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BUDGET AND INCOME-AND-EXPENDITURE STATEMENT

- Both list the income and expenses for the month.
- A budget statement is a list of expected income and expenditure/expenses.
- An income-and-expenditure statement is a list of actual income and expenditure/expenses.

Comparison Between A Budget And Income-And-Expenditure Statement

ACTIVITY 3

1. Re-draw the budget statement below and complete it by filling in the items from the list provided.

\begin{tabular}{|l|l|l|l|}
\hline
Salary: R17 800 & \begin{tabular}{l} Water and refuse account: R325 \end{tabular} & School fees: R940 & Food: R2 750 \\
\hline
Rent: R4 100 & Electricity: R580 & \begin{tabular}{l} Clothes and cellphone: R2 202 \end{tabular} & Petrol: R1 800 \\
\hline
Municipal rates: R475 & \begin{tabular}{l} Car repayment: R1 650 \end{tabular} & \begin{tabular}{l} Housing allowance: R550 \end{tabular} & Entertainment: R1 300 \\
\hline
\end{tabular}

1.2 Calculate how much money will be left over after all expenses have been paid.

1.3 Explain the meaning of the following terms in the given context:
a) Income
b) Expenses
c) Profit
d) Budget statement



Answer :

GinnyAnswer
Sure, let's go through the solution step-by-step.

### Step 1: Re-draw the Budget Statement
Firstly, we re-arrange the given information into a more readable format:

[tex]\[ \begin{array}{|l|l|l|l|} \hline \textbf{Salary: R17 800} & \begin{array}{l} \text{Water and refuse account:} \\ \text{R325} \end{array} & \text{School fees: R940} & \text{Food: R2 750} \\ \hline \text{Rent: R4 100} & \text{Electricity: R580} & \begin{array}{l} \text{Clothes and cellphone:} \\ \text{R2 202} \end{array} & \text{Petrol: R1 800} \\ \hline \text{Municipal rates: R475} & \begin{array}{l} \text{Car repayment:} \\ \text{R1 650} \end{array} & \begin{array}{l} \text{Housing allowance:} \\ \text{R550} \end{array} & \text{Entertainment: R1 300} \\ \hline \end{array} \][/tex]

### Step 2: Calculate Total Income and Total Expenses
1. Total Income
- Salary: R17 800
- Housing Allowance: R550

[tex]\[ \text{Total Income} = R17 800 + R550 = R18 350 \][/tex]

2. Total Expenses
- Water and refuse account: R325
- School fees: R940
- Food: R2 750
- Rent: R4 100
- Electricity: R580
- Clothes and cellphone: R2 202
- Petrol: R1 800
- Municipal rates: R475
- Car repayment: R1 650
- Entertainment: R1 300

[tex]\[ \text{Total Expenses} = R325 + R940 + R2 750 + R4 100 + R580 + R2 202 + R1 800 + R475 + R1 650 + R1 300 = R16 122 \][/tex]

### Step 3: Calculate Money Left Over
To find out how much money will be left over after all expenses have been paid, we subtract the total expenses from the total income:
[tex]\[ \text{Money Left Over} = \text{Total Income} - \text{Total Expenses} = R18 350 - R16 122 = R2 228 \][/tex]

### Step 4: Explanation of Terms
a) Income: In this context, income refers to the total amount of money received or earned within a given period, typically a month. Here, it's the sum of the salary and the housing allowance.

b) Expenses: Expenses are the costs incurred to cover various needs or bills. This includes payments for water and refuse, school fees, food, rent, electricity, clothes and cellphone, petrol, municipal rates, car repayment, and entertainment.

c) Profit: In a personal finance context, profit refers to the money left over after all expenses have been paid from the total income. Here, it's the remaining amount after deducting the total expenses from the total income, which is R2228.

d) Budget Statement: A budget statement is a financial plan that lists expected income and expenses over a specific period, usually a month. It helps individuals plan how they will allocate their resources to cover their expenses. In this activity, the budget statement includes the income from salary and housing allowance and the various expenses.

By carefully planning and understanding both income and expenses, one can manage their finances more effectively and ensure they have money left over, contributing to financial stability.

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