Business studies jss2 third term lesson note

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Lesson Notes / Scheme of work

Primary 1  |  Primary 2 | Primary 3

Primary 4 |  Primary 5 | Primary 6

JSS1 | JSS2  | JSS3

SSS1 | SSS2  |  SSS3

Question Bank

Primary 1 |  Primary 2  |Primary3

Primary 4  | Primary5  | Primary6

JSS1 | JSS2 |  JSS3

SSS1 | SSS2  |  SSS3

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Business studies jss2 third term lesson note

INSURANCE

LEDGER ENTRIES

PETTY CASH BOOK

THE CASH BOOK

IMPREST SYSTEM

SPEED DEVELOPMENT AND ACCURACY SKILLS

BOOK KEEPING ETHICS

PERSONAL QUALITIES OF AN ENTREPRENEUR

BUSINESS OPPORTUNITIES

CONSUMER RIGHT

RESPONSIBILITIES OF A CONSUMER

Insurance

Week 1 & 2

Topic: Insurance I

 

Contents:

  • Meaning of Insurance
  • Principles of Insurance
  • Types of Insurance
  • Importance of Insurance
  1. Meaning of Insurance

Insurance can be defined as the process whereby there is protection against any risk that may terminate life or destroy the business or individual property. Loss of damage to property may arise from accident, theft, fire, flood and so on.

Insurance can also be defined as the transfer of risk of life or property from one person that insures himself (called the insured) to another person i.e. the insurance company (called the insurer) in return for a fixed amount (called premium) which the insured has made to the insurer.

Insurance is a contract between the insured and the insurer. If any property is lost or damaged, the insurer will pay the insurer insured an agreed sum of money called indemnity.

Insurance companies in Nigeria

Insurance companies can be divided into categories, which are

Life Assurance: It is a contract between the person who takes out the policy called the assured and the assurance company. Examples of Life Assurance Companies are: AIICO Assurance Policy, GNI Life Assurance Ltd, Mutual Benefits Life Assurance Company Ltd etc.

Non-life insurance: Non life insurance performs other insurance function. They include Cornerstone Insurance PLC, Sovereign Trust Insurance PLC etc.

  1. Basic Insurance Principles

The following principles are used in guiding the contract of insurance

  1. Principle of subrogation: This principle states that an insurance company can take the place of the insured after it has indemnified him by making necessary payments.
  2. Principle of indemnity: This principle of indemnity states that in the event of any loss the insured has to be restored to the position he was before the loss.
  3. Principle of proximate cause: This principle states that the cause of the loss or damage must be linked with the risk that was originally insured against.
  4. Principle of utmost good faith: The principle of utmost good faith states that both the insured and the insurer must disclose all relevant information to each other.
  5. Principle of insurable risk: This principle states that insurance can only entered if into if the risks involved are insurable.
  6. Principle of insurable interest: This principle states that no person can be allowed to insure anything in which he has no insurable interest.
  7. Types of Insurance
  8. Motor vehicle insurance: Motor vehicle insurance is the most popular and commonest type of insurance policy in insurance Nigeria because it is compulsory for every vehicle to be insured in Nigeria.
  9. Burglary/ Theft Insurance: Burglary or theft insurance policy provides protection against loss or damage to the property of the insured as a result of burglary or theft.
  10. Marine Insurance: Marine insurance is a compulsory insurance that is taken for ships and boats on seas. It is one of the oldest forms of insurance. It covers loss or damage over goods, the ships or boats carrying the goods also.
  11. Life Assurance Policy: This provides protection against loss caused by the death of the person (assured). It helps to reduce the financial problem which the death of the people can cause.
  12. Agricultural Insurance Policy: Agricultural insurance is the newest insurance policy introduce into the insurance market by the federal government. It covers loss or damage to crops, livestock’s, pest inversion etc.
  13. Importance of Insurance

The Importance of insurance are as follows:

  • It helps to reduce risk
  • It helps to motivate workers in their business or job
  • It is a means of savings; it serves as a means that encourages people to save
  • It facilitates international trade
  • It is a provision of old age
  • It is provision against lives and property

ASSESSMENT

  1. The compulsory insurance is a compulsory insurance that is taken for ships and boats on seas. (a) marine insurance (b) motor vehicle insurance (c) life assurance (d) agricultural insurance policy
  2. All the following are types of insurance except (a) food insurance (b) burglary insurance (c) marine insurance (d) motor vehicle insurance
  3. All of the following are importance of insurance except (a) It helps to reduce risk (b)It helps to motivate workers in their business or job (c)It is a means of savings; it serves as a means that encourages people to save (d) it is a way of cheating people
  4. The newest insurance policy in Nigeria is (a) marine insurance (b) burglary or theft (c) agricultural insurance (d) none of the above
  5. the most popular and commonest type of insurance policy is (a) agriculture (b) marine (c) motor vehicle insurance (d) life assurance
  6. The money paid by the insured to the insurer is called (a) interest (b) bonus (c) premium (d) wages and salaries
  7. The insurer is the (a) insurance company (b) the person who wants to protect his properties (c) the workers in the insurance company (d) the manager of the company
  8. All of these are principle of insurance except (a) insurable interest (b) proximate cause (c) utmost good faith (d) life assurance
  9. The principle that states that the loss or damage must be linked with the risk that was originally insured against (a) insurable interest (b) proximate cause (c) utmost good faith (d) subrogation
  • Insurance is also a contract between the ———– and ———– (a) husband and wife (b) children and parents (c) insurer and the insured (d) teachers and students

 

 

 

Topic: Ledger Entries

Content

  1. Meaning of a ledger
  2. Items on a ledger
  3. Classification of a ledger
  4. Record cash transaction

Meaning of a ledger

A ledger can be defined as an important book of account in which all accounts are recorded . It contains account of individuals, account of properties (assets) of the business and also account of expenses and incomes.

Items on a ledger

The following are the items on a ledger

  • Date: This is to record the actual time the transaction took place.
  • Particulars: This explains the kind of transaction that took place, you will find sales, purchases, capital, cash under this column
  • Folio: Folio is used to show the page of the book of original entry that was used to record the transaction before being transferred into the ledger
  • Discount received or given: Discount allowed and discount received are presented under this column. This will provide a means of reconciliation when cost is being calculated.
  • Amount: This is always shown with the unit of the currency being used. In  Nigeria for instance you have the sign of the Naira

Classification of ledger

A ledger can be classified into two. They are:

  1. Personal ledger: The personal ledger are accounts in which persons or organization  transactions are recorded It consists of debtors and creditors.
  2. Impersonal ledger: This is an account that relates to assets, liabilities,income and expenses . It is divided into nominal and real account.

Record cash transaction

Cash transaction are recorded in the cash book. A cash book is a ledger. It is a book of original entry  where all cash received in a business should be recorded in the debit side of the cash account and all cash paid out of the business should be recorded on the credit side of the cash account, the difference between the total amount on the  credit side and that of the debit side is the cash balance in hand at a particular time.

Test and Exercise

  1. —————contains account of individuals, account of properties (assets) of the business and also account of expenses and incomes. (a) ledger (b) profit and loss (c) text books (d) notebook
  2. ————explains the kind of transaction that took place, you will find sale (c) personal and impersonal (d) none of the above
  3. In recording cash transaction of a business, all cash paid should be recorded on (a) debit side of the cash book (b) credit side of the cash book (c) both side of the cash book (d) should not be recorded on the cash book
  4. All the following are items found on the ledger, except (a) amount (b) folio (c) particulars (d) license

Week 4

Topic: Petty Cash Book

Contents:

  1. Meaning of petty cash book
  2. Uses of petty cash book
  3. Importance of keeping a petty cash book

Meaning of Petty Cash Book

A petty cash book can be defined as the book that is used to record expenses that are described as minor. The petty cash book is always kept by a petty cashier, who is in charge of making small cash payment.

It is used to record items of expenditure like postage, transport, stationary, transport fares, etc are first recorded in the petty cash book.

The petty cash book is a formal summarization of petty cash expenditures, sorted by date. In most cases, the petty cash book is an actual ledger book, rather than a computer record. Thus, the book is part of a manual record-keeping system.

There are two primary types of entries in the petty cash book, which are a debit to record cash received by the petty cash clerk (usually in a single block of cash at infrequent intervals), and a large number of credits to reflect cash withdrawals from the petty cash fund. These credits can be for such transactions as payments for meals, flowers, office supplies, stamps, and so forth.

A somewhat more useful format is to record all debits and credits in a single column, with a running cash balance in the column furthest to the right, as shown in the following example. This format is an excellent way to monitor the current amount of petty cash remaining on hand.

Uses of petty cash book

The petty cash book is used for the following

  1. It is used to record small amount of cash kept in the office for minor day to day use.
  2. Petty cash book maintains records of all petty payments systematically.
  3. Petty cash book supplies information regarding petty payments made on different heads more easily and quickly.
  4. Petty cash book makes possible for making comparison of the petty expenses between two periods and helps in controlling such petty expenses more effectively.
  5. Petty cash book helps in making the main cash book more informative, clean and clear by including only major transactions.

Importance of keeping a petty cash book

  1. It allows for proper recording
  2. It makes the task of cashier easier as items of expenditure are summarized, the balance is later transferred into the cash book.
  3. It gives the chance of minor expenses to be paid for immediately instead of waiting for the casheir

Importance of Petty Cash

Petty cash are the small funds available all the time in your office cash box for meeting miscellaneous or emergency expenses during or after banking hours. Petty cash is of very high importance as certain immediate expenses come up for example someone gets hurt to provide immediate medication when senior managers are not available in the office. For the small office service materials. For any petty job where payment by check is not acceptable by the vendor.

Test and Exercise

  1. Define petty cash book.
  2. State the importance of petty cash book.
  3. What are the uses of petty cash book?

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Business studies jss2 third term lesson note

Business studies jss2 third term lesson note

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