S5 UPDATE SYLLABUS

TABLE OF CONTENTS
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Unit 1: MARKET RESEARCH.................................................... Page

Unit2 BUSINESS PLAN USING BUSINESS MODEL CANVAS ……….Page

Unit 3: BUSINESS GROWTH AND DEVELOPMENT…………………. Page

Unit 4: ROLE OF ENTREPRENEURSHIP IN SOCIO-ECONOMIC DEVELOPMENT. Page

Unit 5: ICT IN BUSINESS ………………………Page

Unit 6: BUSINESS PUBLIC RELATTIONS...........................Page

Unit 7: BUSINESS CONTRACS………………………………...... Page

Unit 8: OFFICE PROCEDURES……………………………. Page

Unit 9: QUALIT ASSURANCE AND QUALITY COMPLIANCE IN BUSINESS…. Page

Unit 10: ACCOUNTING PRIME BOOK…………………………………. Page

UNIT 1: MARKET RESEARCH

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Market; A market is defined as an arrangement through buyers and sellers come into contact to negotiate
an exchange for goods and services. Or is a place where buyer and seller meet in order to negotiate
(exchange) goods and services.

Research: is a process of gathering and collecting information about the market like
product,customer,supplier and competitors.
Marketing: This is the action of promoting and selling products including market research and advertising.

Market Research: This is the process of collecting and analyzing information or data related to the demand
of goods and services in a particular market. It gathers information about products, customers,
distributors/ suppliers and competitors.
Importance / the need for market research/ Purpose of market research

Market research helps entrepreneurs in the following ways:

 It reduces risks involved with new products

 It helps to identify customers’ needs and requirements
 It helps to identify the nature and the size of the competition.
 It helps to identify potential customers
 It helps to determine marketing programs
 It helps to draw business plan

1.2. Elements of market research/market surveys

A) CUSTOMER SURVEY
A customer survey is a tool used to help businesses understand what their customers think about their
products or services, their brand, and their customer support.

Sample questions that can be used to design a customer survey.

. How old are you?

. Where do you live?

. How often do you buy product X in a week?

. What is your favorite color?

. What is your marital status?

B) PRODUCT SURVEY / PRODUCT OR SERVICE ANALYSIS

A product survey is a tool that a business uses to learn what their potential customers think about their
products.

Sample questions that can be used to design a product survey

. How long have you been using the product?

. Is our product or service easy, fast, convenient to use?

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. What features do you like most about our product or service?

. How often do you use the product or service?

. Does the product help you achieve your goals?

C) SUPPLY SURVEY

A supplier survey is a tool used by entrepreneurs to collect information from current or potential suppliers.

Sample questions that can be used to design a supplier survey

◾ How long does the supplier take to process our orders?

◾ How fast do they respond to our requirements?

◾ How is the quality of their services and products?

◾ How is the price of their services and products?

◾ Do they offer any after sale services?

D) COMPETITOR SURVEY/ COMPETITOR ANALYSIS / COMPETITIVE ANALYSIS

Competitor survey is a tool used to review the competitive situation in the desired target market as well
as the usage and customer and market shares of competitors’ product/services.

Sample questions that can be used to design a competitor survey

◾ What channels did they interact through? e.g. in person, via phone, online

◾ Who are the competitors?

◾ What are their strengths and weaknesses?

◾ What are the strategic objectives of competitors?

◾ How do competitors deliver service?

. What products do competitors offer?

Data collection is at the heart of market research. If you do data collection wrongly, the result could be an
essentially useless market research report, wasted money, and poorly informed business decisions.
Steps to follow when making effective survey/ To conduct an effective survey, follow the following
steps:/ steps to follow when carrying out market survey:
1. Find out a topic for research study
2. Define the research problem
3. Sett objectives to detailing what the research wants to achieve at the end of the study
4. Determine the research scope (boundaries)
5. Design a clear plan on how to conduct data collection
6. Analysis of data
7. Presenting data

Market research tools/techniques of market research

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The most commonly used data collection tools for Market Research are:
1. Interviews are used to gain a deep and personal insight into a customer’s individual’s experiences
and opinions on a topic. Interviews can be conducted face-face, via phone call or video chat,

How to conduct a customer interview study

 Set a goal and success metrics for your interviews.

 Write a customer interview guide and questions.
 Find your customers
 Set yourself up for success. Get comfortable
 Start the interview to achieve the goal you set for your customer interview
 When you are satisfied with the answers you have gathered, give the customer a chance to ask you
questions thank your customer for their time from the bottom of your heart.

2. Questionnaires are used to collect data using a series of questions aimed at gathering opinions and
experiences around a specific thing like a product, marketing campaign, or brand.
3. Observation is a time-tested method of data collection that, when done right, allows the
entrepreneurs to gather large amounts of unbiased and unfiltered feedback.
4. Focus groups involve bringing multiple people together to discuss a particular topic (for
example, a new product) and share their experiences and thoughts. –
5. Experiment: An experiment is a controlled study in which the researcher attempts to understand
cause and effect relationship
6. Sample surveys: a sample survey is study that obtains data from a selected population after
estimation of population selected (attributes).
7. Case study: it refers to a fairly intensive examination of a single unit as a person, a small group of
people or company.

Steps of conducting Focus Group Discussions

FGDs are normally based around a short list of guiding questions,

Step 1: Select a topic of survey

Step 2: Select the team to facilitate the discussions

Step 3: Identify the groups and participants that will take part

Step 4: Decide on the timing and location of the meetings

Step 5: Develop a set of questions or a discussion guide

Step 6: Conduct and record the focus group discussions

Step 7: Analyze the data and report the results

Data interpretation refers to the process of making sense of data by analyzing and drawing conclusions from
it.

Steps in interpreting data/ Data interpretation process and decision making on market research

Steps should an entrepreneur follow to be able to make the right decision based on the research results.

a) Grouping data of the same characteristics.

b) Analyzing the grouped data.

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c) Comparison of data based on the survey objectives.

d) Interpretation of data.

e) Recommendations and conclusion.

f) Decision making

UNIT 2: BUSINESS PLAN USING BUSINESS MODEL CANVAS(BMC)

Key unit competence:To be able to create a business plan using the Business Model Canvas.

Business model: is a plan describing how a business intends to make money (Is plan for making profit.)

Business model canvas (BMC): this is a very simplified tool that enables entrepreneurs to prepare and
portray their business plans on a single page. Or is graphical representation of the main components of your
planned business activities.
Sustainable Business Model Canvas: is a tool that you can use to visualize, assess, and adapt your
project’s blueprint (business model) in a clear and structured way while considering the project’s social and
environmental impact.
Importance of using BMC in business/purpose of BMC
- Clear expression and communication of your idea to the team, stakeholder.
- Clarify the issues faced by your customer or users, leading to more targeted solution
- Helps entrepreneur to transform an idea into actionable business plan.
- Gives entrepreneur a wide view of every step of their business.
- Verify that your business model is correctly focused
- BMC can serve as the foundation to more detailed business plan(key)

Why do you think nowadays entrepreneurs are moving away from the traditional way of preparing
a business plan towards the BusinessModel Canvas?
The BMC is very summarized, simple to use and easy to use while pitching
• It identifies the products or services the business plans to sell,
• It defines the identified target market, and any anticipated expenses.
• It helps an entrepreneur attract investment, recruit talent, and motivate management and staff.
Some of the items included in the Business Model Canvas
. The logic behind a project.
• The way a project is to be run.
• The people and steps involved.
• The market in which the project is to be operational.
• The financial plan anticipated for this project.
• Describing how your project creates sustainable
Business model canvas (bmc)
We have nine components of BMC,

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The left-hand section of the BMC is the infrastructure section like Key activities, Key resources and Key
Partners.

The middle section of the canvas describes the value proposition delivered to different customer
segments.

The right-hand side of the Business Model Canvas is all about customers- like relationship, channel,
customer segment

The bottom section of the canvas describes the finances. Like cost structure, revenue stream.

Sustainable BMC focuses mainly on two main directions:

 positioning (right side of the canvas): illustrates the position of your project within your target
market, the added value it brings to the target groups, to society as a whole and to the environment.
Like Customer Segments, Customers Relationships, Channels, Value Proposition, Revenue Streams,
and Social and Environmental Benefits
 Operation (left side of the canvas). illustrates the operational plan of your project including all the
involved stakeholders and the financial aspects of your project like Key Activities, Key Resources,
Key Partners, Cost Structure, and Social and Environmental costs.

Elements/components of the BMC

Customer Segments describes who your customers are. Items are Age, Gender, Address, Economic Status,
Educational background, Lifestyles
• Value Proposition. Is a heart of BMC describing the reasons that make customers buy from you and
the gain you provide or the need you satisfy. Items are Product, Service, Problem to solve, Benefit to
customer
• Channels describes how your products and services will be delivered to the market Items are direct
sales, Indirect, Online platforms, retail
• Customer Relationships describes how you will get, keep, and grow your customers. Items are Word
of mouth, WhatsApp group,
• Revenue Streams describes how your business will earn money, Items are Sale of product, Sale of
service, subscription,
• Key Resources describe the unique strategic resources your business has will need. Items are Land,
equipment, workers, room to rent
• Key Activities describes the unique strategic activities your business will perform to deliver your value
proposition Items are Production, selling, packaging, farming, purchasing and research
• Key Partnerships describes what non-key activities you will outsource to enable you to focus
more on your key activities Items are Land owners, wholesalers, IT companies Transport companies, Retail
outlets, government agencies
• Cost Structures describes the major costs incurred by your business Items are Rent, salaries,
registration, raw materials, taxes, utilities
• Social and environmental costs describe the negative impacts of the business activities to the society
Items are Pollution, noise, deforestation, wastes dumping
• Social and environmental benefits describe the positive impacts of the business activities to the
society Items are Employment, incomes, improved health
What are some Questions an entrepreneur should ask him/herself while completing the following
components of the BMC?
a) Value proposition
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• What are your products and services?
• What value do we deliver to the customer?
• Which one of our customer's problems are we helping to solve?
• Which job are we helping the customer get done?
• Which customer needs are we satisfying?
b) Customer segment
• Who are the key customers or users of your business? Who are you solving a problem for?
• What do they do?
• What draws them to you?
• What are your top three segments?
• Which segments produce the most business and revenue?
c) The channels
• Through which Channels do our Customer Segments want to be reached?
• How are we reaching them now?
• How are our Channels integrated? Which ones work best?
• Which channels are most cost-efficient?
• How are we integrating them with customer routines
d) Customer relations
• What are the key relationships and how do you maintain them?
• Having attracted clients and customers, how do you plan to retain them?
• How do you nurture your customer/client relationships?
• Are you going the automated route or something more personal
e) Revenues
• For what value are our customers really willing to pay?
• How would they prefer to pay?
• How much does each Revenue Stream contribute to overall revenues?
f) Resources
• What Key Resources do our Value Propositions require?
• What key resources do our Distribution Channels require?
• What key resources do our Customer Relationships require?
• What key resources do our Revenue Streams require?
g) Key partners
• Who are our Key Partners?
• Who are our key suppliers?
• Which Key Resources are we acquiring from partners?
• Which Key Activities do partners perform for us?

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h) Key activities
• What Key activities do our Value Propositions require?
• What key activities do our Distribution Channels require?
• What key activities do our Customer Relationships require?
• What key activities do our Revenue Streams require?
i) Cost structure
• Is your business more value driven or cost driven?
• What are the fundamental costs derived from my business model?
• Which key resources represent a significant expense to the business?
• How do your key activities drive costs?
j) Impact of business
• How many jobs are we creating?
• How are we preserving the environment?
• How are we contributing to the health of the people?
Questions that will help you to complete your Business Model Canvas.
• What value do we deliver to the customer?
• How do our customer segments want to be reached?
• What type of relationship does each of our customer segments?
• How do your customer segments purchase your value proposition?
• What negative effects shall our business have on the environment?
• What key resources does our business require?
• Who are your suppliers and service providers?
• What are your most important costs?
EXAMPLES: BMC for EGG Collection Centre.
Key partners Key activities Value Customer Customer segment
proposition relationship
. Egg producing . fresh . business relationship . Kimironko retailers
. Commercial feed . Packaging(new) . competitive price with Commercial feed . Institutional
supplier . Transporting eggs(new) market supplier consumers(new)
. world bank . Selling of eggs . eggs free of . Trust based . village consumers
. veterinary field unit fishmeal smell relationship of CFS . neighbours
. Contract with buyers
(new)
Key resources channels
. house of storing eggs . poultry eggs
. vehicles producers travel
. money . local car for
. workers transportation to
.paper pulp or card Kimironko retailing
board( material used of shops.
packaging eggs).
Cost structure Revenue streams

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 . variable cost . sale of eggs produced
-feed cost
-medication and vaccination cost
-transportation cost
-packaging cost
. fixed cost
-rent of kimironko houses
Marketing,rent,staff cost

Social and environmental Costs Social and environmental Benefits

Increased deforestation Employment opportunities
Noise from machines Improved welfare
Increased strain on resources Payment of taxes

Types of business models

- Retailer model
- Manufacturer model
- Free-for-service model
- Bundling model
- Product as service model

Steps followed to make a Business Model Canvas

Step 1: Customer Segments: Who are you creating value for? The first step is to find out what type of
customers your organization is targeting.

5 types of customer segments below:

a) Mass Market. One large group of customers with broadly similar needs and problems. An example
would be customers who need shoes.

b) Niche Market. One group of customers with specific needs and problems. An example would be
customers who need children’s shoes.

c) Segmented. Multiple groups of customers with slightly different needs and problems. An example
would be college students attending a university.

d) Diversified. Multiple unrelated groups of customer segments with very different needs and problems.
An example of this use would be Amazon utilizing online shoppers with Amazon.com and web developers
selling cloud computing services.

e) Multi-Sided Platform. Multiple independent groups of customer segments that may have
different needs and problems, but the business model requires both. An example would be a credit card
company that needs credit card holders and merchants who accept those credit cards.

Step 2: Value Propositions: What value do we deliver to the customer? Once you know who you are
providing to, then you can appeal to them with a value proposition. State your product/service, and why
your product/ service is valuable. 11 elements that contribute to customer value

a) Newness. Fulfils an entirely new set of needs that customer previously didn’t perceive because there was
no similar value proposition.
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b) Performance. Improves product or service performance.

c) Customization. Tailored to the specific needs of individual customers.

d) Getting the job done. Helps customers get a certain job done.

e) Design. Stands out because of superior design.

f) Brand/Status. Stands out because of the popularity or respect of a brand/status.

g) Price. Offers a similar value but at a lower price.

h) Cost Reduction. Helps customers reduce their own personal costs they would take on without the
product/service.

i) Risk Reduction. Offer customers a chance to reduce their own risks.

j) Accessibility. Provides to customers that previously lacked access to product/service.

k) Convenience/Usability. Provides customers an easier way to use a vital product/service.

Step 3: Channels: How do your Customer Segments want to be reached? these channels include
communication, distribution and sales. 5 channel types,

a) Sales Force. In-person sales.

b) Web Sales. Online sales.

c) Own Stores. In-store sales.

d) Partner Stores. In-partner-store sales.

e) Wholesaler. Distributed sales.

Step 4: Customer Relationships: What type of relationship does each of our Customer Segments expect us
to establish and maintain with them? Connecting with your customer base is important in keeping your
reputation as a caring organization. 6 types of relationships to have with customers

a) Brand/Status. Stands out because of the popularity or respect of a brand/status.

b) Price. Offers a similar value but at a lower price.
c) Cost Reduction. Helps customers reduce their own personal costs they would take on without the
product/service.
d) Risk Reduction. Offer customers a chance to reduce their own risks.
e) Accessibility. Provides to customers that previously lacked access to product/service.
f) Convenience/Usability. Provides customers an easier way to use a vital product/service.

Step 5: Revenue Streams describes how your business will earn money?

Step 6: Key Resources: What Key Resources does our business require? Describe the most important assets
required to make a business model work.4 types of resources.

a) Physical resources. Facilities, buildings, vehicles, machines, distribution networks,

b) Intellectual resources. Brands, proprietary knowledge, patents, copyrights, partnerships,

customer databases,

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c) Human resources. Key people involved in business activities.

d) financial resources. Capital, financial guarantees, lines of credit,

Step 7: Key Activities: What does your business do with your resources? Discover the most important
actions a company must take to operate successfully. 3ways activities can be categorized,

a) Production. Relate to designing, making, and delivering a product.

b) Problem Solving. Relate to creating solutions to on-going customer problems.

c) Platform/Network. Relate to continually maintaining Key Resources.

Step 8: Key Partnerships: Who are your suppliers and service providers? Discover what partnerships your
business has forged. Consider the 4 types of partnerships,

a) Strategic Alliances. Partnership between non-competitors.

b) Competition. Partnership between competitors.

c) Joint Ventures. Partnership between ventures to develop new a business

d) Buyer-Supplier. Partnership between buyers and suppliers to assure reliable supplies

Step 9: Cost Structure: What are your most important costs? Develop how your company views costs and
what costs it requires to operate. two types of cost structures;

a) Value-Driven. Focus on improving high value propositions.

b) Cost-Driven. Focus on reducing costs whenever possible.

4 characteristics of cost structures;

a) Fixed Costs. Costs that remain the same no matter the volume of goods or services produced.

b) Variable Costs. Costs that change proportionally to the volume of goods and services produced.

c) Economies of Scale. Costs are reduced with the increase of the volume of goods and services produced.

d) Economies of Scope. Costs are reduced with the increase of business operations.

UNIT 3: BUSINESS GROWTH AND DEVELOPMENT

Key unit competence: to be able to apply the strategies for business growth

Business growth/growing business refers to the process by which business enterprises increase their
production, profitability and size.
Business fail/failing business: refers to the process by which business enterprises decrease their
production, profitability and size.

Business development is the business growth in terms of sales revenue, business expansion,
increasing market and profitability.
Factors that lead to business growth
Factors that lead to business growth may include:

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 1. Availability of market: More buyers will mean more sales and more revenue for the business.
2. Enough capital: If more capital is available, then the business can easily grow.
3. Good management: If the management is competent and hardworking, then the
business will grow faster.
4. Proper location: A business located in a suitable location (near the customers, infrastructures,
secured place, etc.) will grow.
5. Good technology: method of production determines the quantity and quality of output.
6. Political stability and security: a peaceful political environment enables a business to grow.
7. Quality of workers: skilled, experienced, committed workers is factor of business growth.

Indicators of business growth

Indicators of business growth may include:

 Increased capital;
 Increase of asset;
 Increase of business profit;
 Opening more branches;
 Increased sales revenue;
 Increased number of employees
 Use of advanced technology
Factors that hinder business growth (or Factors that lead to business failure/decline)

 Internal factors that hinder business growth can be:

1. Lack of enough capital
2. Poor management of the business
3. Unskilled workers
4. Lack of plan/vision for the business
5. Low quality products
6. Poor location of the business
7. Poor customer care

 External factors that hinder business growth:

1. Corruption
2. High competition: when your competitors are able to produce better quality products/ services
and charge lower prices.
3. Small local markets: Most businesses face the problem of small local markets and
foreign markets are not easy to get.

4. Natural calamities: Natural calamities like floods, earthquakes, droughts, etc.

5. Poor infrastructures: like bad roads, lack of electricity, etc.
6. Political instability and insecurity: like civil wars, strikes, and so on.

Indicators of business failure

 Close new branches

 Close the business
 Empty stock

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  Reduce number of workers
 Amount of taxes reduced
 Low level of production

GROWTH STRATEGIES

For a business enterprise to survive and expand it needs to have specific growth strategies.
An entrepreneur can grow his/her business using internal strategies and/or external strategies.

A. Internal business growth strategies

It refers also to the growth within the organisation by using its own internal resources and capabilities
(workers, equipment’s, machinery, capital, skills, etc.)
 Improving customer care: This involves offering good customer care to the customers as a way
of attracting them.

 Delivering quality products and services: This strategy involves providing quality products
and services. This helps the company to grow.

 Offering discounts to customers: A discount is a deduction on the price. Discounts attract

customers and increase sales revenue.

 Sales promotion: This involves all activities done to inform and attract customers to buy more of
the business products. For example, advertising on Radio, Television, Newspapers, etc.

 Creating new distribution channels and locations: This involves opening new branches and
making new products.

 Bundling products: This involves selling a bundle of products as one kit. For example,
Mobile phone and SIM Card,

B. External business growth strategies (inorganic growth)

External growth strategies refer to the expansion of a business enterprise by using external
resources. It grows in two ways 1. mergers and acquisitions 2. strategic alliances (franchising,
joint venture and licensing agreement)

I. MERGING WITH OTHER FIRMS (MERGERS): Merger refers to legal union of 2 or more
business entities into a single business entity to achieve greater efficiency of productivity and
profits.
What are reasons why companies merge?

The following are the advantages of merging (or reasons why companies merge:

 It increases profits of the mergers: After merger, the new company will have adequate
financial resources/capital to invest in heavy investments, this increases profits for the
merged company.
 Growth and expansion: Mergers help companies to grow and expand their business
activities.
 Increase in market share: Merger helps the merged company to increase the market share.

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  International competition. Mergers help the merged company to compete at both national
and international markets.
 Tax benefits: The biggest advantage for merging firms is tax benefits.

The disadvantages of merging include:

1. Limited degree of independence: After merging of firms, every company loses its
independence because firms act as one single firm under one ownership.
2. Reduced competition leading to monopoly and inefficiency.
3. It leads to unemployment: If two or more firms/enterprises merge into one large
company, some employees in those companies may lose their jobs.
4.Over exploitation of resources: Merging can lead to overexploitation of resources due
to the use of high technology and modern machines to exploit natural resources.

II. ACQUISITION: one company buys another company often which may not be doing well.
The purchased company may still have its own brand name, personnel (both labor and
management).

III. FRANCHISE: A franchise is an arrangement where one party gives another the right to use its
trademark or brand name to produce and market a good or service. A franchiser (or a
franchisor) is the owner of the brand name, logo who sells it for use by another
business/company. A franchisee is the person or company who buys another company's name,
logo for use in his own business.

IV. JOINT-VENTURES: A joint venture is a business entity created by two or more parties,
generally characterized by shared ownership, shared profits and risks and shared
governance.
V. LICENSING AGREEMENT: this is a contract between two parties (the licensor and
licensee) in which the licensor grants the licensee the right to use the brand name,
trademark, patented technology, or ability to produce and sell goods owned by the
licensor.

UNIT4: ROLE OF ENTREPRENEURSHIP IN SOCIO-ECONOMIC DEVELOPMENT.

Key unit competence: To be able to evaluate the contribution of entrepreneurship towards socio-
economic development.

*Development is a gradual process through which there is a persistent increase both in quality and
quantity of goods and services.
Socio-economic development refers to the process of improving the social and economic wellbeing of
people in a country.

Factors influencing in socio-economic development.

- Level of technology. It is a determinant because better technology means better goods and
services at lower prices.

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 - Level of entrepreneurship; this is because entrepreneurs create employment opportunities
which increase people’s income and they also pay taxes to the government.
- Investment climate; this includes favorable taxes, proper laws, economic and political
stability.
- Effective use of available resources; example natural resources, human resources, financial
resources.
- Availability of infrastructures; like good roads, schools, hospitals, and other infrastructures.
- Level of savings.
- Political climate, etc.

Factors that have influenced socio-economic development in Rwanda.

• The provision of health insurance that covers every citizen (Universal Health Insurance).
• The improvement of maternal health of many women by decline of child mortality rate.
• Citizens have got good family planning and improved health schemes.
• Rwanda has given priority to education as the backbone for the development of various sectors.
• The Provision of free of charge education to children of Primary and Secondary.
• Rwanda has a one laptop per child program which has helped children to study in a modern
technology that motivates their desire to learn.
• Rwanda has made effective utilization of the internet technology increased in all modernized societies in
Africa
• The Government of Rwanda distributed fiber optic internet connection nationwide; which has
improved the use of internet at offices, schools and to the society in general.
• In terms of roads infrastructure, all districts in Rwanda are connected by good quality tarmac roads.
• The installation of lights at the streets to increase security; but also, to decorate our country.
• Rwanda adds value to her grown commercial crops such as Coffee and Tea to meet international
quality standards for export.
Indicators of Socio-economic development.

- High GDP (GDP is Gross Domestic Product). It is the total value in money terms of all goods
and services produced within a country in a given year.
- High level of literacy: Literacy is the ability to read and write.
- High level of employment (Occupation structure of labor force)
- Availability of goods and services when more goods and services are available, people are
able to enjoy a variety of items at a reasonable price; this increases the standard of living.
- Developed infrastructure such as roads, networks, schools, hospitals, electricity and water
etc.
- Improved security (Political stability)
- High standard of living
- Improved shelter, etc.

Role of entrepreneurship in socio-economic development

Entrepreneurship helps in the process of socio-economic development in the following ways:

 Creates employment opportunities: Entrepreneurship creates employment either Self-
employment or Paid employment (Direct or indirect employment).

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  Increases Government revenue (Business Taxes): Government gets this money from
different ways which are fees, taxes, dues and other revenues from different business
services.
 Provide variety of goods and services: Without entrepreneurship, people would not get
goods and services they want.
 Utilization of natural resources: Entrepreneurship transforms resources into usable
products.
 Environmental protection: Some entrepreneurs come up with energy saving
products like solar energy, gas, and other produce environment friendly packaging materials.
 Infrastructure development: Entrepreneurs build infrastructure to facilitate their
enterprises.
 Improvement in standard of Living: adopting innovations that lead to improvements in the
quality of life of their employees, customers, etc

Role of entrepreneurship towards social responsibility

- Provision of goods and services. Business provides goods and services that satisfy the needs of
people in society like food, water.
- Provision of employment opportunities
- Supporting community development programs like build schools, hospitals
- Payment of taxes help people to get health, education, security, roads
- Cleaning and protecting the environment through recycling used products
- saving the human environment from harmful products. For example, companies that process
garbage into manure help to make society enjoy a healthy environment.
- provide social services such as Schools (provide education), hospitals (health services).
Business can affect negatively social economic development in the following ways/ How
Entrepreneurship affects negatively social economic development/ Factors that may hinder or
retard socio-economic development in Rwanda.
 Environment degradation
 Pollution of air, land, water and noise pollution
 Cutting trees to build factories, for timber and charcoal
 Corruption
 Exploitation of workers through underpayment
 Using defective weighing scales
 Breaching of contract
 Exploitation of natural resources without considering the future generation
 Improper packaging
 Harmful product
Measures to reduce the negative effects of the business on the natural environment.
 Recycling used products
 Afforestation
 Re-afforestation
 Use of environmentally friendly packaging materials like biodegradable
 Environmental education
 Laws against pollution
 Setting environmental standards

The following are the obstacles of socio-economic development:

1. Political instability.
2. Poor technology.
3. High population growth rates.
4. High levels of income inequalities.
5. Poor infrastructures like roads, electricity, etc.
6. High level of poverty.
7. High level of illiteracy.

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 8. Bad governance.

UNIT 5: ICT IN BUSINESS

Key unit competence To be able to appropriately use ICT in business.

ICT stands for Information and Communication Technology. It involves the use electronic means to receive
and store data or transmit information electronically.

THE TOOLS OF ICT

BUSINESS DEPARTMENTS TECHNOLOGY USED / ICT tools

Communication Telephone, email, internet, fax, SMS, websites, blogs, social
media (Twitter, Instagram, Facebook, LinkedIn, Whatsapp etc.)
Management Computers, time recorders, software, ac
Accounting Computers, calculators, money counting machines, Automated
Teller Machine (ATM), computerised accounting software,
electronic safes,
Transport Tap and GO, airline booking and reservations software.
Security Closed Circuit Television (CCTV) cameras, fingerprints, metal
detectors, locks, electronic safes.
Human resource Email, internet, SMS, time recorders,
Marketing, Sales and Distribution Email, SMS, electronic displays, websites, electronic money
transfer, mobile money
Energy and Power Generators, solar panels, inverters,

Role of ICT in business

Importance of ICT in business is as follows:
1. It makes work easier.
2. It helps to produce better products.
3. Helps companies to sell globally.
4. ICT improves stock control.
5. It saves time in the business.
6. It improves communication within the enterprise.
7. It facilitates E-commerce e.g buying and selling goods online using internet.

The problems (disadvantages) of ICT are:

1. It may cause mass unemployment of people.
2. Today, some people steal money using internet.
3. ICT does not improve decision making.
4. ICT involves training of staff which is costly.

ICT as a source of business opportunities/

The following are some of the businesses that can be started based on ICT.

1. Selling ICT equipment like computers, phones, network cables, tablets, laptops etc.
2. Repair ICT equipment like laptops, computers, and mobile phones.
3. Starting and managing online shops.
4. Starting training programs for people
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 5. Providing delivery services to other online retailers.
6. Develop online games
7. Develop mobile applications
8. Graphics and product designs
ICT tools are used to promote business activities in the following ways;
- Paying taxes (Irembo)
- Invoicing (Electronic Billing Machine)
- Advertising (Televisions, radios, social media)
- Issuing transcripts and reports for students
- Communicating and meeting staff (Google meet, zoom etc)
- Paying school fees (Urubuto) etc

E-Commerce/Online business

E-commerce means electronic commerce. It involves buying and selling goods and services online.

Advantages and disadvantages of E-commerce

Advantages of E-commerce are:

1. It is easy to start and manage an online business

2. It reduces costs
3. It helps consumers to buy products anywhere in the world Easier to audit and monitor
4. No need for buildings
5. No license required
6. It is cheaper

Disadvantages of E-commerce are as follows:

1. E-commerce is costly.
2. E-commerce may be accessed by few people.
3. There is no guarantee of product quality.
4. It requires internet connection and yet not everyone can be connected.
5. There are many hackers who look for opportunities they often attack ecommerce sites, etc.

UNIT 6: BUSINESS PUBLIC RELATIONS

Key unit competence To be able to practise good relations with business stakeholders.

Public relations are how a business deals with the public. The public include customers, suppliers,
employees, shareholders, neighbors to the business, etc.

business stakeholders include:

- Suppliers, society,
- employees,
- family members,
- government,
- suppliers,
- competitors among others.

Functions/benefits of public relations

The functions of public relations department are the following:
In a business organization, the public relations department performs various functions which include:
 Educating the public.
 Mitigating the negative publicity against the business
 Monitoring any comments that is issued about the company.
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  Providing accurate information
 Promoting good relationship with the community.
 To ensure that employees have a good image about the business.

How can relate well with public

- Engage them in some important activities like Umuganda, Community relations etc.
- Invite them to business meetings
- Be active and disciplined during community gatherings
- Regularly update the public about the new stock.

Tools of public relations

1. Brochures: is a booklet published that contains information about the organization, services,
vision, mission, past and present achievements,
key important information of brochure like compelling image, purpose of brochure, contact
information, time and date, call to action.
2. Photographs: Companies use photographs of an activity that has been done by the company to the
community (charity events).
3. Interview with journalists: giving time journalists to ask questions and you provide the answers.
4. Newsletters or publications: they are used to advertise events to the public.
5. Letters to editors of newspapers, magazines.
6. Internet: website, blogs, e-mail, social networking websites (like Facebook, WhatsApp,
Instagram, Twitter, etc.) are used to communicate.
7. Press release is a document produced by a business enterprise and circulated to the press. The
press then uses the information to communicate through stories and articles. Key elements of a
press release include: Logo, Media Contact Information, headlined, Dateline, Introduction, Body,
Close

Customer relations
Customer relations is the relationship between the entrepreneur and customers and how customers
are treated.
No business can exist without customers. When the business has customers, it grows. Customers are like
water.

There are three levels of customer service:

 Poor service: service do not seem to care, do not make efforts to please customers.
e.g. a server in a restaurant who does not bring the menu, does not tell you when food is late, does not
ask if you need anything.

 Mediocre service: service provided is good but might not be able to provide customers with
their needs.
e.g. a server in a restaurant who is polite but cannot give information about the food.

 Exceptional service: the quality of service is always excellent, customer always feels happy
and recommends the service to other people he/she knows.
e.g. a sever in a restaurant who shows up the table with the menu, explains what is available, give
recommendations, explains why food is late, etc.
What a customer wants from the business

A customer wants/needs the following from any business:

 Quality of goods or services: they expect to buy quality goods or services at reasonable price.
 Respect: A customer needs to be respected.
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  Customers want to feel appreciated: This means their presence need to be appreciated.
 Customer care: Customers are happy when they are better served and cared for.
 Business that keeps promises: Customers trust organizations that keep promises with them.
 Friendliness: Customers need to be treated as human.
 Knowledge: Customers need to be fully informed about prices, quality, etc.
 Customers want to be satisfied with your products and/or services.

How to manage customer care

Customer care is how the business treats its customers and meet their needs to ensure their
satisfaction.

The business can manage customer care in the following ways:

1. Being transparent and honest

2. Openly discussing solutions
3. Providing clear timelines
4. Remaining optimistic, but realistic(truth)
5. Following up regularly
Dealing with customer complaints
In business, complaints(ibirego) are inevitable (byanze bikunze). However, if mismanaged or ignored,
complaints can become bad for business.
The business can deal with customer complaints in the following ways:
1. Stay and calm listen: Think before you talk and control yourself.
2. Allow customers to talk: Allow angry customers to talk and express their feelings until they
release their frustration and calm down.
3. Use the correct tone: Don‘t smile, laugh upset customers. Convey empathy with a soft tone.
4. Be neutral: Do not offer your opinion, agree or disagree with customers.
5. Don’t react: Never respond to angry comments.
6. Agree: Find something to agree with the customer about.
Ways to treat customers better/ Ways of becoming a successful Salesperson
A salesperson is an individual who sells goods and services to customers. Salesperson can be a company
owner or an employer.Customers must be treated well and highly respected because without them the
business cannot survive.
 Some ways to treat customers well are:
1.
Providing them high quality service as a way of attracting them;
2.
Providing quality products or services;
3.
Giving them some discounts;
4.
Giving them gifts like T-shirts,
5.
Giving them credit facilities
6.
Offer transport facilities to customers, etc.
 Importance of treating customers well
 This helps to increase sales.
 It builds good reputation.
 Customers will be able to pay you promptly (quickly)
 It is a basis for business growth and success
 Security of the business resources, etc.
Negative effects of bad customer service (bad customer care)

1. May lead to loss in the business and at the end the business may collapse.
2. Bad reputation.
3. Bad business image.
4. Loss of confidence and trust.
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 5. Ends relationship between a business and customers.

Importance of customers to a business/Customers are the lifeblood and backbone of a business”. Do

you agree with this statement?

The following is the importance of customers to a business:

1. Customers are source of sales revenue to the business.

2. Customers are source of profit to the business.
3. Customers help the business to expand its operations.
4. Without customers the business cannot continue its activities, it will collapse.
5. Customers provide feedback that helps the business to make improvements.
6. They advise the business owners on their preferred quality of products.

Explain strategies you will use for making good relationships with your customers
- Practice active listening
- Make follow up
- Personalize their message
Supplier relations

supplier relations is the relationship between the supplier and customers. The supplier also should
provide a good customer care to its customers in order to maintain a positve business image.

Ways of becoming an effective salesperson/ strategy you would use to become a successful sales
person.
A salesperson is an individual who sells goods and services to customers on behalf of company.
Salesperson can be a company owner or an employee.

The ways of becoming an effective salesperson include:

1. Being a Critical Thinker

2. Being Resourceful
3. Being Confident
4. Being Honest
5. Being Competitive
6. Being Communicative
7. Being strongly motivated
8. Attractive words
9. Convincing words
10. Respectful

Community relations
Community relations is a public relation focused on brand and reputation within a specific community. Or It
is an attracting new customers and growing your business.
Importance of community relations:
- Community relations allow giving back
- Community relations build credibility.
- Community relations are great for advertisement.
- Community relations help with networking.
Strategies for doing community relations:
- Investing in your Community: Donate to a local cause to show goodwill.
- Giving through community events: Sponsor a local event
- Volunteerism: Organize a volunteer day for your team at a local charity

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UNIT7: BUSINESS CONTRACT

Key Unit Competence: To be able to make a valid contract and resolve conflicts in business operations
Meaning of contracts and business contracts

A contract is a legally agreement between two or more parties.

A business contract is a legally binding agreement between two or more persons/entities to perform an
agreed business transaction.
situations that may require you to enter into a contract in your business operations.

- When entering a formal business agreement with an employee or employer

- When providing a product or service to a client
- When buying products or services from another entity
- When protecting your business’ confidential information
- When partnering with other parties in business

Forms of business contract

All types of contracts take forms either verbal (oral) or(written) or a combination of both.

 Written Contract: A contract documented on a paper, signed by both parties and usually witnessed
by the third party. Eg: Sale contracts. Elements of a written contract
 Title and date: Examples "Sale Agreement", "Equipment Transfer." or purchase agreement; or
“Land Sale Contract”.
 Parties to the contract: Entity who enters into a binding agreement.
 Details of goods or services Terms and conditions of the contract
 Damages in case of breach
 signatures of parties and witnesses: Generally, to be valid and enforceable, a contract must be
signed by all parties
 Oral contract/verbal/gentleman: is a contract made without writing anything. They are
agreements made using spoken words!
Form of contract Advantages Disadvantages
Written contract - clarity and understanding - time-consuming
- legal enforceability -it is costly
- Serves as tangible evidence of -it can not minimise all risk
the agreement between parties
- mis communication risk
- reducing the risk of disputes. - limited frexibility

-risk management
Oral contract - Time saving - lack of clarity
- Cost saving -cause disputes
- informality and speed - difficult in enforcement
-flexibility - forget or misremember the terms of the
-no document required agreement over time
- easy to communicate. -limited legal resources.
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Types of contracts

1. Bilateral contract is a contract in which two parties (offeror and offeree) are bound by the contract
i.e. both parties promise to do something.
2. Unilateral contract is a contract in which only one party is bound by the contract i.e. Only one of
the parties makes a promise.
e.g. Kamana lost a wallet that holds Id card, driving licence, and other documents. He promised a 10.000
Frw reward to any person who will return it to him.
3. Gratuitous contracts: This is a contract in which one party promises to do something without
receiving anything in exchange. It lacks the consideration; it cannot be enforced by law. Gift is an
example

4. Onerous contracts: are those the costs to fulfill the terms of contract are higher than the benefit
from it. That contract becomes a financial burden to an organization.
e.g. A leasee who continue paying lease as agreed in contract, but who is actually no longer using the
property.
7. Adhesion contract: Conditions are set/fixed by one party in advance. Ex loan contract from bank.

Common types of business contracts

The most common types of business contracts you may enter into include the following:

1. Sales-related contracts. For example,

a) An employment agreement: is a contract between an employer and employee that outlines the terms
and conditions of the working relationship
b) A promissory note: is a written agreement under which one party agrees to pay another party a certain
amount of cash on a future date.
c) A licensing agreement: is a written contract that gives you permission to use another party’s property
under a certain set of conditions.
d) A purchase and sale agreement: is a legally binding document that parties in a transaction use to
stipulate the terms and conditions that will guide the sale and transfer of goods or property.
e) Bill of sale: a bill of sale legally transfers property from one party to another.
f) Purchase order: a purchase order is a contract between a business owner and a supplier or
seller of goods or services. A purchase order defines: how much the business will pay for the goods; the due
dates for payments and the date of delivery
j) Warranty: is a legally binding agreement between a seller and a buyer that outlines the terms
and conditions under which the seller will repair or replace a product if it fails to meet certain specified
standards within a specified period of time.
h) independent contractor agreement: is a legally binding document that establishes the terms
and conditions of a working relationship between a company (or individual)
i) Franchise agreement: is a legal and binding document that outlines the terms and conditions
under which a franchisee can operate a franchised business.

2. General business contracts.

a) Non-disclosure Agreement (NDA): is a confidential disclosure agreement, or confidentiality
agreement is a contract that prohibits individuals from sharing specific information with others
unless they receive prior authorization. NDA prevents employees from sharing sensitive
information with competitors.

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 b) An indemnity agreement: is a contract that protects one party of a transaction from the risks or
liabilities created by the other party of the transaction. Meaning that, if an accident happens while
the renter is using the car, the car rental company will not be liable for any damage.
c) A Partnership Agreement: is a written agreement between business partners.
d) An equipment lease: is a contractual agreement between the owner of the equipment and a lessee
who wants to use the equipment for a specific period in exchange for set payments.
e) A property lease: is a contract where one party grants a right to use a property or land to another
party in return for consideration and for a specific period of time.

Importance of business contracts

Contracts are important in the following way:

1. Business contracts reduce business risks.
2. Business contracts specify terms and conditions of business transactions including price,
quantities, quality, date of delivery, etc.
3. Contracts enables entrepreneurs to obtain loans from banks.
4. Contracts help entrepreneur to get goods on credit.
5. Permanent records. e.g Written contract where you can refer to contract at a future date.
6. Act as evidence of an agreement.
7. Make parties involved execute (performed by both parties) their duties and responsibilities.

Elements of a valid contract

Valid contract:is one that satisfies all the laws requirements.
Void contract: is one that neither party can enforce, usually because the purpose of the deal is illegal or
because one of partie had no legal authority to make contract.(is a minor who has no capacity to contract.)
Voidable contract: it is a Contract which is made under certain pressure(by forcing) either physical or
mental. Voidable contract occur when the law permit one party to terminate the agreement.

Essential elements of a valid contract (Requirements for a valid contract) are the following:

A valid contract should be written and must contain the following essential elements to be legally
binding:
a) Offer and acceptance: there must be an offer and the two parties must lawfully come to
acceptance leading to a valid contract. Until an offer is accepted, it’s not a valid contract.

b) Witness: should have a third party which is neutral between contracting parties

c) Consideration/price: this is the price agreed upon by the parties to the contract and paid by one
party for the benefit received by the other party

Capacity of the parties: the parties to the contract must have contractual capacity for the
contract to be valid, i.e. -Above 18 years of age (not a minor).
-Not insane or mentally impaired.
- Not bankrupt.

d) Free Consent: parties to the contract must agree freely without any of the parties being forced to
accept or enter the contract.
e) Legality/lawful object: the contracting issue must be legal and not contrary to the law and
public policy.
f) Possibility of performance: if the contract is impossible in itself either physically or legally,then
such contract is not valid and cannot be enforced by law.

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 g) Certainty: the terms of the contract must be clear and understandable. If the terms are
ambiguous, where even the court may be able to tell what the parties agreed, then it will be
declared invalid.
h) It should have a determined duration or period,
Who shall not be bound by a contract according to Rwanda law?
-below 18 years of age (a minor).
-Not insane or mentally impaired.
- Not bankrupt.
-not a drunkard /not under the influence of alcohol.
What factors may make a contract not valid?
- Illegal subject matter: if the subject matter is illegal, the contract will not be valid.
- Contracts formed under duress: if pressure is exerted upon a person to make that person enter
into a contract they otherwise wouldn’t enter.
- Substantive unconscionability: when the terms of a contract are harsh, unfair
- Procedural unconscionability: when contract negotiation is unfair to a party because of unequal
bargaining power, lack of meaningful choice, or a wide knowledge gap on the subject matter.
- Lack of capacity to enter a contract: if any of the parties does not have the legal capacity to
contract.
- Contract of adhesion: where when the other party also has little or no ability to negotiate the
terms.

When can an entrepreneur decide to end a business contract? /Discharge of the contract
/Termination of a contract/ending a business contract

Termination of a contract: This term means that a contract between parties is being ended before the actual
agreed-upon date stated in the contract
Cancellation of a contract: Cancellation refers to an ending contract due to voiding its effectiveness, force, or
validity.
Rescission of a contract: If a contract is made undone, this is called rescission.

1. Discharge By performance: If the contract is performed and fulfilled as expected under the terms
and conditions of the contract and both parties are satisfied, then the contract may be terminated.

2. Discharge By breach: Breach of contract happens when one party fails to perform as agreed in
the contract. In this case, a contract is put to an end.

3. Discharge By agreement: The parties to a contract may freerly agree to end the contract, then it
is ended.
4. Discharge By the operation of law: the contract may be terminated according to the law. e.g. if one
party becomes bankrupt, insane or dies.
5. Discharge By frustration: a contract can be terminated also because of conditions or problems that
make the contract impossible. e.g. war, natural disaster, government policy that prohibit the contract.
6. Discharge Destruction of the subject matter: : the contract may be put to an end when the
subject matter of the contract ceases to exist such as being destroyed, stolen or died. e.g. Contract
of renting a house can be terminated when a house is destructed by flood.

Examples of contract
House Rental Agreement
1. Parties

The parties to this Agreement are Manzi Paul, the “Landlord,” and Kantengwa Jane, the “Tenant.”
2. Property

Landlord hereby lets a two roomed house to Tenant located in Bwiza cell
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 3. Terms

This agreement shall run for the period of one year and can be renewed through oral agreement. A notice of 60 days is required by both
parties before the termination of this agreement.
4. Rent

The monthly rental for the said property shall be 60,000 FRW, due and payable in advance on the first day of every month during the
tenancy, by cash, approved by the landlord.
5. Utilities

The tenant agrees to pay for the continuous supply of the following utilities during the terms of the tenancy and be responsible for any
damages or costs which may be incurred as a result of the failure to do so.
6. Deposits

Tenant will pay the deposits of 60, 000 FRW. This amount will be refunded within thirty days following the termination of the tenancy;
unpaid rent, charges for damages beyond normal wear and tear, and costs for reasonable cleaning may be deducted.

In addition, it is agreed:
1. Tenants shall not lease, sublease, or assign the premises without the prior written consent of the Landlord.
2. Landlord may enter the premises at reasonable times for the purposes of inspection, maintenance, or repair, and to show the
premises to buyers or prospective tenants.
3. Tenant further agrees not to maintain a public nuisance and not to conduct business or commercial activities on the premises.
4. In a dispute between the Landlord and Tenant which gives rise to any action in court, the losing party will pay the court costs
and reasonable attorney fees of the successful party.

We, the undersigned, agree to this Rental Agreement:

Landlord: Tenant:
________________________ ________________________
Name Name
__________________ ________________________
Signature Signature
________________________ ________________________
Date Date

UNIT 8: OFFICE PROCEDURES

Key unit competence: To be able to handle general office operations.

An office: is a place in which the functions of public officer are performed. Or is room or set of rooms, or
building used as a place for commercial, professional, or bureaucratic work.
Office procedure: is a set of rules or policies guiding the operation of an office.

OFFICE EQUIPMENT

Examples of common equipments used in Modern offices:

 Computers. A computer is an electronic device used in the daily operations of the business. It
stores files, processes and retrieves information needed in a business.
 Electronic Billing Machine (EBM): is a machine used to pay VAT.
 Cheque writing machine; This machine is used for writing cheques and is used mainly in
banks.
 Calculators. There are manual and electric calculators. The simplest ones will add and subtract.
 Photocopiers. These are used to duplicate information on papers into various copies of the
original document.
 Note counting machine:This machine is used in counting money in the form of notes.
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  Printers: for taking out (printing) soft documents from computer.
 Stapling machines. These are used for fixing related documents together.
 A date-stamp. This records the date on which the letter was received.
 Punch. This is used to put holes in a document ready for filling.
 Telephone: for calling and sending or receiving messages when you are in office
 File: is used for storing important files of an office.
 Other equipment may include: pair of scissors, chairs, tables, dust bins, etc

The role of keeping of keeping office equipiments

– Increase output of workers
– Increase the speed and performance of work done
– Improves the quality of work
– Makes work and keeping document easy

Maintenance of established filing system

These documents should be organized and filed properly as they can be used later for different reasons.
Filing refers to a process of classifying and arranging records for easy retrieving without delay.

Classification system
The classification system refers to the basis of arrangement of documents in a folder.

The documents can be classified by five main methods:

A. Alphabetical: is where documents are filed according to the first letters of either the name of
sender or subject.
Advantages of alphabetical filing
- It is convenient in grouping papers by name of company
- It facilitates direct filing, with no need of indexing since the files are arranged alphabetically.
- It is simple and easy to use for all employees
- One folder can be opened for many files without opening separate files.
Disadvantages of alphabetical filing
- it may take a long time to find papers.
- It may lead to congestion under common names.
- It is difficult to forecast space requirements for different letters of the alphabet.
- Documents can be filed differently due to wrong spellings of names.

B. Numerical filing: This is where documents are arranged according to numbers rather than letters.
Advantages of numerical filing
- There is unlimited room for expansion. New documents are added to the file as they come into the
office.
- It is a highly efficient system.
- It helps in cross-reference with other systems.
- The file number can be used as a reference for correspondence.
- The file number can be used for other purposes, for example, a mailing list as well.

Disadvantages of numerical filing

- It takes longer to file materials as it involves two operations. i.e. recording of the document
number on the card index and filing of the document.
- Filing and location of documents is not simple.
- A separate index must be provided for each file.
- It takes time for new employees to fully understand the system and the code numbers.

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C.Geographical filing: This is where files are divided according to their place of origin for example,
countries, provinces or districts, regions.
Advantages of geographical filing
- It is suitable for companies that have several branches spread all over the country, e.g. commercial
banks
- It is convenient when the locations are known
- It facilitates easy access for filing purposes.
Disadvantages of geographical filing
- Possibility of errors in case the geographical location is not known.
- Some geographical names can be misspelt/wrongly leading to confusion in the system.

D. Chronological / dates filing: This is a filing system where all documents are filed in order of their
dates of receipt. This system is rarely used but it is a useful method of filing papers inside each
folder.
Advantages of chronological filing
- Useful if the dates are known.
- It provides for unlimited scope of expansion.
Disadvantages of chronological filing
- It is not always suitable for different types of records.
- Incoming letters might be mixed up with outgoing ones.

E. Subject/ category filing: Subject filing is where files are classified according to subject headings
topics. Main headings and subsidiary items are in alphabetical order.
Advantages of subject filing
- All documents referring to a particular subject or matter are kept together in one place.
- The files can easily be expanded or contracted by simply adding new ones or removing old ones.
Disadvantages of subject filing
- It is difficult to determine the list of divisions and it requires one to have knowledge of the
business and its files.
- It is difficult to determine the headings for filing purposes. It requires a trained and careful
employee.

These are the centralized and the decentralized filing system.

Centralized filing system: Centralised filing system is one in which the records or files for all staff are in
one central location.
Advantages of centralised filing
- It helps to develop staff who are specialists in filing.
- There is easy control of all files since they are controlled in one room.
- Files are easily controlled and monitored in one central unit.
- The time spent to search for the files is reduced.
- It is very safe to control since all records are in one central location.
- It reduces costs for printing and use of papers.
Disadvantages of centralized filing
- Files may be too far from staff for adequate service.
- The system requires full time staff for filing purposes.
- It requires more capital for investment
- It is risky because all records are kept in one central location.
- The filing department may become a storage place of unwanted and unnecessary documents.

Decentralized system: A decentralized filing system is one in which the files are located at individual work
stations and usually controlled by each person who uses them.
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 Advantages of decentralized filing system
- There is less duplication of equipment and work
- There is very little scope for socialization
- It prevents misfiling
- It promotes secrecy.
- It is a suitable method
Disadvantages of decentralized filing
- There may be confusion
- Can result in duplication of related information due to having different filing places.
- Individual staff members may not know how to properly maintain their files.
- Lack of uniformity in the filing of documents.

Method for sorting, handling and sorting document

This refers to how covers of files are kept in the filing cabinets. The four main methods include:

A. Horizontal filing: is when files are kept in the shelves or drawers when they are standing upright.
Theare facing north to south.

B. Vertical filing: is when files are kept in the shelves or drawers when one is on top of the other. They
arfacing east to west.

C. Lateral filing: this is where files are arranged side by side in the drawers or shelves. This method saves
space because of the great heights.

D. Suspension filing: is where two metal bars are fixed on the sides of a filing cabinet drawer. The files
stand in a vertical position. This method has an advantage because they are tidy since they are upright and
it is easy to locate them.

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An effective and efficient filing system should be characterized by the following:
- Compactness: It should not take up much space; especially the floor for the filing cabinets.
- Accessibility: Record cabinets should be easily accessed. It should be easy to file records .
- Simplicity: The system should be simple to understand and operate.
- Cross-reference: Reference should be provided where necessary information should be provided
on file movements such that it is easy for users to trace them.
- Safety: A high love of safety should be ensured for documents according to their importance. They
should, therefore, be protected against hazards like fire.
- Elasticity: The system should be capable of expansion when required.

What protocols and measures should be in place to ensure the safety and security of sensitive
records within an organization? / In what ways can organizations conduct regular audits or
assessments to evaluate the effectiveness of their record safety and security protocols?
To ensure safety, security and confidentiality of information, the following should be done:

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classification: Records must be classified according to their use. They may be classified according to time
or chronology or subjects.
Information: The information required must be available whenever it is needed.
Elasticity: The record system must be elastic in capacity so that it allows room for expansion or
contraction of records if possible.
Reasonable cost: The cost of record management must be a reasonable one. For more important
records a large amount may be spent and for less important records only a small amount should be spent.
Records management: Should be simple, accurate, economical and useful for the organisation.

Why do businesses maintain past records, and what are the specific purposes served by
record-keeping in different units or offices?
- Accounts of progress are kept in an orderly way: In business it is necessary to measure the
progress of the business organisation or to find out history and other facts about the firm.
- Proper study of the position of the firm: Records of past transactions are the basis on which
further study can be made.
- Comparison of business: Past records make it easy and possible to compare performance of one
period with that of another period, one place with another, one result with another.
- In case of disputes: The need for referring to records or documents often arises for the
settlement of disputes in transactions. All information cannot be remembered.
- Policy making: Past records, events are very necessary to decide future policies and plans. In the
absence of records, the policies and plans may not be successful.
- Legal requirements: Certain records are to be kept for a number of years from the legal point of
view.
- Evidence: Records are good evidence in courts of law, in case of disputes.

What measures should be implemented to ensure effective document management within an

organization? / What are the key components of a successful document retention policy, and how
can it be tailored to meet the specific needs of an organization?
-The organization should ensure that it has qualified staff in keeping records.
- All confidential documents should be kept in a centralized filing system.
- Documents should be checked regularly to ensure that they are kept safely and intact
- Offices should be locked when leaving the workplace.
- Use a single filing system, either alphabetical, numerical, geographical filing in order not to
confuse files.
- The filing room should be kept clean and safe from any things which may destroy the files.

File retention policy

A file retention policy is an organization’s established protocol for retaining information for operational
or regulatory compliance needs. It helps to identify the duration of time for records to be maintained or
retained.
When writing a data retention policy, you need to determine how to:
- Organize information so it can be searched and accessed in future.
- Information that is no longer needed should be disposed of.

The factors considered when choosing office equipments./

Examine (Assess/evaluate/analyse/explain) the factors that should be considered when selecting
machines for an enterprise.”

1. Easy of operation: The best choice of office equipment should be one which is easy to use and
operate.
2. Flexibility: The choice of equipment should depend on the different types of work it can perform.
3. Durability: The best equipment or office machine should be strong and long lasting.
4. Cost: The cost of an office machine is a major factor in buying it.
5. Quality and speed: office equipment should be of high quality and speedy in nature.
6. Safety: The machines to be used must be safe to the users. Machines which are not safe should not
be used in offices because they might harm and cause diseases to the workers. Such as cancer.
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 7. Standard and noiseless machine: The noiseless machines are the most needed in a business
environment.
8. Portability: The choice of equipment‘s should put into consideration the ease to carry (transp

Maintenance and care for office equipments

The following are some of the ways of proper maintenance and care for office equipment’s:
 Ensure that all office equipment’s are away from dust, excessive heat, moisture.
 Regular servicing; actions performed to keep a machine
 Cleaning the equipment using types of tools suggested by the manufacturer like cloths,
brushes, cleaning fluids, etc
 Replacing consumables; consumables such as cartridge for printer and photocopier need to be
replaced at certain times

Security for office equipment (solutions to theft and damage of office equipment and machines)

The list below provides some of the solutions to theft and damage of office equipment and machines,
which will help to reduce business costs and unnecessary expenditures in repairs and maintenance.
 Installation of cameras.
 Installation of entry alarm systems.
 Fire alarms
 smoke detectors.
 Fire extinguishers:

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UNIT 9: QUALITY ASSURANCE AND QUALITY COMPLIANCE IN BUSINESS

Key unit competence; To be able to comply with quality standards in business.

Metrology: is a science of measurement. includes measurement of quantities like

width, length, depth, angles of the related products
purpose of metrology is to promote transparency, fair-trade and protection of the public;
reduce mismeasurement.
Rwanda standards board (RSB) is the institution that controls the quality of products in Rwanda.
It controls the quality of imported and exported products in Rwanda.
Rwanda Standards Board (RSB) is mandated to provide metrology services in the country.
Objectives RSB
 Establishment and publication of national standards;
 To provide products and quality service certifications
 To provide legal, scientific and industrial metrology services;
 To drive the effective implementation of the Made in Rwanda Policy
 To raise awareness and promote the importance of standards and quality service
 To participate in monitoring standardization at national, regional and international level;

Quality assurance is any systematic process of determining whether a product or service meets
specified requirements. Quality assurance includes two principles:
◾ “Fit for purpose” (the product should be suitable for the intended purpose)
◾ “Right first time” (mistakes should be eliminated).
It includes management of the quality of raw materials, products and components, services related
to production, and management, production and inspection processes.
Importance of quality assurance system
 increase customer confidence
 company’s credibility,
 improving work processes and efficiency,
 it enables a company to better compete with others.
 it helps to product needed by customer
 build trust
Quality compliance is to conform to the quality standards set by a by a standards body (Rwanda
Standards Board). Or means acting in accordance with systematic processes of determining
whether a product or service meets specified requirements at every stage of the production process
or delivery.

Importance of quality compliance

 satisfying customers’ needs,
 increasing the level of sales
 complying with the state’s quality requirements among others.
Quality management is also the process of controlling business and production activities to
ensure that products meet the required quality specification. Or managing structure,
responsibilities, procedures, processes, and management resources to implement the principles
and action lines needed to achieve the quality objectives of an organization.
Total Quality Management (TQM) approach, businesses must understand who their current
customers are (and are not), noting their key needs and requirements and keep these expectations
at the forefront of their strategy and processes.

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The seven quality management principles are:
 Customer focus
 Leadership
 Engagement of people
 Process approach
 Improvement
 Evidence-based decision making
 Relationship management

A quality management system (QMS) is a formalized system that documents processes,

procedures, and responsibilities for achieving quality policies and objectives.

The quality management system contains the following elements:

 Define and document necessary components of a quality management system

 Define the quality policy
 Quality objectives must be communicated to the team and well understood
 Develop the documents for the system
 Define the quality process
 Determine the training needs
 Measure and monitor performance
 Take action that improves performance
Relationship between Quality assurance, Quality management and Quality compliance
The relation between quality assurance, quality compliance, and quality management work
together to establish, maintain, and improve the quality of products or services, ensuring that
organizations meet both internal and external quality standards while striving for excellence and
customer satisfaction.
Quality Quality Quality
assurance management compliance

Figure: Relationship between QA, QM and QC.

Using examples, interrelate quality management, quality assurance and quality
compliance
Quality management helps to identify key processes and procedures in the production of a
product; criteria for acceptance of raw materials (inspection and testing), production
processes, packaging, labelling, storage among others aiming at quality assurance, to
assure that the final product abides by the regulations set by regulatory bodies hence
quality compliance

Role of verification and calibration in quality assurance

Verification ensures a process or equipment operates according to its stated operating
specifications.
Calibration ensures the measurement accuracy of an instrument meets a known standard.
Role of verification in qualitty assurance
 preventing errors, and ensuring that documents meet of standards.

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  Verification It is the process to ensure whether the product that is developed is right or not.
 Verification ensure that the end product meets the design requirements
 ensures the accuracy of financial transactions.
Role of calibration in qualitty assurance
 Accurate measurement
 Quality compliance
 Improved health and safety of consumers
 compliance with regulatory requirements
 customer satisfaction

ACCREDITATION

Accreditation is one of the critical quality infrastructure elements that facilitate trade.
Accreditation is the process used by countries’ regulatory body (RSB for Rwanda) to ensure that
businesses/organizations maintain minimum standards of quality and integrity regarding
measurement and certification requirements governing trade.

Accreditation in Rwanda

According to international best practices, a responsible authority could employ its own inspectors
or an independent recognized inspection body could be subcontracted to carry out the work in the
implementation of standards and technical regulations, concentrate on issuing guidelines and
monitoring activities. In Rwanda, Rwanda standards board (RSB) is the one that is in charge of
accreditation.
Rwanda Standards Board (RSB)
The board is responsible for certifying products for quality compliance to standards and ensures
their control at all points of their production, marketing and consumption within the country.
Responsible ministries like Ministry of health and infrastructure and REMA ensure that activities
and projects conform to the required certification requirements.

East African Community Accreditation

The East African Community has issued regulations to enhance the operations of the EAC
Standardization, Standardization, Quality Assurance, Metrology and Testing Act (SQMT) of 2006.
The SQMT regulations are established towards facilitating regional trade.

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International Accreditation
Everyday commercial transactions and international trade rely on the support of standards,
metrology and accreditation quality systems.
It is the primary purpose of regulatory bodies like international laboratory accreditation
cooperation (ILAC) and international accreditation forum (IAF) to establish multilateral
arrangements between their member accreditation bodies based on mutual evaluation and
acceptance of each other‘s accreditation systems. In this way the acceptance of products and
services across national borders is made easier by removing the need for them to undergo
additional tests, inspections or certification in each country into which they are sold.
Accreditation bodies they need to go through to obtain certification mark for their products
i) National level
• Rwanda Standards Board
ii) regional level
• East African Accreditation Board
iii) International Level
• International Standards Organization (ISO)
• International Laboratory Accreditation Cooperation (ILAC)
• International Accreditation Forum (IAF)

Roles of Accreditation across Borders are the following:

 Accreditation improves patient outcomes and mitigates risks.
 Accreditation identifies strengths and gaps in your programs and processes.
 Accreditation promotes communication and staff empowerment across organizations.
 Accreditation fosters a culture of quality and safety.

The importance of accurate measurements in business may include the following:

1. Safety reasons
2. Consumer protection
3. Meeting customers’ preferences
4. Accurate measurements help entrepreneurs to make proper decisions
5. Building good business image
6. It gives consumers confidence to trust the product or service in the market place.

Quality assurance planning cycle/Quality assurance system

Plan

Act Do

Monitor

1. Plan: This involves a set of activities set by the business to ensure the business achieves
quality expectations.
2. Do: After planning stage, set quality activities are implemented in day to day activities of the
business.
3. Monitor: This stage involves monitoring progress of the implemented activities to achieve
quality. This helps the business to know whether the set quality standards are achieved.
4. Act: This stage involves acting according to the results got after implementation. It is the
stage that informs the entrepreneur whether he/she needs to change or review plans.

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what different measures will you implement to maintain quality in business? / The following
are procedures the business can undertake to ensure the products made or services
provided are quality assured:
1. Track mistake: if you are going to commit to quality, first you must define exactly what
quality is
2. Invest in training; training of employees towards quality standards expectations in business
is a key.
3. Create processes or protocols; invest time to establish standard practices for your
employees,
4. Inspection: this involves activities set by the business to ensure the set quality standards are
achieved.
5. Monitoring and Evaluation: this involves activities that are done to monitor progress of the
quality standards set.
6. Managing and controlling risks; ensuring that risks are mitigated
7. Use of quality raw materials; ensuring that the raw materials are of high quality

Importance of obtaining certification marks for their products

 establishing credibility and trust with customer
 ensuring compliance with standards national and international level.
 gaining a competitive edge in the market.
 It increases confidence of consumers
 contributes to the overall success and reputation of the product and the organization.
 They provide evidence that the product meets the necessary legal standards and
regulations.
 Certification marks contribute to consumer safety
Quality management system that can be used by business to promote and ensure quality of
their products or services:
1. Define and document necessary components of quality management system. This would
include key guidelines and elements of what the business takes as quality for example which
kind of raw materials will have to be used.
2. Define the quality policy. This includes the business ‘mission that is what customers want
and value from the business. This should be given top priority in the business.
3. Quality objectives must be communicated to the team and well understood
4. Define the product defect. That is what contributes to poor quality.
5. Develop the documents for the system. This could be a manual that includes the necessary
policies, procedures and forms.
6. Define the quality process. this involves ways of solving given challenges to quality
implementation.
7. Determine the training needs. Entrepreneur must identify the gaps within the team so that
the workers are trained and supported accordingly to meet and comply with quality
standards.

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UNIT 10: ACCOUNTING PRIME BOOK

Key unit competence: To be able to record accounting transactions

Accounting is the art of recording, classifying summarizing and interpreting business transactions
and events.
Book-keeping is the art of recording business transactions in the books of accounts, therefore
Book-keeping is a part of accounting.
Accounting Systems or methods
There are two systems of book keeping; namely: Single entry system and Double entry
system.

a) Single entry system of bookkeeping

Single entry system is a system where every transaction is recorded once in the books of
accounts. Ex cash book Only cash in (revenues) and cash out (expenses) are recorded. The
transactions are recorded in the cashbook only.
Features of single-entry system
 Single entry system has no fixed set of rules and principles for recording
the transactions
 It maintains a personal account of all debtors and creditors.
 It maintains a cash book for recording cash receipts and payments.
 It is incomplete because it does not consider the dual effect of all the
transactions.

Advantages of the single-entry system

1. It is very simple; it does not require trained accountants;
2. It saves times because you need to record each transaction only once;
3. It is cheap, since it does not require the services of a trained accountants;
4. It is suitable for small businesses because they cannot afford the cost of double entry.

Limitations of single entry system

1. It does not help to evaluate the performance of a business effectively;
2. No way to check the arithmetic accuracy of the entries because no ledger and trial
balance;
3. Theft and other losses are less likely to be detected;
4. Profit and losses cannot be determined because cashbook does not record all
transactions;
5. The financial position of a business is not determined because the information on assets
and liabilities is not complete;

The double entry system of book keeping.

Double entry is a system of recording every transaction two times both in Debit and credit
side. It is derived from the Golden rule(principle) that states “every debit entry must have a
corresponding credit entry and vice-versa”.

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 A. An account is a place where debit and credit entries concerning the business
transactions are recorded.

Presentation of an account

There are several ways of presenting an account but our focus is only on two ways:
1o T- Account and,
2o Open format Account

The common form of an account has three main elements:

1. A title that describes the name of the asset, liabilities or Owner's equity.
2. A leftt side, which is called the debit side (Dr).
3. A right side, which is called the credit side (Cr).

Graphically, the account is presented as follows:

(a) T-FORMAT ACCOUNT

Debit Name of the account Credit

(b) OPEN FORMAT ACCOUNT

Debit Name of the account Credit
date particulars folio amount date particulars folio amount

B. Crediting and debiting

Debit means increasing an account while Credit means decreasing an account.
When the account is increasing, such an account is debited and when an account is
decreasing such an account is credited.

Debiting an account means to record the amount on the left side of an account.
Crediting an account means to record the amount on the right side of an account.

Type of Increase Decrease Normal balance

account (+) (-)
Asset Debit Credit Debit
Liability Credit Debit Credit
Capital Credit Debit Credit

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 Revenue/ Credit Debit Credit
Income
Expenses Debit Credit Debit

Thus, from every transaction, at least two accounts are involved. Then, these
questions must be answered:
1 question: What are these two accounts to be affected or involved?
st

2 question: What type of account are they?

nd

3rd question: What account is to be debited and what account is to be

credited?
Rules of double entry
 Every transaction affects at least two accounts
 There must be one debit entry and one credit entry
 The total credit must be equal to the total debit
 Particulars or details in the accounts will become names of other accounts
where double entry is recorded.
Example:
Record the following transactions using double entry system:
March 1st: Purchased goods for 65,000FRW cash
March 15th: Sold goods for 50,000 FRW cash

Solution:
DR Cash a/c Cr
31 1/3 purchases 65,000

Dr purchases a/c Cr
B 1/3 purchases 65,000 31

Dr sales a/c Cr
V 31 15/3 cash 50,000

Dr cash a/c Cr
15/3 sales 50,000 31

When balancing off an account the following steps are put into
consideration:
Step 1: Add the two sides separately to find out the total of each

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Step 2: Subtract the smaller side from the bigger side
Step 3: Record the differences on the smaller side and call it balance carried
down (bal c/d) or balance carried forward (bal c/f)
Step 4: Now both sides are equal.
Step 5: Put balance c/d on the opposite side of the account and call it
balance brought down (bal b/d) or balance brought forward (bal b/f).

Advantages and disadvantages of Double entry system

1. It helps to prepare financial statements like income statement and balance sheet.
2. It prevents fraud in the business.
3. It is used for reference purpose.
4. It proves the accuracy of the ledger accounts.
5. It helps to correct the errors made in the books.
The disadvantages of double entry system are:
1. It takes more time since each transaction is recorded twice.
2. It is expensive in terms of costs.
3. Is not suitable for small businesses since it expensive.
4. It is ideal only for large businesses that can afford its cost.

Types of books of original entry (Prime Books, subsidiary book,journal)

The books of original entry (Prime Books) kept by a business are:

1. Journal proper/General journal: This is a book of original entry which records daily
transactions of the business chronologically.
2. Purchases journal/ Purchases day book: This is a book which records daily purchases of
goods on credit.
3. Sales day book / Sales journal: This is a book which records daily sales of goods on credit.
4. Purchases returns journal/Returns outwards journal: This is a book which records
goods returned to suppliers by the business due to some reasons.
5. Sales returns journal/Returns inwards journal: This is a book which records goods
returned by the customers to the business due some reasons.
6. Cash book: This is a book where all cash receipts and cash payment made by a business are
recorded.
7. Petty cash book: A petty cash is a minor /small cashbook used to record payments
regarding small expenses in a busines

Book of prime entry Transaction type

Purchases journal Credit purchases
Sales journal Credit sales
Sales returns journal Returns of goods bought on credit
Purchases returns journal Returns of goods sold on credit
Cash book All cash transactions
General journal All transactions not recorded elsewhere
Match the following transactions that were carried out in XYZ Ltd with
appropriate prime books to record them:

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B TRANSACTIONS PRIME BOOKS
i) Bought a furniture on credit
General journal
ii) Sold goods amounting to 100,000FRW cash Cash book
iii) Purchased goods on credit from Teta, 20,000FRW Purchase journal

iv) Sold goods on credit to Berwa, 40,000FRW Sales journal

v) Received goods returned by Berwa 20,000FRW Sales return journal
vi) Returning some goods damaged in transit to Teta, Purchases return journal
10,000FRW

JOURNAL BOOK
A journal is a book of original entry used in recording the day-to-day transactions of the business.
This a book where transactions are first recorded before they are posted to the ledgers (accounts).

The data used in cash book is got from the source documents like invoices, receipts (vouchers), pay
slips, etc. The process of recording transactions in journal is called “JOURNALISING”.

There are two categories of journals and these are:

- The general journal
- Special journal

1. The General Journal: general journal is used to record all business transactions
chronologically. It explains the type and reason for the entries in the narrative.

Format of a General journal

Date Particulars/ Details Debit (Dr) Credit (Cr)

2. Special journals: they record transactions of the same nature. They include the Sales
journal, Purchases journal, Sales returns journal and Purchases returns journal.

 SALES JOURNAL / SALES DAY BOOK: This is a book of original entry where credit
sales are first recorded before being posted to the ledger accounts.

Format of a Sales journal

Date Particulars/ Details Invoice No. Amount

EX: Kigali traders made the following credit sales in month of january 2015
Jan1 sold good 4500frw to Gasana invoice no 012
Jan5 sold good 1000frw to james invoice no 01
Sold good 3000 frw to kamali in o 018
Required:Makes entries in the sales journal of kigali traders.

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 Kigali traders sales journal
date details invoice amount
Jan1 Gasana 012 4500
Jan5 James 015 1000
Kamali 018 3000
Total credit sales 8500 frw

 SALES RETURN JOURNAL / RETURN INWARDS BOOK: This is the book in which goods
returned by our customer are recorded before being posted to the ledger. The business
normally accepts these returned goods to maintain good reputation and customers.

Format of a Sales returns journal

Date Particulars/ Credit note No. Reasons Amount
Details

EX: kigali traders during month of january 2015

Jan2 Gasana returned good valued 2500 frw credit note no 201
Jan 7 kamali returned faulty good value at 1000 frw credit note no 205
Required: makes entries in the sales returns journal of kgli traders.

Kigali trader RIW book

date details Credit note no amount
Jan2 Gasana 201 2500
Jan7 kamali 205 1000
Total sales return 3500

PURCHASES JOURNAL / PURCHASES DAY BOOK: is a daybook that records all the credit
purchases of the business before being posted to the ledger.

Format of a purchase journal

Date Particulars/ Details Voucher No. Amount

EX: Peter enterprise made the following credit purchase in month of april 2015
April2 bought goods 3000frw from mohammed voucher no 333
April12 received goods from liliane 2000frw vno 111
April 14 purchase goods from mutoni 2500 v no 2444
Required: make entries in purchases journal peter enterprise

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 Peter journal on June 2015
date details Voucher no amounts
April2 Mohammed 333 3000
April12 Liliane 111 2000
April14 mutoni 2444 2500
Total purchase 7500 frw
journal

PURCHASES RETURNS JOURNAL / RETURNS OUTWARDS JOURNAL: This is the book in which
goods returned by the business to the supplier/creditor and their value are recorded in
chronological order.

Format of a purchase returns journal

Date Particulars/ Details Credit note No. Reasons Amount

EX: Peter trader made the following purchase return in the month of june 2015
June 1 returned good 500frw to mohammed credit not no 112
June 4 returned good 1000 frw to mutoni credit note no 3331
Required: make entries purchase return journal peter trader.

Peter ROW journal on June 2015

date details Credit note no amount
June1 Mohammed 112 500
June4 mutoni 3331 1000
Total purchase return 1500 frw

A. General journal/Journal proper: This is a book of original entry which records daily
transactions of the business chronologically.
Rules of journal entries
 Debit the receiver and credit the giver.
 Whenever an asset is bought, we are supposed to debit that particular
asset account.
 Whenever an asset is sold we credit that account (asset).
 While making entries in the journal we start with accounts to be debited
and those to be credited later.

The importance of a general journal to any business include:

1. It is the diary of the business in which events are recorded as they occur;
2. It is a book of prime entry for correction of errors;
3. It is a book of summaries for the business;

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4. It acts as a book of explanation for the business. After every transaction is
entered, a brief explanation/ description is made;
5. It reduces risks of transactions being omitted as that of making only a single
entry;
6. It shows the financial position of the business by comparing the debit side to the
credit side;
7. It makes it easy to detect errors

Format of a general journal)

Dadate Dedetails FofolioDedebit (Dr) Crcredit (Cr)
 Name of the account to be
debited.
 Name of the account to be
credited.
 Short explanation.

E.g: Kagisha Enterprise made the following transactions during the month of June 2002.
June 1st, started business with cash in hand 1,300,000 Rwf and cash at bank 500,000
Rwf
June 3rd, bought goods from Nzamwita 250,000 Rwf and paid cash
June 7th, bought goods from Cyiza 300,000 Rwf on credit
June 10th, bought a land 700,000 Rwf cash
June 13th paid Cyiza in full settlement by cheque
Required: Record the transaction in journal book.
Solution:

QUICK SERVICE’ S JOURNAL BOOK FOR THE MONTH OF NOVEMBER 2012

DATE PARTICULARS DEBIT CREDIT

June 1 Cash a/c 1,300,000

Capital a/c 1,300,000

Bank a/c 500,000

Capital a/c 500,000
(Capital being invested in business)

June 3 Purchases a/c 250,000

Cash a/c 250,000
(purchase of goods from Nzamwita cash)

June 7 Purchases a/c 320,000

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 Cyiza a/c 320,000
(purchase of goods on credit from Cyiza)

June 10 Land a/c 500,000

Cash a/c 500,000
(Purchase of land by cheque)

June 13 Cyiza a/c 300,000

Bank a/c 300,000
(Paid our creditor Cyiza in full settlement)

REMARK: Drawings account is always debited in journal.

Drawings in business is any of the following situations:
(i) Withdrawing cash from bank for personal use (taking on the money you have on your
account)
(ii) Taking cash from business for personal use (taking on the money you have in hand)
(iii)Taking goods from business for personal use (taking on your stock of goods)
(i) Drawings (Dr)
Bank (Cr)
(ii) Drawings (Dr)
Cash (Cr)
(iii) Drawings (Dr)
Stock (Cr)

1. BUY DEBIT: -what we buy acount

-purchase A/C, goods/stocks A/C
CREDIT: - Cash A/C on cash
- Bank A/C cheque
- Supplier A/C on ccredit

2. SELL DEBIT: - Cash A/C

- Bank A/C
- Customer A/C
CREDIT: - Sales A/C

3. PAY DEBIT: -Supplier A/C

CREDIT: -Cash A/C
-Bank A/C

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CASH BOOK
The cash book is defined as a book which records all receipts, and all the payments for a particular
financial period.
There are four types or forms of cashbooks namely:
- Single column cash book
- Two columns cash book
- Three columns cash book
- Petty cash book

Note: Only cash and cheque transactions are recorded in cash books no credit transactions.

SINGLE COLUMN CASH BOOK

a) Single column cash book: This is a cashbook with only one column amount on both side.
This type of cashbook is mainly used by small businesses that do not have bank account or
which carry out cash transactions only.

Format of a single column cash book

Dr Title Cr
Date Particulars Amount Date Particulars Amount

EX: Mrs. Kazimoto carried out the following transactions during the month of February 2013:

1st Feb she started a business with 1,500,000Frw

3rd Bought furniture worth 1,000,000Frw cash
4th Bought raw materials for 50,000Frw cash
5th Paid wages and salaries 30,000Frw
9th Paid rent 50,000Frw cash
12th Received a commission of 100,000Frw cash
21st Received cash from Sandra 200,000Frw
25th Bought a computer 300,000Frw in cash
Required: To prepare a single column cashbook and balance it off

Solution:

Books of Kazimoto Single Column Cash Book as per February 2013

DR CR
Date Particulars Amount (Rwf) Date Particulars Amount (Rwf)

Prepared by K.John Page 48 of 55

 Feb 1 Cash b/f (Capital) 1,500,000 Feb 3 Furniture 1,000,000
Feb 12 Commission 100,000 Feb 4 Raw materials 50,000
Feb 21 Sandra 200,000 Feb 5 Wages & salaries 30,000
Feb 9 Rent 50,000
Feb 25 Computer 300,000

Feb 28 Balance c/d 370,000

TOTAL 1,800,000 TOTAL 1, 800,000

March 1 Balance b/d 370,000

TWO COLUMN CASH BOOK

b) 2- Column cash book: it is when we have both cash and cheque transactions. It is called
two column cash book because it has two columns on each side, i.e. cash account and bank
account on each side.

Format of a 2-Column cash book

DR Title CR
Date Particulars Cash Bank Date Particulars Cash Bank

EX: Desire had the following transactions in the month of January 2013
1st Jan cash at hand 500,000Frw and cash at bank 200,000Frw
5th Jan received a cheque from peter 300,000Frw
7th Jan cash purchases 300,000Frw
10th Jan cash sales 400,000Frw
11th Jan paid Musoni by cheque 190,000Frw
15th Jan bought stationery for use in cash 40,000Frw and paid rent by cheque 200,000Frw
20th Jan received payment by cheque from Aaron 600,000Frw
30th Jan paid Gasirabo by cheque 100,000Frw.
Required: Prepare desire’s 2-column cashbook with the above transactions and dully balance it.
Solution:

Desire’s Entreprise Two-Column Cash Book for the Month of Jan. 2013
Dr Cr
Date Particulars Cash Bank Date Particulars Cash Bank

Prepared by K.John Page 49 of 55

 Jan 1 Capital 500,000 200,000 Jan 7 Purchases 300,000 -

Jan 5 Peter - 300,000 Jan 11 Musoni - 190,000

Jan 10 Cash sales 400,000 - Jan 15 Stationery 40,000 -

Jan 20 Aaron - 600,000 Jan 15 Rent - 200,000

Jan 30 Gasirabo - 100,000

Jan 31 Bal. c/d 560,000 610,000

TOTAL 900,000 1,100,000 TOTAL 900,000 1,100,000

Feb 1 Bal. b/d 560,000 610,00

THREE COLUMN CASH BOOK

c) 3-column cash book: It is when we have cash transactions, cheque transactions and cash
discounts received or/and allowed. 3-Columns cashbook has three columns for amounts
on both debit and credit sides, i.e. Cash accounts, Bank accounts and Discount accounts on
each side.

 Discount allowed: This is a reduction in the price paid for goods given by the
business to the customers (debtors) to encourage them to pay promptly (in time).
 Discount received: This is a reduction in the price paid for goods given by the
supplier to the business to encourage it to pay in time.
Note : Discount allowed is debited in three column cash book while discount received is
credited.

Format of a 3- Column cash book

DR Title CR
Date Particulars Cash Bank Disc. A Date Particulars Cash Bank Disc. R

Note: In 3-column the discount columns are totaled but not balanced as those of cash and
bank

EX: Kigali traders Ltd had balances cash at hand cash 220,000Frw cash at bank 14,000Frw
on 1st March 2004.

Prepared by K.John Page 50 of 55

 3rd March received a cheque from Juma 12,000Frw less 5% discount.
4th paid cash to Okello 10,000Frw less 12.5% discount.
6th Karekezi paid his account of 40,000Frw by cheque less 3 % discount
8th bought goods by cheque 20,000Frw
15th paid Mukasa by cheque 19,000Frw having deducted discount 1,000Frw
17th paid Nakure by cheque 15,000Frw less 5% discount
20th cash sales 14,000Frw
Required: Draw a 3-Column cash book of Kigali traders Limited

Solution
Kigali traders ltd 3-Column cash book for the month of March 2004
DR CR
Date Particulars Cash Bank Disc. A Date Particulars Cash Bank Disc. R

Mar 1 Cash b/d 220,000 14,00 - Mar 4 Okello 8750 - 1250

Mar 3 Juma - 0 600 Mar 8 Purchases - 20,000

Mar 6 Karekezi - 11,40 1,200 Mar Mukasa - 19,000 1000

Mar Cash sales 14,000 0 - 15 Nakure - 14,250 750

20 38,80 Mar

0 17 Bal. c/d 225,250 10950

Mar

31

TOTAL 234,000 64200 1,800 TOTAL 234,000 64200 3,000

Apr 1 Bal. b/d 225,250 10,950

Special Entries in 2-Column & 3-Column Cash Books (Contra Entries ,C )

Contra entries which affect 2 sides of a cash book, i.e. those transactions are recorded in DR and
CR side at the same time.

Contra Entries take place under the following circumstances:

 *When cash is deposited into the bank./ Opening bank paying.
Debit- Bank
Credit-Cash
 *Cash withdrawn from the bank./ Cash cheque.

Prepared by K.John Page 51 of 55

 Debit- Cash
Credit-Bank

*Withdrawal of cash from the bank for office/business use.

Debit- Cash
Credit-Bank
 Banked cash
Debit -bank
Credit - cash

NOTE: - When we withdraw cash from bank for private use/personal use (called “Drawings”)
it is Not contra entry.
- Drawing refers to the money removed out of the business by the owner for private or
personal use. It affects ONLY ONE COLUMN either cash column or bank column of CR
side.

Three/Triple Column Cash Book

The three-column cash book can be enlarged further and converted into a three-
column cash book by including a separate column for recording discounts,
(discount allowed and discount received)

Discount allowed is an allowance extended to a debtor when he/she pays

promptly.
i.e. within a specified period of time and it is therefore debited in the cashbook
as an expense while
Discount received is an allowance received from suppliers or creditors when
the enterprise pays promptly and therefore it is credited in the cashbook as an
income

Discounts: This is an allowance given to a trader/customer on goods

purchased. It takes the following forms:
- Trade discount
- Cash discount
Trade discount: It refers to a reduction in the usual price of a product that is
given to customers who buy goods and services for resale. In other words, no
entry is made for trade discount separately in books of accounts of the
seller and buyer.
Cash discount: This is a form of allowance given to the buyer by the seller to
encourage him/her to pay in time and to always pay cash promptly. Discounts
can be received from the supplier/manufacturers or can be given away / allowed
to the business customers.
Example:
MUGISHA bought goods worth 500,000FRW and was allowed a trade discount of
5% and cash discount of 10%. How much did he pay for the goods?

Prepared by K.John Page 52 of 55

Solution:
Trade discount = 5100 *500,000 = 25,000 FRW (remember that this will not
be recorded anywhere either in the books of the buyer or those of sellers)
Cash discount=10100*500,000-25,000= 10100*475,000=47,500FRW
Amount paid for the goods= 500,000FRW – (25,000FRW+47,500FRW) =
427,500FRW

PETTY CASH BOOK

d) The petty Cash book: A petty cash is a minor /small cashbook used to record payments
regarding small expenses in a business. It is a further extension of the main
cashbook, only the summary totals are recorded in the cashbook.

To avoid this overcrowding of information in the main cashbook, payments of relatively small
amounts such as postage, small transport charges like tax hire, meals, purchase of stationery,
daily wages, etc. are put in the petty cashbook.

Format of a petty cash book

Date Particular Vouche Receipt Payment Analysis column

s r No. s s
Postag Stationer Transpor Sundry
e y t

The components of a petty cash book include:

1. Details /particulars column: This column is used to record the specific details on which
the expenditure was made.
2. Receipt side: This is side where the imprest amount is recorded.
3. Payment side: This is a side where total expenses are recorded.
4. Analysis columns: This a side used for analyzing expenses by category.
The analysis columns contain the following elements:
 Stationery: Records expenses like pens, pencils, papers, stencils, ink, etc.
 Postage: For payment on stamps, envelopes, letters and parcels, telephone charges
and telegram, etc.

 Transport/Travelling: Records payment for the different means of transport used

by the business.

Prepared by K.John Page 53 of 55

  Maintenance: Records the maintenance of business machines, business premise, etc.
 Wages: Records payment for wages of non permanent workers (manpowers) who
are paid on daily basis.
 Cleaning: Records payment for different items used in cleaning like soaps,
OMO&NOMI, brooms, etc.
 General expenses/Sundry: Records any other expenses which are not catered for
under the specific analysis columns. These are expenses, which may not have been
catered for in specific analysis columns.

N.B: The elements of the analysis columns are in most cases provided in the question.

5. Ledger account: This records payment made to creditors using the petty cash. Or Ledger
account: This records transaction to creditors paid from petty cash.
6. Reimbursement: This is the amount that is refunded to the petty cashier to top up the
float to start another period.
7. Imprest /Cash float: This is the amount kept by the petty cashier estimated to last for a
given period
8. Voucher number: Every petty cash voucher contains a number, which acts as reference.

EX: Rugina a petty cashier was issued with a cheque of 50,000Frw to be spent on minor
expenses on 1st May 2004.
The following transactions took place during the month of May 2004:
2nd May paid transport 1,500Frw and postage 2,000Frw
13th May bought office stationery for 13,000Frw
24th May paid transport 2,500Frw and telephone 2,500Frw
27th May paid sundry expenses 5,500Frw

Required to record the above transactions in Rugina’s petty cash book having analysis
columns for telephone and postage, office stationery, transport and sundry expenses.

Solution:
RUGINA’S PETTY CASH BOOK FOR THE MONTH OF MAY 2004
Date Particulars Receipts Payments Postage Stationery Transport Sundry

May 1 Imprest 50,000

May 2 Transport 1,500 1,500

May 2 Postage 2,000 2,000

May 13 Office stationery 13,000 13,000

May 24 Transport 2,500 2,500

May 24 Telephone 2,500 2,500

May 27 Sundry expenses 5,500 5,500

Prepared by K.John Page 54 of 55

 TOTAL 27,000 4,500 13,000 4,000 5,500

May 31 Balance c/d 23,000

TOTAL 50,000 50,000

June 1 Balance b/d 23,000

1st june reimbursement 27000

Prepared by K.John Page 55 of 55