step Activity Command

1. Opening an Excel worksheet in Start

computer
MS Excel Worksheet
2. Preparing a cost statement
(schedule) in the Excel Worksheet
Direct material x

To obtain the sum of the primary Direct labour x

Cost and the manufacturing Direct other expenses x
Overhead use the command ()
or (sum) Prime cost xx
Rent & rates of factory x
Supervisers’ salary x
Machine depreciations x
Manufacturing Overhead xx
Total Manufacturing cost xxx

Total Production Cost

3. Computing the unit cost:
Number of units produced
Enter (Total cost/No: of units) and
give the command

Annex 8.9.1

Nimal who is a carpenter bought carpentry equipment and tools for Rs. 120000/- for the
purpose of opening a carpentry workshop and rented out a building on a monthly rent of
Rs. 20000/- . A carpenter to works in his carpentry workshop and a watcher for
Rs. 10000/- at monthly salary were also recruited.

Nimal purchased timber (teak wood) of Rs. 90000/- to make almirahs and the carpenter
was paid Rs. 50000/- as salary for the 10 almirahs made in January 2015. Another Rs.
10000/- was paid for carving designs on the almirahs. He also incurred Rs. 8000/- to buy
sand paper and polish and another Rs. 2000/- to buy nails for carpentry tools.

The electricity expenses incurred to produce the almirahs made in January 2015 was Rs.
6000/- and Rs. 4000/- was incurred repair the carpentry machines. Machines are depreciated
by 10% per annum

95
Study the case above carefully and answer (responses) following questionnaire in accordance
with the table in annex 8.9.2. After responding to each step compare your response with the
one provided by the teacher.

1. Prepare a costing sheet for the costs incurred on this business

2. Categorize the costs identified above according to the cost elements learned.

3. Compute the prime cost and the production overheads incurred to produce the almirahs
in accordance with the cost elements made out.

4. Prepare a costing sheet for January 2015 and compute the total production cost.

5. Compute the production cost of an almirah.

6. If the selling price of an almirah was determined by adding 40% profit margin calculate
the selling price of an almirah.

Annex 8.9.2
The table to be answered
Step 1 Costing sheet

Expense Cost (Rs.)

1.

2.

3.

96
Step 2 Rs.

Prime Cost

Direct material wood/timber ------------

Direct labour wages of carpenter . ------------

Other direct expenses carving designs 10,000

Manufacturing overhead ------------

------------------- ------------

------------------- ------------

------------------- ------------

------------------- ------------

------------------- ------------

------------------- ------------

------------------- ------------

Workings

Description of machines = cost of machines X percentage of depreciation

................................

................................

Step 3

Prime cost

(.................. + ................ + .................) Rs. ....................

Production overhead cost Rs. ....................

(.................. + ................ + .................) Rs. ....................

97
Step 4

Production Cost Sheet

for the month of January 2015

Rs. Rs.

Direct material ..................

Direct labour 50,000
Other direct cost ..................
Prime cost ................
------------
......................... ------------
------------
------------
------------
Total production overhead cost ...................
Total production cost ...................

Step 5

Total production cost

Unit cost of a product =
Total No. of units
= .........................................
Production cost of an almirah = Rs. .............................

Step 6

Selling price of a unit = Unit cost + Profit margin of a unit

= ............... + ..................................
Selling price of an almirah = Rs. .....................................

98
 Annex 8.9.3

Answer table

Answer for step 1

Rs.

Equipment & tools 120,000

Timber 90,000

Building rent 20,000

Watchers wage 10,000

Carpenters wage 50,000

Carving designs 10,000

Sand paper and polish 8,000

Nails 2,000

Electricity 6,000

Equipment depreciation 1,000

Machine repairs 4,000

Answers for step 2

Prime Cost

Direct material cost wood/timber 90,000

Direct labour cost wages of carpenter 50,000

Other direct costs carving designs 10,000

Production overhead cost sand paper & polish 8,000

lubricant 2,000

factory watcher’s wage 10,000

factory rent 20,000

factory electricity 6,000

machine repairs 4,000

machine depreciation 1,000

99
Working

Depreciation of Machine = cost of machines X percentage of depreciation

= 120,000 x 10/100 x 1/12
= Rs. 12,000 x 1/12
= Rs. 1,000
Answers for step 3

Prime cost
(Rs. 90,000 + Rs. 50,000 + Rs. 10,000) = Rs. 150,000
Production overhead cost
(Rs. 10,000 + Rs. 10,000 + Rs. 31,000) = Rs. 51,000

Answers for step 4

Production cost sheet for the Month of January 2015

Rs. Rs.

Direct material cost wood 90,000

Direct labour cost carpenter’s wage 50,000

Other direct cost carving designs 10,000

Prime cost 150,000

Production overhead cost

sand paper & polish 8,000

nails 2,000

factory watcher’s wage 10,000

factory rent 20,000

factory electricity 6,000

Machines repairs 4,000

depriciation on machines 1,000

Production overhead cost 51,000

Total Production overhead cost 201,000

100
Answers for the step 5

Total production cost

Unit cost of a product =
No. of units produced

= Rs. 201,000 / 10

Production cost of an almirah = Rs. 20 100

Answers for the step 6

Selling price of a unit = cost of a unit + margin of profits of a unit

= Rs. 20,100 + (20,100 x 40 / 100)

= Rs. 20,100 + 8,040

Selling price of an almirah = Rs. 28,140

Quality Inputs:

 Business and Accounting Studies grade 11 Text book.

 Related Annexes

Criteria for Assessment and Evaluation:

 Explains “Production Cost”

 Names & explains cost elements

 Calculates prime cost

 Calculates production overhead

 Calculates production cost of a unit and selling price of a unit

 Presents how to calculating the selling price of a produced unit using a spread sheet
or a suitable method.

101
Competency 9 : Makes appropriate decisions inquiring into
investments.

Competency Level 9.1 : Inquires about the importance of the investment.

No. of Periods : 05

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes:

• Explain the importance of invesment

• Shows different means of investment
• State the basic factors to be considered in selecting an
appropriate investment

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Investment

Investing money
with an economic
beneifits Purchasing
Treasury Bills

Sources of
investing Share market
Opening a
business investment

Depositting Purchasing Purchasing

money in a bank Properties Ordinary
Shares

Purchasing Purchasing
Land Jewellery
Savings Fixed
Account Deposits
Purchasing
Vehicles

102
Investment
Retaining (saving) some amount of money from the earnings with the purpose of having
future gain or profit can be referred to as investment.

Different sources of investing

 Depositing in a savings account
 Maintenance of a Fixed Deposit in a bank
 Purchasing properties like land, building and jewellery etc
 Investing in the share market (These subject matters are discussed in activity 9.1.1)
Main factors to be considered in choosing an investment
 Objective  Risk  Benefits

Generally expected rewards from each investment

 Interest income
 Security
 Capital gains
 Dividends
 Ability to place as guarantee

Benefits from various investments

 Savings accounts
 Gaining income interest
 Security for money
 Aquiring gaining other benefits
Ex: Entitled for lottery draws and some others offers as rewards

 Fixed deposits

 Gaining a higher rate of interest
 Security for money
 Ability to get loan facilities submitting as a guarantee

103
Purchase of Property

• Being an owner of a fixed asset

• Ability to utilize that property

• Possibility of making capital gain

• Ability to get a loan submitting same as a guarantee

• Can rent out and earn income

Instructions on Planning Activity :

Engage in lesson through activity displaying the following statement in an appropriate

manner, to be seen by every student
If you won Rs. 1,000,000/- at a lottery draws,………………..

• List the responses of the students on the board and ask for reasons

• Briefly explain the term “investment”

• Arrange group work on the following activity for further knowledge about the
sources of investing

• Distribute case in 9.1.1 and handout of annex 9.1.2 guidelines to the groups of
students and involve them in the activity.

• Let them read the grade 11 text book on this activity

• Make arrangements to have presentations on group work

• Give out an appropriate note so as to improve the knowledge of the students with
the facts they learnt and some other relevant facts.
Annex 9.1.1
Case Study
Mr . Mahinda Ranwella retired after 35 year of Government Service. His daughter Nimali,
works in a state bank. His son Milinda holds a degree in Business management. He is involved
in various business activities.
Mr. Mahinda Ranwella has Rs. 10,00,000 he received as commuted pension and Rs. 20,00,00
of his own savings.
Mr. Ranwella is thinking of investing this money so as to derive a good profit. But he has no
conception regarding investments. When discussing this idea with the rest of the family various
views were put forward. In this regard,
Nimali says, that, these days, there is a high bank interest it would be advisabe to open a Fixed
Deposit in a bank. But Milinda states that since gold and property are down in price, it would
be good to think along these lines, also/when opening a fixed deposit account.

104
 Annex 9.1.2

Hand out of instrucions to the students

1. Study the case you received very carefully.

2. Study the text book and explain the term “investment” in brief

3. Name 3 ways of investments come across in this case.

4. Identify the following investments and write two benefits you would gain in each.

• Deposits in banks

• Investing in purchase of property

5. Mention two facts to be considered by an individual in investing his money.

6. Name other types of investments in which Mr. Mahinda Ranwella could invest his
money.

7. Prepare the facts you have gathered for a presentation to the class.

Quality Inputs:

Business and Accounting Studies grade 11 text

Criteria for Assessment and Evaluation:

• Explain the importance of investment.

• States various ways of investment.

• Disclosing how the most appropriate form of investment, from several types of
investments, could be selected.

• States the facts to be considered when choosing an investment.

105
Competency 9 : Makes appropriate decisions inquiring into
investments

Competency Level 9.2 : Inquires about the importance of investing in the share
market

No. of Periods : 05

Learning Outcomes : At the end of this lesson, students should be able to

acquire the following learning outcomes :
• Show the importance of investing in the share market.
• Show the importance of the purchase of ordinary shares.
• Show the importance of purchasing Treasury bills.

Instructions related to the Learning-Teaching Process :

Key terms and Concepts

Concept Map

Share market
investment

Means of
Importance
investment

Buying ordinary Buying treasury

shares bills
Contribute
to decisions
making in the
company
Benefits
Benefits
Other
Acceptance Fixed Minimal
rewards
as securities interest risk

Possibility of Capital
being ap- profit Dividends
pointed to the
board of
directors

106
Share Market Investment

The Colombo stock exchange has been established in order to implement share transactions in
Sri Lanka. Only registered companies are involved in this market. The affairs of the share
market are operated by the Colombo Stock Exchange. Further, these affairs are monitored
and previewed by Securities and Exchange Commission of Sri Lanka

Buying the Shares

Purchasing the shares of companies is an investment . These affairs are implemented through
the share market. Shares can be bought either when a company makes a primary share issue
directly to the general public or when an existing share holder of a company is selling his shares
in the secondary market. The gains received are is called “dividends” Ordinary shares are
significant among various kinds of shares issued by a company

Ordinary Shares

A particular kind of shares issued to the public by a public limited company in order to accumulate
the capital requirements is known as “Ordinary Shares”.

Possible bnefits from purchasing company ordinary shares

• Voting power

• Receiving dividends

• Receiving capital profits

• Ability to convert shares into cash

• Ability to submit as securities

• Other gains

•Chance of getting elected to the board of directors

•Ability to be involved in decision making in the company

Receipt of Dividends

Dividends are determined in terms of available profits of the company and as well as the
objectives of the company. Normally dividends are not declared in the absence of profits,
nevertheless a higher dividend is payable in the presence of higher profits.

107
Entitlement to power of the company

A company is managed by a board of directors. The members are elected to the board of
directors from among the ordinary share holders. The chance of getting elected to the board
of directors is directly gained by the ordinary share holders.

Investing in Treasury Bills

Bills issued by the government in order to meet short terms needs of the government are called
Treasury Bills. These can be bought from the Colombo stock Exchange.

Benefits of investing in Treasury Bills

• Ability to gain interest

• Availability of absolute security (Minimal risk)

• Ability of converting into cash

Quality Inputs :

• Business and Accounitng Studies grade 11 classText

Criteria for Assessment and Evaluation:

• Explaining the importance of investing in the share market

• Stating the various possible investments in the share market

• Highlighting the importance of investing in shares from among various alternate forms
of investment

• Pointing out the importance of investing in Treasury Bills.

108
109