Grade 11 Business Studies

Grade 8 Economics and Managements Sciences

CONSUMER PROTECTION ACT

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BUSINESS STUDIES (all grades)

CONSUMER PROTECTION ACT

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You know the scene: your waiter brings you your meal at a restaurant, but it’s only half the size of the advertised picture.

·         Or your toaster dies an unexpected, flaming death on day 101 of your 100-day-guarantee.

·         Or a telemarketer calls you up halfway through lunch and you find yourself signing up for an insurance policy between mouthfuls.

Yes, it’s a dangerous world for consumers. But that’s all about to change.

On March 31, the new Consumer Protection Act (CPA) comes into play.

RETURNS AND REFUNDS

·         It’s all about you in the new act, especially when it comes to returning goods or asking for refunds. ·         Consumers will now have up to six months to return faulty or unsafe goods. ·         You will have a choice between the supplier repairing or replacing these, or refunding you in full. ·         If the product fails again within the next three months, the supplier is once again obliged to replace it or refund you. ·         But remember, this applies only to the general wear and tear of your appliances, not gross negligence on your part. ·         The supplier may charge you a small amount to repackage the product.

DELIVERIES

·         Ordering online? Goods will have to be delivered at an agreed date, time and place. If not, you will be free to accept or cancel the agreement – it’s your choice. ·         Companies are also obliged to deliver goods that match the sample or description of the product. You have the right to examine your purchases before accepting them, and reject them if you’re not happy. ·         If you didn’t get a chance to examine the product and are unhappy with it, it can be returned at the supplier’s expense.

SMS COMPETITIONS

·         As of March 31, companies will not be allowed to charge you an exorbitant R5 or R10 to enter an SMS or MMS competition, but will have to stick to the usual network rates.

REPAIRS

·         Sending your laptop in for repairs? Getting that leaky roof fixed? ·         As of March 31, companies have to provide you with an estimate for the work – which you must approve – and cannot charge you more than that estimate. ·         If more work is required above and beyond the estimate, they first have to get the go-ahead from you. ·         Companies also can’t charge you for preparing their quote, unless you’ve agreed to that.

PRIVACY

·         Gone are the dreaded telemarketer calls and junk mail flyers. At least in theory. ·         According to the new act, salespeople cannot bombard you with calls and leaflets at certain times of the day and certain days of the year. ·         You can also put your name on a blocking registry to one-up the telemarketers before they even begin to dial. How exactly this will be enforced, however, is still anybody’s guess.

COOLING-OFF PERIOD

·         Impulse buyers, this one’s for you. ·         According to this clause, you will have five business days to change your mind about that mid-life-crisis Harley or the seaside cottage you fell in love with. ·         Notify the company in writing, and they’ll have 15 days to pay you back in full. If goods have already been delivered to you, you’ll have to return them before you get your money back. ·         Note that this applies only where you bought in response to direct marketing, which is when things are advertised to you directly, in person, in the mail, or electronically.

CONTRACTS

·         Ever been billed for that gym or cellphone contract you thought had expired? ·         Thanks to the new act, automatic contract renewals will be no more. Companies will have to contact you – in writing – between 40 and 80 business days before your contract expires. They have to give you the option to continue your contract, change its terms or cancel it. ·         Note that the contract will continue on a month-to-month basis until you make your choice. ·         You will also be able to cancel contracts at any time. No more waiting for the full 24 months to end. If you’re unhappy, give the company 20 days’ notice – in writing – and you’re home free. ·         And while you won’t have to pay the full value of the contract, keep in mind that you still have to pay anything you owe the company up to the date of cancellation. ·         The company might also charge you a cancellation fee, possibly no more than 10 percent of the amounts still owed.

VOETSTOOTS

·         Voetstoots – especially in the car industry – means buying it as you see it. Don’t go complaining to the seller when your 1962 skedonk no longer gets you from A to B. What you see is what you get. But not anymore. ·         According to Broekmann, “The CPA specifically identifies the consumer’s rights to good-quality products, in good working order, free of any substantial defects, and fit for their purpose.” ·         From March 31, suppliers will have to let you know of all defects – both obvious and hidden – of your purchase, and you have to agree to buying the product in that condition.

RESERVATIONS

·         This one is still on you. Cancel a booking or reservation, and the supplier is entitled to charge you a “reasonable” cancellation fee. The “reasonableness” depends on how early you cancel and if the supplier can fill your now-empty spot. ·         If, however, the booking is cancelled because of the death or hospitalisation of the person who made the booking, no cancellation fee can be charged.

*source The Star

 

You know the scene: your waiter brings you your meal at a restaurant, but it’s only half the size of the advertised picture.

·         Or your toaster dies an unexpected, flaming death on day 101 of your 100-day-guarantee.

·         Or a telemarketer calls you up halfway through lunch and you find yourself signing up for an insurance policy between mouthfuls.

Yes, it’s a dangerous world for consumers. But that’s all about to change.

On March 31, the new Consumer Protection Act (CPA) comes into play.

RETURNS AND REFUNDS

·         It’s all about you in the new act, especially when it comes to returning goods or asking for refunds. ·         Consumers will now have up to six months to return faulty or unsafe goods. ·         You will have a choice between the supplier repairing or replacing these, or refunding you in full. ·         If the product fails again within the next three months, the supplier is once again obliged to replace it or refund you. ·         But remember, this applies only to the general wear and tear of your appliances, not gross negligence on your part. ·         The supplier may charge you a small amount to repackage the product.

DELIVERIES

·         Ordering online? Goods will have to be delivered at an agreed date, time and place. If not, you will be free to accept or cancel the agreement – it’s your choice. ·         Companies are also obliged to deliver goods that match the sample or description of the product. You have the right to examine your purchases before accepting them, and reject them if you’re not happy. ·         If you didn’t get a chance to examine the product and are unhappy with it, it can be returned at the supplier’s expense.

SMS COMPETITIONS

·         As of March 31, companies will not be allowed to charge you an exorbitant R5 or R10 to enter an SMS or MMS competition, but will have to stick to the usual network rates.

REPAIRS

·         Sending your laptop in for repairs? Getting that leaky roof fixed? ·         As of March 31, companies have to provide you with an estimate for the work – which you must approve – and cannot charge you more than that estimate. ·         If more work is required above and beyond the estimate, they first have to get the go-ahead from you. ·         Companies also can’t charge you for preparing their quote, unless you’ve agreed to that.

PRIVACY

·         Gone are the dreaded telemarketer calls and junk mail flyers. At least in theory. ·         According to the new act, salespeople cannot bombard you with calls and leaflets at certain times of the day and certain days of the year. ·         You can also put your name on a blocking registry to one-up the telemarketers before they even begin to dial. How exactly this will be enforced, however, is still anybody’s guess.

COOLING-OFF PERIOD

·         Impulse buyers, this one’s for you. ·         According to this clause, you will have five business days to change your mind about that mid-life-crisis Harley or the seaside cottage you fell in love with. ·         Notify the company in writing, and they’ll have 15 days to pay you back in full. If goods have already been delivered to you, you’ll have to return them before you get your money back. ·         Note that this applies only where you bought in response to direct marketing, which is when things are advertised to you directly, in person, in the mail, or electronically.

CONTRACTS

·         Ever been billed for that gym or cellphone contract you thought had expired? ·         Thanks to the new act, automatic contract renewals will be no more. Companies will have to contact you – in writing – between 40 and 80 business days before your contract expires. They have to give you the option to continue your contract, change its terms or cancel it. ·         Note that the contract will continue on a month-to-month basis until you make your choice. ·         You will also be able to cancel contracts at any time. No more waiting for the full 24 months to end. If you’re unhappy, give the company 20 days’ notice – in writing – and you’re home free. ·         And while you won’t have to pay the full value of the contract, keep in mind that you still have to pay anything you owe the company up to the date of cancellation. ·         The company might also charge you a cancellation fee, possibly no more than 10 percent of the amounts still owed.

VOETSTOOTS

·         Voetstoots – especially in the car industry – means buying it as you see it. Don’t go complaining to the seller when your 1962 skedonk no longer gets you from A to B. What you see is what you get. But not anymore. ·         According to Broekmann, “The CPA specifically identifies the consumer’s rights to good-quality products, in good working order, free of any substantial defects, and fit for their purpose.” ·         From March 31, suppliers will have to let you know of all defects – both obvious and hidden – of your purchase, and you have to agree to buying the product in that condition.

RESERVATIONS

·         This one is still on you. Cancel a booking or reservation, and the supplier is entitled to charge you a “reasonable” cancellation fee. The “reasonableness” depends on how early you cancel and if the supplier can fill your now-empty spot. ·         If, however, the booking is cancelled because of the death or hospitalisation of the person who made the booking, no cancellation fee can be charged.

*source The Star

GRADE 10 ACCOUNTING

GUIDELINES TO COMMENTING ON RATIO’ S

PROFITABILITY

a)     Gross Profit % on Cost of sales

Gross profit/cost of sales x100/1

b)    Gross Profit % on Sales (turnover)

                                                Gross profit/sales x 100/1     

Comment:

·         Both equations test whether the business meets its mark up %.

·         Compare this % to the expected mark up %.

·         Offer the following reasons for the difference between the actual and expected mark-up:

1.      Too much trade discount allowed.

2.      Too much seasonal sales or seasonal sales at low prices.

3.      Errors in calculating mark up or cost price.

c)     Operating profit on sales(turnover)

Operating profit/sales x 100/1

Comment:

·         Compare % of current year with previous year’s %.

·         For every R1 sale made, the business will generate x amount operating profit

– reflects how much operating expenses absorb the sales at the end of the year.

d)    Operating expenses on sales(turnover)

Operating expenses/sales x 100/1

Comment:

·         Compare % of current year with previous year’s %.

·         For every R1 sale, the business will incur x amount on operating expenses

– increasing operating expenses will result in a lower net profit.

·         Certain expenses must be controlled e.g. telephone, advertising salaries and wages...

·         These expenses must be identified and measures must be put in place to reduce them.

e)     Net profit on turnover (sales)

Net profit/sales x 100/1

Comment:

·         Compare with previous year- if decreases expenses may be too high.

·         Why?

1)      Excessive trade discounts.

2)      Seasonal sales.

3)      Inaccurate stock taking.

4)      Inaccurate stock taking.

5)      Inaccurate/incomplete record keeping.

·         Solution:

1) Better control over operating expenses.

2) Increase sales by offering discounts, promotions, price mark down etc.

3) Pay off/reduce loan debt.

f)      Return on Owners Equity

Net profit/Average capital x 100/1

How do you work out average capital?

Capital @ beginning of year + Capital @ end of year /2

Comment:

·         Compare to last year and indicate whether improved or deteriorated.

·         Is the return above an alternative investment?  E. g. Fixed deposit at the bank.

·         Should the owner be satisfied or not?

·         Should he/she consider switching to an alternative investment?

·         % should be approximately higher than 18% to make business worthwhile and investment worth the risk.

SOLVENCY RATIO

Total assets: total liabilities

Comment:

·         Acceptable norm is 1:1.

·         The ability of the business to meet its long term liabilities. E.g. Loans.

·         A business is solvent when:                 total assets>total liabilities.

·         A business is insolvent when:              total assets<total liabilities.

·         Compare to previous year and indicate whether improved or deteriorated.

·         Why? 

1)      Additional loans

2)      Additional Mortgage loans

·         Solution: Pay back loans as soon as possible

LIQUIDITY RATIO’S

a)     Current Ratio

Current assets: current liabilities

Comment:

·         Ability of the business to meet short term debts e.g. creditors.

·         Should be approximately 2:1 to avoid liquidity problems.

·         Compare to last year to see if improved or deteriorated.

·         State whether satisfactory or not.

·         Cannot be too high, as this means that funds could be tied up in the current assets which do not earn a return like other investments (fixed deposit).

·         Will the business be able to pay current liabilities?

b)    Acid Test Ratio

                                                Current assets – inventory: current liabilities

Comment:

·         This test is done to see if the business can meet short term debt under abnormal conditions e.g. economic depression, a decrease in sales...

·         Compare with previous year figures.

·         Norm is 1:1.

·         If the ratio is lower than 1, to be able to pay off short term debts the business would have to sell stock first putting the business under huge stress and could also result in stock being sold below cost.

·         Will the business be able to pay current liabilities with collections from debtors and cash on hand alone or must they sell off stock?