GRADE 9 EMS NOTES: FINANCIAL LITERACY &
ENTREPRENEURSHIP
1. DEBTORS AND CREDITORS
What is a Debtor?
A debtor is a person or business that owes money to the business because they
bought goods or services on credit.
The business will receive the money later (future income).
Debtors increase assets of the business.
Example:
Sipho buys a phone from your store and promises to pay at the end of the month — Sipho is a
debtor.
What is a Creditor?
A creditor is a person or business to whom the business owes money, usually
because the business bought something on credit.
The business must pay later (future expense).
Creditors increase liabilities of the business.
Example:
You buy goods from Makro on credit — Makro is your creditor.
2. CREDIT TRANSACTIONS AND THE ACCOUNTING CYCLE
Cash vs Credit Transactions
Cash Transaction: Payment is made immediately.
Credit Transaction: Payment is made at a later date.
The Accounting Cycle (Credit Purchases)
1. Source Document (e.g., invoice)
2. Subsidiary Journals (e.g., Creditors Journal)
3. Posting to General Ledger and Creditors Ledger
4. Trial Balance
5. Financial Statements
3. CREDITORS JOURNAL & LEDGERS
Creditors Journal (CJ)
Records all credit purchases of goods for resale.
Source document: Original invoice received from supplier.
Posting to Ledgers
From the CJ, post to:
o Creditors Ledger – individual accounts for each creditor.
o General Ledger – Creditors Control account.
Cash Payments Journal (CPJ)
Records all payments made (including to creditors).
Source document: Cheque counterfoil or EFT slip.
Effect on Accounting Equation
When buying on credit:
o Assets (stock) ↑
o Liabilities (creditors) ↑
When paying creditors:
o Assets (bank) ↓
o Liabilities (creditors) ↓
SWOT Analysis Example
Strengths Quality products, great location
Weaknesses New business, limited capital
Opportunities High demand, low competition
Threats Rising costs, competitors entering market
6. RECORDING IN SUBSIDIARY JOURNALS
Journal What it Records
Cash Receipts Journal (CRJ) All money coming into the business
Cash Payments Journal (CPJ) All money going out of the business
Debtors Journal (DJ) All goods sold on credit
Creditors Journal (CJ) All goods bought on credit
7. RECORDING IN LEDGERS
General Ledger: Where totals from journals are posted (e.g. Bank, Sales, Creditors
Control).
Debtors Ledger: Individual accounts for each debtor.
Creditors Ledger: Individual accounts for each creditor.
8. CONSOLIDATION & SKILLS REVISION
Critical Thinking & Reasoning
Understand how different functions affect business performance.
Analyse financial transactions and how they affect the accounting equation.
Values to Develop
Respect: Teamwork in business.
Positive Attitude: Problem-solving and facing business challenges.
