Topic outline

  • INTRODUCTION

    INTRODUCTION

    This textbook is part of school curriculum reform in Rwanda in particular how 
    the curriculum is taught.  It is hoped that this change will make what you learn 
    in school more useful both at school and when you leave school.
     In the past, the main reason for schooling was to obtain knowledge – that is 
    facts and ideas about each subject.  But nowadays the main reason  due to 
    changes that are happening in the environment and the job market is becoming 
    more competitive therefore you should be able to use the knowledge you 
    will obtain from this text book to develop competencies. These competencies 
    include, ability to think for yourself, ability to communicate with others and to 
    explain what you have learnt, as well as being creative in developing your own 
    ideas, not just following those of the Tutor and the textbook. In this textbook, 
    different approaches are used to help you to develop competences and make 
    this textbook user friendly. Among these approaches are the following: 

    Activity-based learning 

    These activities present you with instructions to follow that will help you to 
    learn and discover others for yourself. You already have knowledge and many 
    ideas based on the experiences you have had and your life within community. 
    Some of the activities, therefore, require you to use the knowledge and ideas 
    you already have.

     In using this book, therefore, it is essential that you do all the activities and 

    follow all the instructions. You will not learn very well unless you complete 
    these activities provided. They are the most important part of the Textbook.
     
    In some ways this makes learning more of a challenge.  It is usually challenging 

    to think for yourself than to copy what the Tutor tells you. But if you take up 
    this challenge you will become a better person and become more productive 
    and successful in your life.
     
    Group work
     You can also learn a lot from other people in your class. If you have a problem, 
    it can often be solved by sharing it with others. Many of the activities in the 
    book, therefore, involve discussion.  Your tutor will help to form and organize 
    these groups in a conducive learning environment facing each other. You cannot 
    discuss properly unless you are facing each other.
     
    Research
     One of the objectives of the new curriculum is to help you discover for yourself. 
    Some activities, therefore, require you to do research using Textbooks in 
    the library, the internet if your school has access, or any other source such 
    as newspapers and magazines etc. This means that you will develop skills 
    of learning for yourself that can help you both when still in school and after 
    school. Your tutor will help in case your school does not have a fully equipped 
    library or internet.

    Skills lab

     Entrepreneurship subject is more practical than theoretical that is why it 
    requires time for skills lab which is a regular time on normal time table when 
    student-teachers are required to complete learning activities working in 
    manageable groups. 

    During skills lab activity student-teachers are given an opportunity to talk 

    more and get more involved in the lesson than tutors. Student-teachers receive 
    constructive feedback on work done (Tutor gives quality feedback on student 
    presentations). 

    The Skills Lab prepares student-teachers to complete portfolio assignments on 

    their own after classes. So, classroom activity should connect directly to the 
    portfolio assignment and   during the skills lab the tutor makes sure that he/
     she links the unit with the portfolio assignment, student’s business club and 
    back home projects.

     Icons

     To guide you, each activity in the book is marked by a symbol or icon to show 
    you what kind of activity it is. The icons are as follows:
     This indicates thinking for yourself or groups discussion. You are expected to 
    use your own knowledge or experience, or think about what you have read in 
    the book, and answer questions individually or as a group activity.
     
     Thinking icon/Learning activity icon
     This icon reminds you to link your previous knowledge with the topic you 
    are going to learn. As a student feel free to express what you already know 
    about the topic. What is most important is not giving the right answer but the 
    contribution you are making towards what you are going to learn.
     
    Application Activity icon
    Some activities require you to complete them in your exercise book or any other 
    book. It is time for you to show if you have understood the lesson by answering 
    the questions provided. 

    Skills lab icon

     This icon indicates a practical activity, such as a role play to solve a problem or 
    complete an activity, participating in a debate and following the instructions 
    provided by the teacher. These activities will help you to obtain practical skills 
    which you can use even after school.
     
    End unit Assessment icon

     This icon requires you to write down the responses to activities including 
    experiments, case studies and other activities which assess the attainment 
    of the competences. Tutors are expected to observe the changes in you as a 

    student teacher.

  • UNIT 1 : BUSINESS IDEAS AND OPPORTUNITIES

    Key Unit Competence: To be able to generate viable business ideas.
    Introductory activity

    Analyze the photo below and answer the following questions


    Observe the picture above and identify different sources of business 
    ideas.

     1. Generate different business ideas from the above environment.
     2. Notall business ideas are business opportunities. Is this statement true or 
    false? Give reasons to justify your response.
     
    1.1 Business, business idea and a business opportunity

     1.1.1. Meaning of a business idea

    Business refers to any economic activity that involves the production, selling 
    of goods and services, covering risks with the aim of getting profits.

    An idea is called an opportunity if there is evidence that the entrepreneur’s 

    idea can be turned into reality.

    A business idea simply refers to any thought that the entrepreneur may 

    come up with as a result of scanning the environment with the possibility 
    of developing it into a business opportunity. It requires the entrepreneur to 
    exercise creativity and innovativeness in order to come up with the successful 
    business ideas for the environment. 

    Examples of business
    ideas in Rwanda include; Real estate, clothing and 

    textiles, food processing, E-Commerce, technology products.
     
    1.1.2. Meaning of a business opportunity

     A business opportunity can be defined as an identified situation or chance 
    that can be turned into a real and profitable business.

    An opportunity is a favorable set of circumstances that creates a need for a new 

    product, service, or business. Such opportunities are determined by customer 
    requirements and lead to the provision of a product or service which creates or 
    adds value for its buyers or end-users.

    A business opportunity
    is any situation that can be turned into a possible and 

    profitable business activity. 

    An opportunity is a situation in which it is possible for you to do something 

    that you want to do. A business opportunity is said to be viable, when it has the 
    ability to grow and expand.

     Examples of business opportunity and their   business idea
     -Lack of sufficient safe water in your community is a business opportunity. 
    Provision of JIBU, NIL, AKANDI or INYANGE water can be a business ideas.
     
    -High demand for charcoal as a source of energy in your community is 

    business opportunity.  For that opportunity, many business ideas can be 
    generated like provision cooking gas, making charcoal in wastes, planting 
    trees, buying big vehicle to transport charcoal from far forest…

    A business idea may not necessarily be a profitable business opportunity; one 

    needs to filter and sift through these ideas to realize whether they are real 

    opportunities.

     Application Activity 1.1

     Case study: A reality T.V. Show

    Rwiyemeza is a prominent entrepreneur dealing in growing and 
    processing of Mushrooms in Kicukiro district. One day she was invited 
    to give an interview on Rwanda Broadcasting Agency (RBA) about her 
    business to the whole nation by Mr. Makuru. 


    Read through the excerpts from the interview 

    Makuru: How did you decide to get into mushroom growing and 
    processing? How did you start?

    Rwiyemeza
    : It was during my school time when I joined a school 

    business club. I got the idea when our club mentor told us that we can 

    start a backhome.

    business, we used to call it a ‘BHB’. I introduced the idea to my parents 
    and I was lucky that they supported me. It was not a very easy task with 
    everyone telling me different things about growing mushrooms. Actually 
    many people that I talked to focused on the challenges but about three 
    people told me that I can overcome the challenges if I plan in advance. 
    I therefore decided to take on the business of Mushroom growing and 
    processing.

    Makuru:
    What was the biggest challenge while starting your Mushroom 
    business? How did you overcome it?

    Rwiyemeza
    : There were so many challenges such as unsure market, 
    competition, pests, but deciding on turning my business idea into a 
    profitable business was most challenging. I had to make a lot of research 
    from existing entrepreneurs,  sector offices, and financial institutions. 
    I also had to do personal evaluation. I found that I could market my 
    product very widely to beat the market problem, and ensure much 
    cleanliness and timely watering to avoid pests. 

    Makuru
    : What are the benefits of your business to the community?

    Rwiyemeza:
      Apart from earning a living for me and my family,  my 
    business employs three ladies and 2 gentlemen who earn a monthly 
    salary. Important to note also, is that I have inspired a lot of other young 
    entrepreneurs especially women to start their own businesses.

    Makuru
    : What advice would you give to the young people who may 
    want to start businesses? 

    Rwiyemeza
    : My advice would be that all around us are opportunities 
    of business ideas but one has to be careful because NOT all business 
    ideas can be turned into profitable businesses. Before I finally decided 
    to start mushroom growing and processing, I had tried a number of 
    business ideas which failed because they were not viable. So, I again 
    advise the young people to take time and research  about the business 
    ideas before investing money since “Not all business ideas are business 

    opportunities”.

     Questions:
     Referring to the case study (A reality T.V. Show) above, answer the 
    following questions:

    a) What do you understand by a business and what is Rwiyemeza’s 

    business?
     
    b) Explain what you understand by a business idea. Mention any 
    sources of business ideas for Rwiyemeza’s business activity.

    c) Rwiyemeza says it was not easy for her to start up the business 

    activity. Explain what you understand by a business opportunity 
    and identify some challenges Rwiyemeza faced.
     
    d) Why do you think it is very important to do a research and personal 

    evaluation before deciding to start a business activity?
     
    e) Looking at the situation at school and in your home community, 

    what two best business ideas can you possibly take on? Why do 

    you think those two are the most viable ones?

     1.2. Reasons for generating business ideas
     Activity 1.2

     1) Why do you think that it is important to generate business ideas?
     2) In your own words, explain why the following Entreprises Urwibutso, 

    Inyange, Mara phone, Volkswagen  have been generated. 

    The simplest purpose of business is to solve a customer’s problem or meet 
    the customers’ needs
    . By providing the goods and services that meet the 
    customer’s needs, the business owner may realize profits. Businesses exist to 
    impact on people’s lives. This happens by businesses providing people with 
    goods and services they desire to meet their needs. While the people buying the 
    business’ products (goods and services) are meeting their needs, the business 
    owners expect to realize profits. Businesses serve as conductors of economic 

    activity and development.

    Business may be done by private individuals, government, companies, co

    operatives or non-governmental organizations (popularly known as NGOs).

     Hereafter are many reasons why entrepreneurs would need to generate 

    business ideas:

    To start a sustainable business: a good idea is essential for a successful 
    business venture – both when starting a new business or expanding it.

    To respond to market needs
    : markets are made up essentially of 
    customers who have needs and wants waiting to be satisfied.
     To meet changing fashions and requirements: provide opportunities 
    for entrepreneurs to respond to demand with new ideas, products and 
    services.

    To stay ahead of the competition
    : Remember, if you do not come up 
    with new ideas, products and services, a competitor will. So the challenge 
    is to be different or better than others.

    To exploit technology – do things better
    : Technology has become a major 
    competitive tool in today’s markets and for one to be better with changing 
    technology, generation of business ideas is crucial.

    Because of product life cycle
    : All products have a finite life. The firm’s 
    prosperity and growth depends on its ability to introduce new products 
    and to manage their growth.

    To diversify risks and overcome failure
    : It is necessary for firms to try 
    to diversify their risks and overcome failures that may occur from time to 

    time by constantly generating new ideas.

     Application Activity 1.2
     Identify a number of different needs and wants in your community 
    that are not yet being met by the existing businesses and suggest the 
    business you would come up with.


     1.3 Sources of Business Ideas.
     Activity 1.3

     Referring to your community and beyond, explain at least 5 business 
    ideas that you can generate from the different sources.
    The following are some of the sources of business ideas:
     
    -Looking within you and examining skills, talent and passion: The very 
    first place to start looking for business ideas and opportunities is to look 
    within yourself. Self-examination is an important thing that can help in 
    reaching to different decisions. It is important to examine your own skills, 
    talent or passion that can fit into the business. Therefore, such businesses, 
    which corresponds according to your skills is the most appropriate and 

    are expected to be successful in the future. 

    -Inventing a new product or service: Another great source of business 
    opportunity is inventing a new product or service. Different people are 
    creative with a mindset of thinking out of the box and solving problems 
    with the best appropriate solution. One needs to think like great 
    entrepreneurs such as   SINA Gerald of Urwibutso enterprise, Zulphat 
    Mukarubega proprietor of Rwanda Tourism University College, etc. 
    However, for winning ideas you need to be specific on your target market 

    and analyse the problem.

     -Adding value to an existing product(Innovation): Rather than inventing 
    a product, one can also add value to existing products. These kinds of 
    innovations can be proved as a great source of business opportunities. 
    Since most of the inventions have already taken place, so it is prevailing 

    as innovation.

    -Franchising: A continuing relationship in which a franchisor provides a 
    licensed privilege to the franchisee to do business and offers assistance 
    in organizing, training, merchandising, marketing and managing in 
    return for a monetary consideration. Franchising is a form of business 
    by which the owner (franchisor) of a product, service or method obtains  

    distribution through affiliated dealer (franchisees).

     By looking on the demographics and the need for a particular service or 
    product, one can also start a franchising business. It can be really profitable 
    since much of business modeling is not required because a person uses 

    the rights of another retailer.

    Mass Media: Mass media has become comprehensive from past few 
    years. Magazines, TV, Newspapers etc. are a great source of ideas and 
    opportunities. Different businesses are on sale and different commercial 
    advertisements are available to choose from.

    Attending Exhibitions:
    Trade shows and Expos helps to develop a strong 

    business network.

    Industrial Survey: Another important source for a business ideas can 
    be industrial surveys. Since, the main point of a business is to fulfill the 
    needs of a customer. Therefore, surveying and analyzing the underlying 
    need of a customer can help in reaching a rational decision that addresses 

    the customer’s problem and result in a profitable business.

    Listening to customer complaints: Complaints are a part of customers’ 
    relationship that led into the development of new or improved products 
    and services. Whenever customers report badly, it means that the 
    customer satisfaction is not being achieved and there is some issues 
    with the product.  This can help in generating new business ideas for 

    addressing problems of customers.

     Application Activity 1.3
     Describe the qualities of a good business idea in your home community 

    that can be turned into a Back-Home Business.

     1.4. Steps of generating business ideas 
    Activity 1.4

     Referring to your community and beyond, explain at least 5 business 
    ideas that you can generate from the different sources.
    a. What would you have to do in order to take on the best business 
    opportunity?

    b. Would you advise a friend on how to assess business ideas and 

    opportunities? If yes, how? If not, what would you do?

     1. Start thinking/get your brain at work
     The first thing to do when you get a business idea is determine whether it’s 
    a good idea. Not every idea that seems good at first is practical. And some 
    business ideas have no market.

    You will need to do some research to evaluate your business idea. Here is a 

    checklist of questions to use as a guide:
     -Is there a need for this product or service? Some of the most popular 
    products and services meet a need that people currently have. The 
    product or service may improve upon or complement an existing product 
    or service, or your idea may be a completely new approach to meeting a 
    need.

    -Is there a desire for this product or service? A
    dmittedly, some of the 
    most popular products are desire-based rather than need-based. That 
    means that someone is purchasing the product because they want to. A 
    few needs-based reasons for a purchase include to increase status or to 
    follow a trend.

    -Who is currently meeting the need for this product
    or 
    service?
    Answering this question gives you a start on evaluating your 
    competition. You need to know not only who your competitors are, but 
    also how many are they? Don’t forget to consider indirect competition.
     
    -Who will buy this product or service?
    Find out who your typical 
    customer is likely to be. This may involve conducting surveys, testing the 
    waters, finding a focus group, and more. The better your understanding 
    your potential customer, the more likely you are to create a successful 
    business.

    -How big is that market?
    You may have a great business idea. It may even 
    be brilliant. But, if the market for your idea is very small, your business 
    might not be viable–that is unless people are willing to pay a premium for 
    your product or service. This  brings us to the next question.

    -How much are people willing to pay for your product or service?
    Your 
    intake from your product or service needs to cover your costs and should 
    include a healthy profit. Remember, that even a small niche market can 
    be profitable if potential customers are willing to pay you enough money.

    -How hard will it be to implement the idea?
    Let’s face it, some ideas 
    are easier to implement than others. When answering this question, take 
    into consideration the amount of time it will take you to launch your 
    business as well as whether or not you will need to hire someone to help. 
    After doing your research, you should be able to tell whether you want to 

    continue on ,and develop your business idea.

     2. Buy a notebook (Think on paper)
     Now that you know how to stimulate your brain and get started with the creative 
    thinking process, you need to keep count on your ideas and make sure that you 
    can document them to study and examine them further. Every business you 
    can think of started with a small idea somewhere, from a small observations, 
    a frustrating situation, or while taking a shower. You never know when the 
    inspiration comes, so keep a notebook close to you at all times to write these 

    ideas down whenever they come.

     3. Follow your passion
     Once you start your business, you will spend most of your day for several 
    years doing that business. So make sure you choose a business that you feel 
    passionate and excited about. If you don’t like the business you are doing , you 
    might not succeed in that business, probably not because you don’t have what 
    it takes, but mostly because you might lose interest too easily in the face of the 

    challenges that will come your way.

     4. Keep your eyes open
     New business opportunities get born from new situations every day. Keep an 
    eye on what is happening around you, make it a habit to read the newspaper 
    and identify new opportunities. You may read that people are complaining from 
    poor health services in your area, or the lack of schools in your neighborhood. 
    Talk to your neighbors and the people you know, what is frustrating them? 
    What would they want to change in your neighborhood? Is your neighbor 
    complaining that he/she needs to drive long distances to get to the nearest dry 
    cleaner? Or is your other neighbor complaining about the lack of groceries in 
    close proximity to where you live? Are your coworkers frustrated that there are 

    no restaurants close to your work building?

     5. Capitalize on your strengths
     Most people are good at something. Look at your experiences and career, what 
    is it that you can do well? Have you been working in project management for 15 
    years and know the ins and outs of the business, this is often the best place to 
    start. Instead of focusing on the things you cannot do well, focus on the things 
    you are good at. What can you do better than others? How are the others doing 

    it? And how can you do it differently? 

    6. Explore new things
     As mentioned earlier, change is one of the biggest stimulators to the brain. Even 
    if you don’t want to open your own coffee shop, next time you are in one, look 
    at how things are done and think of new ways to improve it. Often this thinking 
    might lead you to new ways to improve on your business ideas in your chosen 

    field.

     7. Check your bank account
     Starting and running your business requires money. Depending on your 
    situation, you need to think of businesses that suit your budget. Everyone’s 
    finances are limited, so make sure whatever business idea you come up with is 
    doable. If you have a small amount of money, then look into business ideas that 

    are not cash hungry, maybe start small and then grow with the business.

     8. Know what you want in life
     Aside from your business goals, think about the reasons why you want to start 
    a business in the first place. What is it that you are looking for? What are your 
    goals in life? Are you starting a business to be able to spend more time with 
    your family? To make more money? To be respected among your peers?

    Whatever your goals are, make sure that your business idea complements these 

    goals and help you to achieve them. If your goal is to find more time to spend 
    with your family and do other things, then starting a business that requires you 

    to work 16 hours a day or travel constantly might not be the best idea.

     9. Choose a business that suits your personality.
     Are you a morning person or a night creature? Each person has his/her own 
    peak hours of the day. You will find very few successful bakers or newspaper 
    owners that don’t like to wake up in the morning. If you are not a morning 
    person, avoid businesses that will need you to work in the early hours of 
    the morning. If you are a night person, then maybe running a nightclub or a 
    restaurant that stays open till late hours is more suitable for you. Conversely, if 
    you sleep early, running a business that requires you to stay late might not be 
    suitable for you.

    Are you an indoor or outdoor person? Do you like working in an office for long 

    hours or can’t stand the office and feel that you need on the move all the time? 
    If you like the office quiet environment, then pick a business that can be done 
    from an office. If you like to be on the move, pick a business that requires you to 
    go to different places and meet new people.

    Are you brainy or handy person? People do things differently, some people like 

    to do things that involve thinking and working their brains, other people like to 
    do things that involve craftsmanship and handy work.
     
    Are you shy or outgoing person? If you are a shy person, then becoming a public 

    speaker might not be the best idea for you. If you are an outgoing person and 
    like to meet new people all the time, having an internet based business might 
    deprive you from that joy.
     
    I think you get the idea, think of your personal traits and attributes and pick a 

    business idea that suits your personality.

     10. Read about other people that started their own business
     A large part of becoming successful involves looking at other successful people 
    and learning how they achieved their success. Reading autobiographies about 
    prominent and successful business figures and learning how they started their 
    journey will give you great insight on how they did things and what exactly they 
    did to become successful.

    You find that most of them started from nothing. Many of them failed in 

    several businesses and had to listen to people that told them they will never be 
    successful. But they stood up and tried again and again until they succeeded. It 
    is not whether you fail that makes you the man you are, it is how you stand up 
    after the fall.

    Study their characters, what do successful entrepreneurs have in common? 

    How did they achieve their vision? What challenges did they have to overcome? 
    Look for similarities between their stories and your situation right now. You 
    will find that it is a great source of inspiration and motivation. If others just like 

    you did it, then you can do it too.

     1.5 Business opportunities
     Activity 1.5
     1) What do you understand by a viable business opportunity? 
    2) What business opportunities can you think of? Among those, which 

    ones are viable for you and why?

     1.5.1. Meaning of business opportunities
     A business opportunity can be defined as an identified situation or chance 
    that can be turned into a real and profitable business.
     An opportunity is a favorable set of circumstances that creates a need for a new 
    product, service, or business. Such opportunities are determined by customer 
    requirements and lead to the provision of a product or service which creates or 
    adds value for its buyers or end-users.
     A business opportunity is any situation that can be turned into a possible and 

    profitable business activity. 

    1.5. 2. Characteristics of a good business opportunity

     1. Demand
     Demand is the first thing that one ought to take into account before planning 
    to start a business is to ask themselves where there is a significant demand for 
    the particular product or services they intend to launch i.e. is there a gap in the 
    market? If the answer is NO then that idea isn’t a viable business opportunity. It 
    would also be profitable to target a specific niche as this increases the chances 

    of you becoming a dominant player for that specific niche.

     2. Return On Investment (ROI)
     If the business opportunity you have in mind has the potential of bearing fruits 
    within a set period of time and which can cover the capital that was used in 
    addition to bearing profits there is a high chance that you have got a winner 
    but if it only requires more and more capital to be injected in with minimal 
    or no possibility of having any returns any time soon then you ought to tread 

    carefully.

     3. Availability of resources
     You should have all the resources needed to take advantage of that particular 
    business opportunity as well as a time frame for implementing it, lest someone 

    else beats you to it.

     4. Skill
     You need to have the experience required to tap into that particular business 
    opportunity e.g. if you want to start a bakery but don’t know a thing about 
    baking ,then that is not a viable business opportunity. It is therefore important 
    that you have the required skill i.e. experience and expertise, for the business 

    you would like to start.

     5. Scalability
     Can the business grow gradually within a given period of time and can it adapt 
    to the changing times i.e. is it flexible enough? If the answer is NO then that idea 

    isn’t a viable business opportunity.

     6. Healthy Profit Margin
     Does the business have a good profit margin that will ensure the business 
    remains profitable even as it meets the gap in the market? If the answer is NO 

    and you’re not in it for charity then that idea isn’t a viable business opportunity.

     7. Customer Retention
     It’s said that customers are the lifeblood of any business but if you can’t retain 
    your customers then your business won’t last very long. You therefore need to 
    put in place mechanisms that will ensure you prolong your customers stay with 

    you i.e. that they will keep buying from you for as long as possible.

     8. Low capital requirement
     A good business opportunity should be cheap to finance. Access to capital is a 
    major obstacle to entrepreneurship implying that entrepreneurs should focus 
    on ideas that are cheap to finance. Entrepreneurs exploit financing methods 
    such as loans, venture capitalists and contributions from friends and family 
    among others. Capital suppliers are reluctant to finance new businesses with 

    huge capital requirements.

     9. Aligns with your passion
     A good business opportunity is one that aligns with the individual’s passion. 
    The founder’s motivation is a key determinant of the success of a start-up. 
    A passionate founder has an internal motivation towards building a bright 

    future for the business. If you are like this leader, you will create a clear vision 

    and mission statements and use them to motivate stakeholders towards the 

    organizational goals.

     Application Activity 1.5
     Suggest a project you need to start in your students business club and 

    identify the requirements you need to start your project.

     1.6. Factors to consider when generating and evaluating 
    viable business ideas and opportunities  
    Activity 1.6

     1) What do you understand by a viable business opportunity? 
    2) What business opportunities can you think of? Among those, which 
    ones are viable for you and why?
     
    Discuss different ways in which you can use to learn about existing business 

    ideas and opportunities both in your community and elsewhere. 

    It is very important to examine and evaluate your business opportunity 

    and determine your potential for success before you spend time and money 
    developing a business plan.

    Entrepreneurs need to determine whether the business opportunity they 

    have identified is viable or not. When evaluating the viability of the business 

    opportunity, the following factors need to be taken into consideration:

     1. Market
     Business evaluation process goes through analyzing the market. If there isn’t a 
    big enough market for your product or service, you should rethink whether this 
    business opportunity makes sense.
     • Who will be your target consumer?
     • Is there a need for your business idea?

     • Can you meet that  market need?

    For instance, you might think of a great business idea to produce a carbonated 
    beverage flavored with roots, berries, and other natural flavors.

    However, in your evaluation you might find that this type of product is already 

    saturated in the market. The idea is good and a market exists, but if the market 

    is flooded with competitors it would not likely be profitable.

     2. Business plan
     The bottom line of any business is to make money. Without positive cash flow, 
    you won’t succeed. Business owners with the best of intentions often fail 
    because the financial potential isn’t big enough.
     • Will there be sufficient financial reward?
     • Do you see a potentially growing market for the product?
     • Do you have others who believe in your business ideas?
     • Are there other businesses that are similar (which is a validation that 
    this potential business opportunity could be worth pursuing)?
     You as an entrepreneur have a lot of thinking to do. Come up with great business 
    ideas. Be creative and get enthusiastic about your ideas. However, always take 
    the time to plan for a sound business because the better the business plan, the 

    higher chances for your idea to succeed.

     3.  Technology and other requirements
     The business should be evaluated in terms of whether there is an appropriate 
    technology that can be used in production. Factors to be looked into include;
     Appropriateness of the technology, the cost of the technology, the possibility 
    of the business suffering in case the technology becomes outdated/obsolete, 

    availability of raw materials and other resources.

    4. Infrastructure
     Easy access to infrastructure such as roads, water, electricity, telephone and 
    postal services among others enables business enterprises easily make orders 
    for goods and deliver them hence reducing operating expenses. With low 

    operating expenses, profits can be maximized.

     5. Government policy
     An entrepreneur should consider the requirements of the government before 
    starting a business e.g. the government may require certain businesses to be 

    located in certain areas only.

     6. Amount of capital required
     The capital required to run and maintain the business should be considered i.e 

    the source of capital.

     7. Security

     Availability of security should be considered.

     8. Impact of the business operations on the environment
     Some business operations on the environment lead to environmental 
    degradation and should be located in appropriate environment.
     Are the political, economic, geographical, legal, and regulatory contexts 
    favorable? Will the business do any damage to the physical environment?
     The above questions are typical of the type of issues that need to be addressed. 
    Responses to these questions will determine the attractiveness of any business 

    opportunity.

     9. Competition and competitive advantage
     Competition is regarded as a threat to business of similar kinds operating in a 
    similar location. Although competition is a threat, it is healthy in the sense that 
    it goes along the way in controlling the price of goods offered. It is crucial for 
    entrepreneurs to consider opportunities where competition is not high as this 

    will enable them to get reasonable market.

     10. Length of the window of opportunity
     For example, one may inform you of an upcoming workshop for educators in 
    your area, you realize that there is an opportunity for you to supply water, 
    food and airtime among others, but for you to determine whether you should 
    invest in this, you need to know how many people are coming, the length of the 
    workshop, such that you know how much stock is needed, you also base on that 

    to determine whether you will get back your money or not

    Application Activity 1.6

     Analyze the photo below and answer the questions that follow;

     1) What kind of activity is represented in the photo?
     2) What are the effects of such business ideas to the community?
     3) As an entrepreneur, suggest any two business ideas you may 
    generate in response to the effects of the activity above.
     4) Picking one idea, give the factors you will base on while choosing 
    that idea.
     5) What advice would you give to potential entrepreneurs while 

    generating business ideas in relation to the photo above?

     Skills lab
     Choose 2 businesses/ business ideas and conduct a viability test to 
    find out which one is better in terms of; 1. Potential for growth, 2. 
    Infrastructure, 3. Market for the goods/services (real demand), 
    4. Profitability, 5. Competition and competitive advantage, 6. 
    Financial viability. Make posters indicating how each of the above 
    factors favors or limits their business ideas with clear examples. 
    Recommend the most viable business ideas the Business club should 
    continue/ start running basing on the results of the viability tests and 

    suggest action steps for the implementation.

     End of unit 1 Assessment
     
    1. Read the following scenario:
     Mr. and Mrs. Kaberu visited their friend Kambanda who lives in Kigali. 
    They were surprised to see how Kambanda’s business of Coca-Cola 
    wholesaling was booming. They didn’t even ask him how and why he 
    chose to do that business. 
    When they went back home in Nyagatare, they sold all their cows and 
    opened  x because they were kept for long. The landlord chased them 
    out of the house because they couldn’t pay rent any more.
     Out of frustration, Mr. Kaberu had to sell all his stock at half price because 
    he had nowhere else to keep them. On hearing this, his wife Mrs. Kaberu 
    cried the whole day and night to the extent that she collapsed and was 
    taken to the hospital at the mercy of the neighbours because her and 

    her husband couldn’t afford the medical bills.

     Questions
     a) Explain whether the business idea was good or bad.
     b) Write a letter to Mr. and Mrs. Kaberu advising them on the importance 
    of assessing a business idea or opportunity in case they have another 

    one.

     2. There are many business opportunities that we can get from our 
    communities, why should we always assess a business opportunity 
    before investing our resources and time? To answer this, discuss in 
    your groups and raise at least 5 business opportunities that you can 
    think of. Assess each one of them and choose the best two viable 

    ones which you will present to the class.

  • UNIT 2: DRAFTING A VALID BUSINESS CONTRACT

    Key Unit Competence: To be able to make a valid contract in business 

    operations.

    Introductory activity

    Sam met with a businessperson on a football match who requested him to be 
    supplied with beans at a price of 500 Frws per kilogram. When Sam delivered 
    200kgs, he was not paid the full amount of money they had agreed upon.
     
    a) Has such a situation ever happened to you? When and what happened?

    b) What mistake did Sam do?
    c) Assume you were the one in such a situation, what would you do?
    d) What advice would you give to Sam and the businessperson?

    e) What lessons do you learn from the above situation?

    2.1. Meaning and Forms of Business contracts
     Activity 2.1

    Bayigana operates a small medium enterprise in Huye and wants 
    Ishimwe to supply his business with goods. Bayigana tells her to start 
    right away and supply the goods they will discuss other issues later. 
    She insists that she needs an agreement between the two especially on 
    issues of price, mode of payment, delivery period, quantity and quality, 
    among others.
     a) How do you call an agreement that Ishimwe insists to be between them?
     b) Do you think she is right to have the agreement before starting the 
    supply of goods? Give reasons to support your answer.
    c) In which way/form may the agreement be made between the two? 
    Support your answer

    d) What do you understand by the term contract and business contract?

    2.1.1 Meaning of contract and Business contract


    A contract is a legally binding agreement between two or more parties which 
    can be enforced by law.
     
    Example in marriage the woman and man make a contract during civil marriage. 

    The three parties are woman, man and witness will come to testify before the 

    law represented by Executive secretary of sector. 

    Before starting a job, the employer and employee make a contract. In this case 
    there are two main parties and the law  is now represented by official labor law 
    because it is not possible to make a job contract which is against the labor law.   

    A business contract is a legal binding between two or more persons/ entities  

    to perform an agreed business transaction and can be enforced by law. The 
    day today running of the business involves making contractual obligations with 

    suppliers, buyers etc. 

    Example: A farmer can make a contract of supplying   chicken to the hotel. In 
    most cases this contract is written and two parties should sign to that document. 
    This contract should follow the official law like the right person who represents 
    the hotel and the farmer should have maturity age. The two parties should sign 
    with free consent.  Once signed it becomes a document which binds the two 

    parties. 

    2.1.2 Forms of business contracts 
    Oral contract is an agreement between two or more parties by use of words. 
    They are non-written contracts. They rely on the good faith of the parties but 
    can be difficult to prove. Once the contract is verbal, the wittiness is mandatory 

    and provides evidence.

    Application Activity 2.1
    Read the following statements and answer the questions that follow:
    - Nkusi wants to lend his car to Niragire for 5,000Frw per day for 
    five days.
     -Niragire agrees with a handshake to borrow the car from Nkusi 
    and pay the money in witness of Rukundo.
    -Ntezimana promises to take his girlfriend Bagirishya for an outing 
    to Lake  Kivu.
    -Niyokwizerwa promises to pay 10,000Frw to whoever finds her lost phone.
    -Gato puts on paper his commitment to provide printing services 
    to Umutoni on agreed terms.
    -Mutesi promises to pay for her brother’s school fees and puts it in 

    writing.

    Which of the above statements are?
     a) Contracts.
     b) Not contracts.

     c) Business contracts.

    2.2 Valid contract

     2.2.1. Parties to a contract

     Activity 2.2

    1) Analyze the figure below and answer the following questions.


     a) Do you think the above sample is a contract? Give reasons to 
    support your answer.
     b) Name the key elements of the written contract above.
     c) Do you think the sample above is a valid contract? Support your 
    response by mentioning the elements of a valid contract in the 
    sample provided. (If any?)
     2) Describe different parties to a valid contract.
     3) Kamaliza’s 16-years old son, who looks a bit older, he signed a 
    contract joining a health club. He has dues of 15000 Frws. Is this 

    contract valid? 

    Parties of contract are persons who can sign the contract. For a contract to be 
    considered valid, it should include three parties. These are; Offeror/promisor 
    who makes an offer, Offeree/promisee to whom an offer is made and Witness 

    who sees an event happening.

    For example, in the above template Mr. John Muhire Offeror/promisor agrees 

    to sell his  car  to Umugwaneza Nadine Offeree/promisee  at 2 millions.

     Two parties to contract Offeror/promisor and Offeree/promisee must have 
    “capacity”, legal ability to make valid contract. Assent of parties is a must. If 
    either party is deprived, use of his understanding or deemed by law not have 
    attained consent, then such an agreement shall not bind him. All parties should 

    have should be mature, sound mind and qualified for contract by law.

    The information of two parties in contract should be clear, complete and 
    concise. In any case, the names are not enough, it should be better to include 
    other information like number of identification card, the location where those 
    documents are issued. Ensure that all information is well reflected on the 
    contract. For example in above contract there is a mistake in writing names. 
    Umugwaneza Nadine who sells the car is not the same Mugwaneza Nadine who 

    signs the contract. These slit mistakes can disqualify the contract.

     Witness is a person who sees an event happening. In a legal contract, a witness 
    is someone who watches the document be signed by the person they are being 
    a witness for and who verifies its authenticity by signing their own name on the 
    document as well. However, if you have a legal document such as a mortgage or 
    a Will the chances are that you will want a witness to attest to your signature. 
    Generally, the person you choose to witness a document should have no financial 

    or other interest in an agreement. A neutral third party is the best choice.

     2.2.2. Elements of a valid contract
     For a contract to be valid and therefore enforceable by law, it must have the 
    following elements:

    Intention to be bound by the contract
    : the two parties should have intended 
    that their agreement be legal. Domestic agreements between husband and wife 
    are not taken as valid

    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

    Consideration/price:
    this is the price agreed upon by the parties to the 
    contract and paid by one party for the benefit received or promise of the other 
    parties.

     
    Capacity of the parties: the parties to the contract must have contractual 
    capacity for the contract to be valid, i.e. should be sober, above 18years, not 
    bankrupt, not insane, properly registered.

    Free Consent:
    parties to the contract must agree freely without any of the 
    parties being forced to accept or enter the contract.
     
    Legality/lawful object: the object and the consideration of the contract must 
    be legal and not contrary to the law and public policy.

    Possibility of performance:
    if the contract is impossible to be executed in 
    itself either physically or legally, then such contract is not valid and cannot be 
    enforced by law.

    Certainty
    : the terms of the contract must be clear and understandable for a 
    contract to be valid. If the terms are vague or ambiguous, where even the court 

    may not be able to tell what the parties agreed, then it will be declared invalid.

     Application Activity 2.2
     Imagine if you make a contract without considering the elements of a 

    valid contract, what will happen if the person/ business refuses to pay?

    2.3. Importance of business contracts
     Activity 2.3

     Why is it essential to prepare business contracts?
     Referring to the activities in the previous lessons, do you think it is 
    important to have contracts in business operations? Give reasons to 

    support your answer.

    In business life, contracts are important because they outline expectations 
    for both parties, protect both parties if those expectations aren›t met and lock 
    in the price that will be paid for services. There are so many relationships that 
    affect the way the business operates such as customers or clients, employees, 
    suppliers, government, financiers.  Contracts are then important in the following 

    ways:

    - Contracts reduce business risks by compelling business partners to 
    perform what they have agreed to as per contract.
     
    - Business contracts specify terms
    and conditions of business 
    transactions
    including price, quantities, quality, date of delivery, etc. 
    which avoids misunderstandings.

    -
    Contracts help entrepreneurs to get the goods
    on credit because 
    the suppliers are aware that the entrepreneur is bound by contract and 
    therefore will make effort to pay the agreed amount.

    -Written contracts act as evidences. They are important because it is easy 

    to forget details you have agreed upon verbally and therefore provide a 

    permanent record.

    -Contracts may be used by entrepreneurs to convince bankers that the 
    entrepreneur has a business that will generate income so as to obtain 

    loans.

     Application Activity 2.3
     Demonstrate the importance of business contracts to the school 

    business club.

    2.4 Designing a contract sample 
    Activity 2.4

     Prepare a sample contract with suppliers for your school business club.

     2.4.1 Sample of Employee contract
     Employee Contract Template:
     Employment Contract
     This contract, dated on the ____ day of ______________ in the year 20____, is made 
    between [company name] and [employee name] of [city, state]. This contract 
    constitutes an employment agreement between these two parties and is 
    governed by the laws of [state or district].

    WHEREAS the employer desires to retain the services of the employee, and the 

    employee desires to render such services, these terms and conditions are set forth.

    IN CONSIDERATION of this mutual understanding, the parties agree to the 

    following terms and conditions:
     
    Employment
    The employee agrees that he or she will faithfully and to the best of his/her 
    ability to carry out the duties and responsibilities communicated to him/her by 
    the employer. The employee shall comply with all company policies, rules and 

    procedures at all times.

    Position
     As a [job title], it is the duty of the employee to perform all essential job functions 
    and duties. From time to time, the employer may also add other duties within 

    the reasonable scope of the employee’s work.

     Compensation
     As compensation for the services provided, the employee shall be paid a wage of 
    ___________ [per hour/per annum] and will be subject to a No [quarterly/annual] 
    performance review. All payments shall be subject to mandatory employment 
    deductions (State taxes, Social Security, Medicare).
     
    Benefits
     The employee has the right to participate in any benefits plans offered by the 
    employer. The employer currently offers
      . Access to these 

      benefits will only be possible after the probationary period has passed.
       
      Probationary Period
       It is understood that the first [time frame] of employment constitutes a 
      probationary period. During this time, the employee is not eligible for paid time 
      off or other benefits. During this time, the employer also exercises the right to 
      terminate employment at any time without advance notice.
       
      Paid Time Off
       Following the probationary period, the employee shall be eligible for the 
      following paid time off: • [length of time for vacation] • [length of time for sick/
       personal days] • Bereavement leave may be granted if necessary.
       
      The employer reserves the right to modify any paid time off policies.
       
      Termination
       It is the intention of both parties to form a long and mutually profitable 
      relationship. However, this relationship may be terminated by either party at 
      any time provided [length of time] written notice is delivered to the other party.

      The employee agrees to return any employer property upon termination.

       Non-Competition and Confidentiality
       As an employee, you will have access to confidential information that is the 
      property of the employer. You are not permitted to disclose this information 

      outside of the company.

      During your time of employment with the employer, you may not engage in any 
      work for another employer that is related to or in competition with the company. 
      You will fully disclose to your employer any other employment relationships 

      that you have and you will be permitted to seek other employment provided 

      that (a.) it does not detract from your ability to fulfill your duties, and (b.) you 

      are not assisting another organization in competing with the employer.

       It is further acknowledged that upon termination of your employment, you will 
      not solicit business from any of the employer’s clients for a period of at least 

      [time frame].

       Entirety
       This contract represents the entire agreement between the two parties and 
      replaces any previous written or oral agreement. This agreement may be 
      modified at any time, provided the written consent of both the employer and 

      the employee.

       Legal Authorization
       The employee agrees that he or she is fully authorized to work in [country name] 
      and can provide proof of this with legal documentation. This documentation 

      will be obtained by the employer for legal records.

      Severability
      The parties agree that if any portion of this contract is found to be void or 
      unenforceable, it shall be removed from the record and the remaining provisions 

      will retain their full force and effect.

      Jurisdiction
       This contract shall be governed, interpreted, and construed in accordance with 

      the laws of [State, province].

      In witness and agreement whereof, the employer has executed this contract 
      with due process through the authorization of official company agents and with 

      the consent of the employee, given here in writing.

       Employee Signature

       Date

       Company Official Signature

      Source: www.betterteam.com/employee-contract-template

      2.4.2. Sample of a sales contract
       
      PRIVATE CAR SALES CONTRACT

       The Car Details
       Make: Toyota
                                             SOLD FOR:……… frws                                    
      Model………                                     Registration Number…….. Registration document 
      completed by buyer/seller ..Yes/No . Mileage………. Registration document (V5) 
      exchanged ....Yes/No . 

      Additional notes and comments agreed on this sale

       
      SELLER’S DETAILS: Name…………….. Address………………


      CERTIFICATE of PURCHASE: I am the undersigned buyer of the above car. 

      I have purchased it from the seller named above for the amount of cash also 
      mentioned above (SOLD FOR). This is the final price agreed. I have paid for this 
      car in full and I am in receipt of this car and all the relevant documents to it. The 
      Seller above also acknowledges being in full receipt of all the total amount but I 
      do accept that full title to the car does not fully pass from the seller to purchaser 
      until all cash is paid. Any cheques will need to be cleared before full title passes 
      to myself. It is fully understood that this vehicle is sold as seen. I the buyer agree 
      that I have tried, tested and approved this car as suitable for my personal needs 
      without any representations, warranties or conditions expressed or implied 
      whatsoever. 
      Buyer’s Name:………………………                                                                  

      Buyer’s Address: …………                                                                                                                                                               


      Buyer’s Signature in agreement:  …………                                                   


      Seller’s Signature in agreement: …………                                                    

      Date:  …………                                

      Application Activity 2.4
       Assume, your parents have houses to rent at home, help them design a 

      rental contract that will be signed by the tenants. 

      2.5 Termination/discharge of business contracts
       Activity 2.5

       What do you think would lead you to terminate a contract with your 
      suppliers?
      To terminate a contract means to end the contract. Contract may be terminated 
      under the following circumstances:

      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.
      By agreement: The parties to the contract may freely agree to end the contract 
      if both consent to end the contract.
      By 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.
      By operation of the law: The contract may be terminated by law if it is illegal, 
      if one party becomes bankrupt, insane or dies.
      By frustration: A contract can be put to an end when a condition set in hinders 
      one of the parties from performing his/her contractual obligations.
      For convenience: Where the contract allows a party to terminate the contract 
      at any time by providing notice to the other party for example employment 
      contract.
      Due to a breach: Where one party has not complied with an essential contract 
      condition, the other party may decide to terminate the contract and seek 
      compensation for damages.
      By lapse of time: If the offeror fails to perform and the offeree fails to take 
      action within this specified period, then the latter cannot seek remedy through 
      law. It discharges the contract due to the lapse of time. For example, Ngabo 
      takes a loan from Kamikazi and agrees to pay instalments every month for the 
      next three years. However, he does not pay even a single instalment. Kamikazi 
      calls him a few times but then gets busy and takes no action. Four years later, 
      she approaches the court to help her recover her money. However, the court 
      rejects her suit ,since she has crossed the time-limit of three years to recover 

      her debts.

      Application Activity 2.5
      1) Read the following paragraph and answer the questions that follow:
       
      Musoni started a business selling general merchandise in his 

      community. He is renting the place where his business operates. He 
      buys his goods from a nearby town through a fellow businessperson. 
      He says he trusts his friend, so they never write down anything when 
      sending for goods but just gives him the money. He always sells 
      goods to his customers on credit but rarely make any record of such 
      transactions. Recently, after some advice from a friend, he contracted 
      a construction company to build for him a two-roomed building from 
      where he will shift his shop.
       
      a) Mention some of the mistakes Musoni is doing in his business 

           activities?
      b) What are the likely consequences of Musoni’s actions mentioned 
           above?
      c) What advice would you give to Musoni to avoid the consequences 
           above and why?
      d) What may cause Musoni to terminate the contract with the 
           construction company?
      2)Kizito offered 10,000Frw for the return of his lost dog, but then he 
      refused to pay because he thought the person who brought the dog 
      back had stolen it.

      Was there a valid contract in the scenario above?


      Do you think Kizito is right? Give reasons to support your answer.


      What advice would you give to the person who brought the dog  back? 

      Skills lab 2

       With reference to the knowledge of Business contracts, design contract                             
      templates  to be used in the school business club when dealing with; a) 

      suppliers. b) Customers,  c.) Employees of the club,  d.) Club members.

       End of unit 2 Assessment
       1) Read the case study below and answer the questions that follow:
       
      Shine Business club

       Shine business club wanted 3crates of soda which they wanted to sell 
      to their school that was organizing a visiting day. Chantal an active 
      member of the club having been close to Bizimungu an entrepreneur 
      dealing in retail business convinced the club to deal with him. The 
      club paid him and agreed he would deliver the sodas to the club after 
      three days but unfortunately after the agreed time, he didn’t deliver 
      the sodas as expected. When the club contacted him for the sodas, he 
      denied to have entered into any dealing with them that if he did, he 
      would be having at least a formal document to prove that. The club 
      reported the matter to the school administration, but it couldn’t help 
      them since it was not notified of that dealing.
      a) What are some of the essential elements of a valid contract 
      observed in the above case study?
      b) Was there a valid contract in the above case study? Support your 
            answer
      c) What advice do you give to shine business club?
      d) How would you approach the situation or the above problem if it 
           was your business club?

      2) Analyze the example below and answer the questions that follow:

       
      Nkusi and Mukarutesi are capable adults. Nkusi is in the need for a 

      new car. it is on a budget, so he scans the classified advertisements 
      and finds Mukarutesi, who is selling an old Toyota Carina for 
      2,000,000Frw. Nkusi calls Mukarutesi and offers 1,800,000Frw. 
      Mukarutesi accepts Nkusi’s offer and they decide to meet. At the 
      meeting, Nkusi hands over 1,800,000Frw and Mukarutesi hands 

      over the keys for the Toyota Carina.

       a) Is there a valid contract in the above example?
       b) Referring to the elements of a valid contract, support your 
          response;
       c) Which form of business contract would you advise Nkusi to sign 
      with Mukarutesi?
       d) What do you think may lead the contract in the example above to 

      be terminated?

      3) Read the following passage and answer the questions that follow.
       Ntwali started a business selling general merchandise in his community. 
      He is renting the place where his business operates. Ntwali paid his 
      property owner three months’ rent in advance but never asked for 
      receipt. After two months, his property owner says he wants the rent for 
      the two months. Ntwali is frustrated and tries to remind the property 
      owner that he paid his rent for three months. The property owner denies 
      and asks Ntwali for proof of the payment which he does not have. Ntwali 
      is stuck, does not know what to do while the property owner threatens 

      to evict him if he does not pay his rent.

       a) What is the cause of the conflict in the example above?
       b) Advise Ntwali on how he can resolve the conflict with the property 
            owner
       c) What are the disadvantages of the form of contract between Ntwali 
      and the property owner?
       d) Help Ntwali design a written contract that he can sign with his 

      property owner to avoid such conflicts again.

    • UNIT 3: TAXES IN BUSINESS

      Key unit competence: To be able to analyze the role of tax towards economic 

      development of the country and pay taxes.

      Introductory activity: A case study

      Why Do You Have to Pay Taxes 
      Every year around, before and after June 15, everybody especially business 
      people will be discussing about tax changes in the national budget. This is 
      because tax reforms and new taxes introduced are announced on that day. 
      However, have you ever wondered why you and businesses need to pay taxes?

       
      In Rwanda, there are arms of the government (ruling bodies) from the 
      village, sector, district, provincial and national levels. These bodies comprise: 
      Legislature (who make laws), Executives (who enforce laws) and Judiciary 
      (who exercise laws). The salaries that public servants receive to do their jobs 
      come from taxes. Paying taxes is considered a civic duty, although doing so is 

      also a requirement of the law.

      Taxes take many forms too. When you work at a job to make money, you pay 
      income taxes. Depending on how much money you earn, a certain percentage 
      (part) of the money you make is withheld (kept out of your paycheck and 

      sent to the government).

       When you buy things at a store, you also usually pay sales tax, which is a 
      percentage of the cost of the item charged by the store. If you own property, 

      you also pay property taxes on the value of your property.

      Paying your taxes is considered a civic duty, although doing so is also a 
      requirement of the law. If you do not pay your taxes, the government agency 
      that oversees taxes — the Rwanda Revenue Authority or RRA - will require 

      you to pay your taxes or else face penalties, such as fines or going to jail.

      The money you pay in taxes goes to many places. In addition to paying the 
      salaries of government workers, your tax also help to support common 

      resources, such as police and firefighters.

      Tax money helps to ensure the roads you travel on are safe and well
      maintained. Taxes fund public libraries and parks. Taxes are also used to fund 
      many types of government programs that help the poor and less fortunate, 

      as well as many schools!

      Each year as the “tax day” rolls in, adults of all ages and businesses must 
      report their income to the RRA, using special tax forms. There are  many laws 
      that set forth complicated rules about how much tax is owed and what kinds 
      of special expenses can be used (“written off”) to lower the amount of taxes 

      you need to pay.

       For the average worker, tax money has been withheld from paychecks 
      throughout the year. On “tax day,” each worker reports his or her income and 

      expenses to the RRA.

      Employers also report to the RRA how much they paid each worker. The RRA 
      compares all these numbers to make sure that each person pays the correct 

      amount of taxes.

       If you have not had enough tax money withheld from your checks throughout 
      the year to cover the amount of tax you owe, you will have to send more 
      money (“pay in”) to the government. If, however, too much tax money was 
      withheld from your paychecks, you will receive a check (get a “refund”) from 

      the government.

      From the passage answer the following questions:
      What are the major changes expected by people especially business people 
      on June 15, every year?

      What makes the business people so anxious to know the changes mentioned 

      above in a)?

       Why do you think it is important for businesses to pay taxes to the government?
       How do the following benefit from taxes?
       i) Entrepreneur.
       ii) Government.
       iii) Society. 
      a) Identify and briefly explain at least two types of taxes paid in Rwanda?
      b) What happens to businesses or people who do not pay taxes?

      c) What is the difference between tax and taxation?

      3.1. Tax and business tax


      Activity 3.1
       1. Explain the meaning of the following terms used in taxation:
       a) Tax                                              b) Business tax
       2. In your community, you have probably heard people and business 
      people complaining about the taxes they pay or charged to different 
      or similar items. Identify any 5 things you have heard normally 
      people complain about.
       3. If you were the one determining or imposing taxes to people and 

      businesses, mention any five things you would put into consideration.

      3.1.1. Meaning of taxation concepts
       Tax is a fee without direct exchange requested to the members of the community 
      by the State according to the law, to financially support the execution of the 
      government tasks.

      Business tax
      refers to compulsory and non-refundable payments made by 
      the business to the government or local authority to raise revenue to finance  
      public expenditures. 

      Taxation
      is a system of raising money or revenue by the government from 
      individuals/businesses and companies by law through taxes.

      Taxation is a system/practice of government collecting money from its citizens 

      to pay for public services.

      Tax avoidance
      is a situation where a business person does not pay tax because 
      s/he has avoided the product or activity on which the tax is imposed. It is the 
      taxpayer’s exploitation of loopholes in the tax system there by paying less tax 
      than what they are supposed to pay. 

      Example of Tax Avoidance:

       • Taking legitimate tax deductions to maximize business expenses and 
      thus lower your business tax bill.
      Tax evasion is the illegal practice of not paying taxes by either not reporting 
      income, reporting expenses not legally allowed, or by not paying taxes owed. In 
      businesses, tax evasion can occur in connection with income taxes, employment 
      taxes, sales, etc.
       
      Examples of practices considered as tax evasion:
       • It is considered tax evasion if you knowingly fail to report income.
       • Under-reporting income (claiming less income than you actually received 
      from a specific source).
       • Providing false information to the RRA about business income or expenses, etc.

      3.1.2 Characteristics or principles of a good taxation system

       A good taxation system can contribute a lot to the economic development of a 
      country and its national treasury. Equitable taxation system bears a significant 
      role in bringing harmony in the lifestyle of the population of the country. A good 
      tax system should consist of taxes which conform to the canons of taxation. The 

      canons or principles of taxation are explained as follows:


      1) Convenience:
      Places, periods and seasons in which the tax dues are 
      collected should be convenient to the taxpayer.  For example, the convenient 
      time to a trader is when s/he has made a profit. For a farmer, is when s/she 
      has sold his/her products.
      2) Simplicity: The type of tax and the method of assessment and collection 
      must be understandable by both the taxpayer and tax collectors. 
      Complicated taxes may lead to disputes, delays and high costs of collection 
      in terms of time and resources.
       3) Certainty: The taxpayer must know the nature, base and amount of tax 
      without doubt. Unpredictable taxes discourage investment and reduce 
      work effort. Simply the tax should not be arbitrary.
       4) Economy: The cost of collection and administration of tax must be much 
      lower than the tax collected
      5) Elasticity: A tax should change directly with a change in the tax base. If the 
      tax base increases, the tax charged on the tax base should also increase.
      6) Productivity: The fiscal authorities should be able to predict and forecast 
      accurately the revenue a particular tax would generate and at what rate it 
      would flow in.
      7) Equity: Tax assessment should be in such a way that taxpayers bear a 
      proportionately equal burden. I.e. people who earn more income should 
      be taxed more than those who earn less income.
       8) Diversity: This canon requires that there should be a number of taxes of 
      different varieties so that every class of citizen may be called upon to pay 

      something towards the national priorities


       
      Application Activity 3.1

       1. Why is it important to have principles of taxation?
       2. Referring to the principles (characteristics) of a good taxation system 
      you know, briefly explain why each is important to the taxpayer and 
      tax authority (RRA).
       3. With examples, differentiate
       a) Tax and Taxation
       b) Tax avoidance and Tax evasion
       4. Do you think tax evasion is good? Give reasons to support your  response

      3.2. Importance of paying taxes

      Sources: http://www.kigalicity.gov.rw 
      Figure 3.2 Taxes help the government to build infrastructures

      Activity 3.2

       1. With examples from your community or Rwandan community at 
      large, why do you think people and business enterprises need to pay 
      taxes to the government?
       2. As an entrepreneur to be or referring to the activities of entrepreneurs 
      in your community, how do you think businesses or entrepreneurs 
      benefit from paying taxes?
       3. In general, how does your society benefit from paying taxes? Give 
      examples to support your views.

       

      3.2.1. Importance of paying taxes to an entrepreneur


       • Paying taxes by the entrepreneur helps the business activity to continue, 
          as it does not face penalties and associated costs from the RRA for non
       payment.
       • When an entrepreneur pays taxes, it improves his/her reputation or 
         public image which may result in increased customers and better services 
       from the government.
       • To avoid inconveniences of closure of the business and its associated 
          costs: when entrepreneur fails to pay assessed taxes, his/her business is 
      subject to penalty even closure to some cases.
      • Business needs certain infrastructures to operate successfully such as 
         roads to move raw materials, finished goods, workers; security for their 
         enterprises, among others, and all these are provided by the government 
       from taxes. 
      • Paying taxes means contributing money to government agencies or 
       departments such as Development Bank of Rwanda (BRD), Business 
      Development Fund (BDF), which support entrepreneurs to operate 

      business activities through soft loans and other financial support. 


      3.2.2. Importance of paying taxes to the government

       • Source of government revenue: taxes are the main source of government 
      revenue to finance its public expenditure. So taxes enable the government 
      to pay its workers, construct roads, maintain security, provide health care, 
      education among others.
       • Taxes benefit the Rwandan government to meet its objectives and goals 
      such constructing affordable houses to the citizens which helps improve 
      the standards of living
       • Taxes help the government to finance its policies especially on poverty 
      alleviation through programs such as “GIRINKA”, “VUP”, “UBUDEHE” 
      among others.
       • Taxes enable the government to regulate the prices of goods and services 
      in the country hence ensuring a low cost of living and maintaining the 
      standards of living of the citizens.
       • Taxes enable the government to maintain a balance between the poor 
      and rich. The government uses the taxes from business people to provide 
      services needed by the poor, which otherwise the rich could not provide.
       • Taxes enable the government to promote its policy industrialization 
      through reducing products from other countries that would otherwise 
      outcompete the home industries. 
      • Taxes enable the government to ensure that the citizens have enough 
      products. This can be through taxes charged to reduce products moving 
      out of the country or removing taxes on goods needed in the country. This 

      helps maintain a high standard of living.


       
      3.2.3. Importance of paying taxes to Society
       • There are reduced rates of poverty among the community due to a 
      significantly equal distribution of income through various activities and 
      projects set by the government.
       • Improved wellbeing among the vulnerable and elderly as they benefit 
      from the different government programs financed through taxes.
       • Reduced infant mortality rates and increased life expectancy due to 
      improved access to health facilities and services.
       • Increase in the percentage of the population that completes secondary 
      and TVET education, reducing the literacy levels, improving on the 
      peoples’ skills through programs such as 12YBE.
       • Increased community/social solidarity, general happiness, life satisfaction, 
       and a significant more trust among the community members and for 
      public institutions.
       • Taxes are charged on some products to discourage their production 
      and usage hence controlling over-exploitation of resources as well as 

      protecting the environment which is vital for the existence of the society.


       
      Application Activity 3.2

       1. By giving specific examples from your community, how does your 
      society benefit from taxes?
       2. What do you think would happen in the country if taxes were not paid?

      3.3. Calculation of taxes


      Activity 3.3

       1. Do you think it is important for an entrepreneur to know how to 
      compute the amount of tax he/she is supposed to pay? Give reasons.
       2. What do you think the term “Pay-As You-Earn (PAYE) tax means”? 

      And how is it calculated?

      There is a variety of taxes that a business has to pay such as corporate income 
      tax, trading license tax, professional income tax or PAYE (Pay-As-You-Earn), 
      rental income tax, fixed asset tax, Value Added Tax (VAT), Sumptuary tax, etc. 
      but here, an emphasis is made on:
       
      1. Pay- As- You Earn (PAYE) and

       2. Value Added Tax (VAT
       
      3.3.1. Pay-As -You-Earn (PAYE) tax or professional income tax
       The tax law requires that when an employer makes available employment 
      income to an employee the employer must withhold, declare, and pay the PAYE 
      tax to the Rwanda Revenue Authority within 15 days following the end of the 
      month for which the tax was due.

      PAYE: is composed of Wages, salaries, leave pay, sick pay, medical allowances, 

      pension payment etc. Pay-As-You-Earn tax is computed as follows:


      Example:

      The following relate to monthly salaries of Kanyarwanda enterprise employees 

      for year 2018.

      a) Rukundo earns 450,000Frw
       b) Karinganire earns 89,000Frw
       c) Keza earns 28500Fw

       d) Buzima earns   12,5000Frw 

      Required:
       Calculate the total PAYE for above employees that Kanyarwanda enterprise 

      pays to RRA every month.

      Solution:

       a) Rukundo : 

       Total TAX for Rukundo = 14000+105000= 119,000Frw

       b) Karinganire:

      Total tax for Karinganire is 11,800Frw
       c) Since Keza earns less than 30000Frw she does not pay PAYE. Her total tax =0 

      (28500*0)

      d) Buzima:

      Total tax for Buzima =14000+7500=21,500Frw

      Total PAYE  for Kanyarwanda  enterprise every month 

                    =   (119,000+11,800+21,500)Frw= 152,300Frw
       Note:
       Exemption for PAYE is that every person who earns income less than 30000 
      does not pay PAYE to RRA.

      The “casual laborer” means an employee or worker who performs unskilled 

      labour activities, who does not use machinery or equipment requiring special 
      skills, and engaged by an employer for an aggregate period not exceeding thirty 

      (30) days during the tax period.

      3.3.2. Value Added Tax (VAT)


      Value Added Tax was introduced in Rwanda in 2001. VAT is a tax on the added 
      value achieved by a firm. This is the difference between the buying price (of 

      raw materials) and the selling price of the product in whatever forms it is sold. 

      Value added = F.P – I.C where F.P is final product, IC is intermediate costs

      Tax rate 
      The VAT rate is applied to duty-free goods. Several rates can be applied 

      depending on the nature of products. The standard rate is usually 18%

       Example 1:
       UTEXRWA industry bought cotton from a local farmer worth 1200, 000Frw to 
      use in production of blankets;170 blankets were manufactured and sold to a 
      wholesaler at a cost of 4,000,000Frw who later supplied it to LEMIGO hotel 
      at a value of 8,000,000Frw VAT included. Calculate the value of VAT paid on 

      blankets.

      Possible solution 
      Step 1 VAT paid by local farmer:
       VAT =1,200,000Frw*18% = 216,000Frw
       Step 2 VAT paid by wholesaler:
       VAT = FP -IC where FP is final product and IC is intermediate cost
       Value added =4,000,000Frw-1,200,000=2,800,000Frw
       VAT paid by wholesaler =2,800, 000Frw*18%= 504,000Frw
       Step 3 VAT paid by LEMIGO hotel:
       VAT paid by LEMIGO hotel= 8,000,000-4,000,000Frw= 
      (4,000,000Frw*18%)=720,000Frw
       
      Therefore, total VAT =216,000+504,000+720,000 =1440, 000Frw

       Alternative:
       VAT is calculated on sales.
       VAT =sales *18%
       Which is equal 8,000,000Frw*18%=1,440,000Frw
       
      Example 2:

       A students’ business club has sold goods to XY enterprise at 100,000 Frw VAT 
      excluded.

      Calculate:

      a) VAT received 

      b) The price VAT included

      Solution:



      OR

      The price VAT excluded= Price VAT included-VAT paid

                      = 1,000,000Frw- 152,542.37Frw = 847,457.63Frw

      Exemptions on Value Added Tax
       The following goods and services shall be exempted from value added tax:
       1. Services of supplying clean water and ensuring environment treatment 
      for nonprofit making purposes with the exception of sewage pump- out 
      services; 
      2. Goods and services for health-related purposes: (health and medical 
      services, equipment designed for persons with disabilities, goods and drugs 
      appearing on the list made by the Minister in charge of health and approved 
      by the Minister in charge of taxes. 
      3. Educational materials, services and equipment; books, newspapers and 
      journals
       4. Transportation services by licensed persons: 
      5. Lending, lease and sale: (sale or lease of land, sale of a whole or part of a 
      building for residential use, renting or grant of the right to occupy a house 
      used as a place of residence of one person and his/her family) etc.
       6. Financial and insurance services: 
      7. Precious metals: sale of gold in bullion form to the National Bank of Rwanda; 
      8. Any goods or services in connection with burial or cremation of a body 
      provided by an Order of the Minister in charge of finance; 
      9. Energy supply equipment appearing on the list made by the Minister in 
      charge of energy and approved by the Minister in charge of taxes; 
      10. Trade union subscriptions; 
      11. Leasing of exempted goods;
      12. All agricultural and livestock products, except processed ones. However, 
      milk processed, excluding powder milk and milk derived products, is 
      exempted from this tax; 
      13.Agricultural inputs and other agricultural and livestock materials and 
      equipment appearing on the list made by the Minister in charge of agriculture 
      and livestock and approved by the Minister in charge of taxes.
      14. Gaming activities taxable under the Law establishing tax on gaming 
             activities;
       15. Personal effects of Rwandan diplomats returning from foreign postings, 
      Rwandan refugees and returnees entitled to tax relief under customs laws. 
      16. Goods and services meant for Special Economic Zones imported by a zone 
      user holding this legal status; 
      17. Mobile telephones and SIM cards; 
      18. Information, communication and technology equipment appearing on the 
      list made by the Minister in charge of information and communication 

      technology and approved by the Minister in charge of taxes.

      Application Activity 3.3

       1. A students’ business club (SBC) in one of the TTCs has the following 
      regular employees. Their salaries are in accordance with their 

      appointment as follows:


       Calculate the PAYE tax on each  individual employee
       2. The PAYE tax to be withheld and paid by the business club to RRA2. 
      Using the information available on the below EBM issued receipt, 
      compute the following:
       a) Price VAT excluded

       b) VAT to prove the amount appearing  on the receipt.

      3.4. Penalties of not paying tax
       Activity 3.4

       1. Identify instances through which a taxpayer may undergo various 
      penalties.
       2. What do you think may happen to an entrepreneur if he/she does not 
      comply with the tax obligations?
       
      The penalties of not paying tax include:

       • Fines and interest: A taxpayer who fails to comply with the provisions 
      of law determining and establishing a tax shall be liable to a fine. The 
      fines will vary according to types of taxes. 
       Example of Penalties and Interest on not paying PAYE
       A taxpayer who fails to pay tax within the due date is required to pay interest 
      on the amount of tax. Interest is calculated on a monthly basis at the inter-bank 
      offered rate of the National Bank of Rwanda plus 2 (two) percentage points. For 
      example, if the inter-bank rate is 9%, interest is imposed at 11% annually.
       • Imprisonment: A tax fraud’s punishment in Rwanda, is the jail for a 
      period between six (6) months and two (2) years; even the Minister’s 
      order determines an award given to any person who denounces a 
      taxpayer who engages in that act. Failure to pay tax withheld: this 
      undertakes 100% penalty and 3months to 2years in jail.
       • Closure of the business for 30 days;
       • Cancellation or withdrawal of registration certificate;
       • Banned from public tenders;

       • Exposure in the media


       
      Application Activity 3.4
       1. Discuss why RRA charges fines and penalties?
       2. What do you think will happen if taxpayers don’t pay both taxes 

      assessed and fines/penalties?


       
      Skills lab 3
       1. Justify the following statements with concrete examples:
      • “Taxes are more of a benefit than a cost to an entrepreneur” 

      • “ Tax evasion is a shortcut to business growth”

       2. A business club at one of the TTCs has 3 regular employees namely 
      KALISA, KALIZA and BERWA with monthly salaries of 35,000Frw, 
      40,000Frw and 20,000Frw respectively. On top of that the business 
      made sales of 300,000Frw VAT exclusive, and the input VAT is 
      34,000Frw. 
      a) Calculate the total amount of tax that the business club has to pay 
      to RRA

       b) Advise the above business on how the above taxes would be paid.


       
      End of unit 3 Assessment
       1. It is said that “tax is the free money to central or local authorities from 
      taxpayers” do you agree with this statement. Justify your answer 
      2. Describe any four characteristics of a good taxation system.
       3. How are taxes used by government to:
       a) Support Entrepreneurs
       b) Support the community
       4. Fill in the missing gaps, with the most appropriate term:
       a) ………….  punishment is the jail for a period between six (6) months 
      and two (2) years; even the Minister’s order determines an award 
      given to any person who denounces a taxpayer who engages in that 
      act.
       b) …………. is the compulsory and non-refundable payment made by 
      the business to the Government or Local Authority so as to raise 
      their revenues.
       c) …………. is the one that is exempted from VAT.
       d) …………. is one of the taxes vested to the local government (Districts).
       e) The degree to which the taxpayers meet their tax obligations 
      as set out in the appropriate legal and regulatory provisions 
      is……………………….
       f) The………………. means an employee or worker who performs 
      unskilled labour activities, who does not use machinery or 
      equipment requiring special skills, and engaged by an employer for 
      an aggregate period not exceeding thirty (30) days during the tax 

      period.

    • UNIT 4: TECHNOLOGY IN BUSINESSES

      Key Unit Competence: To be aware of how new technologies can affect 

      business activities. 

      Introductory activity

      Analyze the Photos below and answer the questions that follow.



      a) Looking at picture 1,2,3and 4, explain the advantages and disadvantages 
      of using the above techniques in the production of goods and services.

      b) Which production technique is suitable for your school business club?  

      Give reasons to justify your answer?

      4.1. Types of technology in business

      Activity 4.1
       1.a) Suppose you wish to start up a feasible business in your community. 
      Which type of technology will you use in your business and why?
       b) How would you define the term technology as used in business?
       2. Distinguish intermediate technology from capital intensive and labor

      intensive technologies.

       4.1.1. Meaning of technology 
      Technology refers to methods, systems, and devices which are the result of 
      scientific knowledge being used for practical purposes.  

      Technology can also be defined as a human knowledge which involves the use 

      of tools, materials, and systems to perform an activity.

      Many businesses are using technology to stay competitive, they create new 

      products and services using technology, and they also use technology to deliver 

      those products and services to their customers on time and within budget.

      Technology in business allows organizations to improve both the performance 
      and overall effectiveness of products, systems and services, which, in turn, 
      enables businesses to expand quickly and efficiently. Another role of technology 

      in business is to provide security to a business.

       Examples of some tools, systems or devices used by technology in business.
       • Desktop Computers and Laptops.
       • Software and Productivity Tools. 
      • Networking of Computers and Printers. 

      • Telephone and Voice Mail Systems.

       In Rwanda there are different technologies used to improve the services such as
       • Tap and Go: This is One of the biggest technologies that has changed 
      the face of public transport. It’s a smart transport system that enables 
      passengers to board public buses without using hard cash but rather 
      smart cards. 
      • Zipline’s drone technology: this is a global race for commercial drone 
      deliveries of small packages.  In Rwanda it is used to transport blood to 
      remote areas where accesses to roads are impassable.
      • Irembo services: The burden of walking long distances to seek some 
      government services has consistently been removed. There are large 
      numbers of people who do not have to necessarily travel to apply for 
      a marriage certificate, land transfer, drivers’ related services, birth 
      certificate, criminal record clearance certificate, and other services. 
      These few examples show how technology in business comes to enable 
      businesses to expand quickly and efficiently.

       It is important to note that both technologies (Tap and Go & Irembo) aligned 

      with our country’s policy of promoting our economic growth through CASHLESS 

      transactions.

       4.1.2. Types of technology
       1. Intermediate technology is one that fits into the level of development of 
      the host country. It is neither too simple nor advanced. For instance, the 

      use of ox-ploughs, solar cookers etc.

       2. Capital-intensive technology is the production method/ technique where 
      more machines are used than labor. It is also called labor saving technology 
      because we save more labor to use machines. It is common in industries, 

      factories, mining etc.

      Advantages of Capital -Intensive Technology 
      • Commodities of high quality are produced, which compete favorably 
      both in the domestic and international market. 
      • There is mass production. With the use of machines more output is 
      produced which stimulates the rate of economic growth in a country.
       • Exploitation of idle resources is encouraged since it is efficient which 
      increases the production of more goods and services.
       • Promotes the development of skills. Using machines requires highly 
      skilled labor therefore encourages people to do research innovations 
      and inventions.
       • Reduces labor unrest for instance demonstrations and strikes. This 
      increases production of more goods and services therefore it is easy to 
      control machines than labor.
       • It saves time and increases labor productivity because a worker who 
      uses a machine will do his or her work in the shortest period and are less 
      exhausted than using manual labor to perform a given task.
       • Promotes specialization this leads to production of excess (surplus) at 
      a low cost. The surplus is exported yielding foreign exchange earnings.
       • High profits for the entrepreneur since it minimizes costs in the form 
      of wages bills and other fringe benefits.
       • It promotes industrialization. When capital intensive technology 
      is adopted, many industries will come up and development of other 
      infrastructures such as roads, hence promoting the tertiary sector.
       • It strengthens good relationships between countries where machines 
      are exported or imported, hence fostering trade.

       Disadvantages of capital-intensive technology.
       • It is very expensive to buy machines. Most developing countries 
      depend on foreign aid and loans to finance their budgets, so if they adopt 
      the use of machines, they will have too much debts.

      It leads to technological unemployment since more machines are 
      used than labor in the production process therefore most labor will be 
      unemployed, which is an economic problem.

      It widens the income inequality gap where a few skilled labor will be 
      engaged in the production process to run machines and the unskilled 
      will remain unemployed hence widening the gap.
       
      High costs as a result of maintenance, repairs when broken down and 
      depreciation. therefore, it is expensive because it requires a lot of foreign 
      exchange to import spare parts and other machines. 

      It encourages rural- urban migration since most machines are used  
      in urban centres this leads to development of shanty towns or slums in 
      cities.

       • It is not helpful in the eradication
      of poverty since there are very few 
      people employed in the production of goods and services.

       • It is inappropriate technique in some activities that require human
       
      judgement, such as picking flowers and tea, sorting printed papers. In 
      this instance machines may not be applicable at all stages of production. 
      etc.
       3. Labor Intensive Technology is the production method /technique 
      where more labor is used than machines. It is also called capital saving 
      technology meaning we save capital and use more labor. It’s commonly 

      used in hotels, restaurants etc.

      Advantages of labor-intensive Technology
       • It generates more employment opportunities for nationals due to 
      investments in various sectors. This leads to an even distribution of 
      income in the country since they are many people involved.
       • It reduces costs of production since in most countries labour is cheap 
      and abundant.
       • It helps to reduce rural-urban migration (RUM) since it can easily 
      be established in the rural areas where labor is abundant. This leads to 
      rural transformation hence reduction in RUM, poverty is also reduced and 
      crime rate levels.
       • It increases effective demand, many people are employed which 
      increases their chances of investing in an economy.
       • Monopoly control, it minimizes monopoly tendencies in the industry 
      since the economic power cannot easily be concentrated in a few hands.
       • Labor is more mobile than capital technology. It’s easy to move 
      workers from one town to another compared to moving machinery or 
      capital assets.
       • It does not require a lot of skills and is suitable to work in industries 
      that require human judgement. For instance, picking flowers, picking tea 
      leaves.
       • Labor can provide feedback and craftsmanship in the production 
      process, this provides ideas for continuous improvement hence workers 
      can also adapt to introduce innovative ideas in hand crafts. 
      • It encourages decentralization as it allows industries to be established 
      in various parts of the country. That is to say, the rural areas and small 
      towns. 
      • It minimizes the dependency on technology which might be complex 
      and very expensive, hence increasing self-reliance.
       • It is flexible. Unlike machinery, it can be used to meet the changing levels 
      of consumer’s demands.
       • It helps to increase the standard of living. When labor intensive 
      techniques are adopted, many people in families will get jobs and earn 
      income hence increasing their standards of living.
       • It encourages infant industries, which act as training grounds for man 
      power and this helps in the acquisition of skills. These also play a vital 
      role in the economic development of a country.
       • Personal touch, people can interact properly with customers and most 

      services cannot be done with the use of machines for instance hairdressing.

       Disadvantages of labor-intensive technology
       • It is relatively expensive in the long-term when compared to 
      machinery
      , because it is associated with other labor benefits. For 
      example, housing, insurance, medical bills, trainings,... which increases 
      cost of production.
       • Inferior quality products are produced, when labor intensive 
      techniques are adopted, many people produce products without carrying 
      research thus poor-quality products.
       • Limited hours of work. Machines can work day and night hence produce 
      high quantity output. Economic Growth remains low in a country with the 
      use labor intensive techniques of production.
       • It requires a lot of supervision which leads to under utilization of 
      resources and increased costs.
       • Lack of uniformity in production, with the use of labor- intensive 
      techniques of production there are most likely to produce products that 
      are not uniform which makes them not competitive to the market.
       • Specialization is not promoted in the production process which may 
      slow down the production process.
       • Managerial complexity arises. It is not easy to manage people since 
      they have individual differences especially when a business grows this 
      may further lead to bureaucracy in decision making.
       • It is difficult to get skilled manpower it is easy to get machines than 
      skilled labor in a given field and this hampers the production of goods and 

      services. Etc.

       Application Activity 4.1
       1. Justify why the government of Rwanda is encouraging businesses to 
      use capital intensive technology.
       2. Refer to your school and describe how technology has helped in the 

      efficiency of the school for both students and the school itself.

      4.2. Characteristics/ features of appropriate technology
       Activity 4.2

       Referring to the types of technology you mentioned above, which type 
      of technology, is appropriate in;
       a) Northern province
       b) Eastern province
       c) Southern province

       d) Western province

       Developing countries face challenges of how to utilize resources fully. The 
      dilemma is that labor is so abundant and capital is scarce, therefore they have 
      to choose which technology is appropriate. The following are some of the 
      characteristics of appropriate technology.
       
      1. It should be simple to use without requiring special skills.

       2. It should also be effective in order to increase productivity in the country for 
      economic growth to be attained. 
      3. It should also be readily available not complex to get.
       4. It should be durable and meets the needs of the community.
       5. It should also be cost effective and not very expensive.  
      6. It should be able to reduce income imbalances through employment potential. 
      7. It should produce for an identified market to prevent resources being wasted.
       8. It should be able to produce efficiently the right quality and quantities of the 
      products needed by the consumers. 
      9. It should also minimize the use of imported inputs like labor, raw-materials 
      and some capital equipment. 

      10. It should be flexible/ easy to use and require locally available resources.

       Application Activity 4.2
       1. Try to find an example of simple and more complicated technique of 

      production from each of the following areas of human activity.

      2. If you were to start a business in any of the above human activity 
      areas, which technology will you likely choose? A simple technology 
      or a more complex technology?
      3. What could be the reasons guiding your choice?
      4. Now that you have identified possible businesses from these areas 
      of activities, which technology do you think will be more effective 
      in order to improve the productivity of the specific businesses or to 

      improve your qualities?

      4.3. Importance of technology in business

      Activity 4.3

       Debate “The use of technology in business has done more good than 
      harm”
      Technology is an essential tool in the day today business operations; no matter 
      the size of the business, technology has both tangible and intangible benefits. 
      These include the following: 

      1. The use of ICT through internet helps entrepreneurs to carry out market 

      research. This helps it to grow and acquire more opportunities across the 
      globe, hence widening the market by use of E-commerce sites like eBay, 

      Amazon, Jumia, etc.

      2. Technology helps to increase productivity of the labor through collaborating 
      with each other hence speeding up the work.

      3. It helps to keep track of records for instance with the use of the accounting 

      software.

      4. Technology can be used for security purposes thus reducing threats of losing 

      financial data and vandalism to unknown persons. For example, by using 
      passwords on computers.

      5. Technology improves the efficiency of businesses. The use of mobile phones, 

      printers and  E-commerce, eases the work in business.

      6. ICT enables easy access to funds through the use of ATM cards, such as debit 

      cards, credit cards, and electronic money transfers etc.

      7. It also enables better decision making as entrepreneurs can get information 

      at the right time.

      8. Technology helps businesses grow with the use of artificial intelligence. This 

      gives the business a competitive edge over other businesses. 

      9. Advanced technology helps to produce better quality products that may fetch 

      a lot of money for the enterprise thus increasing customer satisfaction.

      10. Technology helps to perform complicated tasks with ease and faster. For 

      example, use of computerized accounting software like quick books, sage 
      and pastel helps in doing accounting with ease.

      11. ICT helps firms to monitor the buying habits of their customers and be able 

      to stock the right products in the right quantities at the right time. Speed 
      Governors help to keep track drivers from over speeding hence reducing the 
      number of accidents.

      12. Computers can perform a lot of work in the shortest time possible which 

      would require a lot of time if done manually. Examples include preparation 
      of control accounts, financial statements and preparing payrolls etc.

      13. Technology also helps to cut down costs. For example, the costs incurred 

      while transporting and delivery of goods can all be done using computers 

      and the internet.

       APPLICATION ACTIVITY 4.3
       Carry out research and identify the various technologies that are being 
      used in businesses be it in your school or other business enterprises. 
      Suggest their importance in terms of communication, management, 

      accounting and transport.

      4.4. Technological tools used in business

      Activity 4.4

      Observe the pictures below and explain the importance or uses of each 

       machine, equipment or technology as used in business.



      From the above pictures, you realize that businesses use various technological 
      tools, depending on the type of business, and department. The table below 

      shows the common technology tools used in business departments.

       Importance of the technological tools in figure 4.4 above as used in 
      business

       Electronic mail:  It is one of the ways businesses can use to reach its clients.  
      Communication is fast and convenient because you can send messages and 
      they are received between the customers and the business.
       
      Automated Teller Machines
      : These machines help customers to deposit, 
      withdraw at any time. This reduces the queues people would make to get their 
      money. They are also located in different places which eases access to cash

      Cash less public systems
      : (Tap and go) These help businesses to increase 
      customer satisfaction. They are also secure and convenient which minimizes 

      fraud cases.

      Electronic safes: These machines are used to keep money. These are assets to 
      the business because they are secure.

      Closed Circuit Television (CCTV):
      These are televisions that can be installed 
      in your business. They can help you monitor your business operations from 
      anywhere. They increase safety for the owner, employees and customers. If a 
      crime occurs, they can be used to provide evidence to catch the criminal. 

      Metal detectors:
      These are handheld detectors which are used to identify 
      metallic objects that may be considered dangerous. They also help provide 
      security.

      Bar codes:
      They are used to track and store information of goods. This 
      increases the efficiency of the business instead of the storekeeper entering the 
      information manually.

      Point of sale terminals:
      A POS solution provide a faster checkout process than 
      the cash registers. This helps people not to make long lines while paying for the 
      goods bought. Using this tool can increase efficiency and improves the image of 
      the business. 

      Application Activity 4.4

       1) Describe how new technologies affect business activities. 
      2) Explain the challenges of using such technologies in local and small
      scale businesses in Rwanda. 

      Skills lab 4

       Use available resources like the internet, textbooks, magazines, resource 
      persons among others to research, choose the appropriate technology 
      that would improve the performance (Quality, quantity and efficiency 
      of work) of the projects your business club is running or plan to run at 
      the college on each of the following business aspect:
       a. Business registration
       b. Production of Goods and services
       c. Packaging and branding
       d. Marketing
      e. Selling of the products and / services.
       And explain why you have chosen that particular type of technology 
      and how you will acquire it.
       
      End of unit 4 Assessment

       1) Case stud
      y
       Mugiraneza has a peanut butter making business. Last week she 
      announced the purchase of new equipment and modern technology that 
      would make a radical change in the production process. The investment 
      would make some employees lose their jobs. Mugiraneza explained to 
      them but there was no doubt, it was in the best interests of the company 
      in general.

      Employees were not consulted because it would slow down the process 

      and Mugiraneza felt that it was the best decision to make.

      In the long run, the modern technology and equipment should increase 

      the businesses’ competitiveness and produce quality products and in 
      large quantities. The working practices would obviously be changed, and 
      employees would have to learn new skills of using them. The employees 
      were promised to be trained, although it was not a guarantee to employ 
      all of them if they fail to adapt successfully.


      After the announcement, the employees were so furious and considered 

      taking industrial action. Hearing the rumors of a possibility to strike, 
      Mugiraneza admitted that the issue was not handled very well but would 
      not reconsider the decision.

      a) What factors may have made Mugiraneza decide to invest in modern 
      technology?
      b) Do you think the employees were right in taking industrial action? 
      Give reasons for your arguments.
      c) Analyze the factors that Mugiraneza might have taken into account 
      before acquiring the modern technology.
      d) Mugiraneza admitted that the issue was not well handled. In your 
      opinion, how should she have handled it?

       2. Peter produces flowers and sells them both in the local and 

      international markets. He plans to use e-commerce in his business.
       (i) Mention any 3 e-shops he can contact for advice.
       (ii) How can Peter find other e-shops to sell his products on the 
      international market?
       iii) Explain the merits and demerits of using e-commerce in a 
      business like that of Peter.
       (iii) Write a letter to Peter advising him on how to use e-commerce 
      for the success of his business.

      3. Many people believe that the key to better performance is good 

      management rather than the use of more technology. As an 
      entrepreneurship student teacher, critically assess this view.
       
      4. The Government of Rwanda is intensifying the campaign of starting 

      small and medium enterprises to boost made in Rwanda and to export 
      made in Rwanda products to the rest of the world. Entrepreneurs in 
      order to meet the international market standards and demand, they 
      prefer an investment in automatic and capital intensive technologies, 
      however this affects the numbers of labour force to be employed as 
      very few people with the right skills will be retained and many of the 
      rest with no skills to operate the machines are likely to lose jobs.

      Required
      : With your expert knowledge on technology, advise the 
      entrepreneurs, government and employees on how technology can 

      create a win - win situation for all?

    • UNIT 5:MONEY MANAGEMENT

       Key Unit competence: To be able to manage money responsibly and to keep 

      financial records.

      Introductory activity
      Case study:
      Elizabeth and Kabayiza are married with two children, aged three and five. 
      Kabayiza works full-time in manufacturing and Elizabeth works four days a 
      week as a nurse. When they got married, they were renting and maintained 
      two separate accounts as well as a joint account for bills. Now they own a 
      home and are paying off a mortgage and saving determinedly for the future 
      so that they can afford private education for their children by the time they 
      enter high school.

      Referring to the story above and your knowledge about entrepreneurship 

      skills learnt and competences developed before, answer the questions below.

      a. Why do Elizabeth and Kabayiza need money?

      b. What are the best ways of the couple to save money? 
      c. Why do they need to save money?
      d. Explain the moral lesson that you learn from the above case study

       5.1. Meaning of money, savings and saving goals
       Activity 5.1
       Using the knowledge acquired in O’level, explain the meaning of the 
      following terms as used in entrepreneurship:
       a) Money 
      b) Savings

      c) Saving goal

       A. Money 
      Money is anything that is generally accepted as a medium of exchange and 
      repayment of debts. 

      Money is one of the most important inventions of modern times. It has 

      undergone a long process of historical evolution. 


      Stages in the evolution of money


       1st Stage: Barter trade: Human beings passed through a stage when money 
      was not in use and goods and services were exchanged directly for goods 
      and services. Such exchange of goods or services for goods or services is 

      called Barter Exchange.

       2nd Stage: Commodity money: The inconveniences and drawbacks of 
      barter trade led to the gradual use of a medium of exchange. In the historical 
      study of money it is found that all sorts of commodities like seashells, pearls, 
      precious stones, tea, tobacco, cow, leather, cloth, salt, wine, etc. have been 

      used as a medium of exchange (i.e. money).

       3rd Stage: Metallic money: Inadequacy of commodity money led to the 
      evolution of metallic money (gold and silver). The problem of uniformity of 

      weight and purity of precious metals led to private and public coinage.

       4th Stage: Paper money: This process was finally taken over by the state 
      as one of its essential features and ultimately commodity money gave way 
      to paper money which means currency notes. Nowadays, the  use of paper 
      money has almost become universal along with coins made of copper, bronze 

      or nickel, etc.

       5th Stage Bank money: The process of evolution of some better medium 
      of exchange still continues. As the volume of transactions increased, even 
      paper money started becoming inconvenient because of the time involved in 
      its counting and space required for its safe keeping. This led to bank money 
      or credit money in the form of cheques, drafts, bills of exchange, credit cards, etc. 

      B. Savings 


      Savings is the portion of income not spent on current expenditures. Because 
      a person does not know what will happen in the future, money should be 
      saved to pay for unexpected events or emergencies. An individual’s car may 
      breakdown, their dishwasher could begin to leak, or a medical emergency 
      could occur. Without savings, unexpected events can become large financial 
      burdens. Therefore, savings helps an individual, family or business become 

      financially secure.

       C. Saving goals 
      Money can also be saved to purchase expensive items that are too costly 
      to buy with monthly income. Buying a new house, clothes, purchasing an 

      automobile, or paying for a vacation, etc. can all be accomplished by saving a 

      portion of income. We usually save for:
       • Basic needs
       • Household expenses
       • Education
       • Emergencies/safety
       • Retirement/security
       • Family wellbeing
       • Esteem

       • Self-actualization

       Application Activity 5.1
      Using the knowledge and skills acquired in year 1, Unit 3: Setting 

      entrepreneurial goals, set a SMART saving goal.

      5.2. Need for money
      Activity 5.2

      Observe the following figures and answer the questions that follow:


      a. Describe at least five household expenses.

       b. Discuss different sources of income (money). 

      In everyday life, human beings have different needs. Money is used in exchange 
      when selling and purchasing different products and services. Money is not only 
      needed to be used personally but also in business activities.

      Money is most especially needed for the following reasons:

       • Investment: Money is used to purchase goods that are not consumed 
      but are used in the future to create wealth. It is used for things that can 
      generate more money in the future.
      • Personal needs: Money is used to make personal expenditure including, 
      but not limited to, the need for food, clothing, shelter, health care and 
      safety.
       • Emergency: Some money is put set aside to specifically cover any 
      unexpected expenses that may come up. An emergency fund may cover 
      unexpected car repairs, medical bills or other emergency situations.
       • Education: Money is used for the purpose of completing the education.
       • Retirement: Retirement is the years that an individual is able to enjoy 
      after spending a majority of his/her life devoted to career. One should 
      put aside a portion of the income to help him or her after working age, etc.
       
      Application Activity 5.2

       1.As a student of entrepreneurship, come up with different ways of 
      getting money.

       2. Make the total cost of all household expenses in your family.

       5.3. Obstacles to achieving saving goals
       Activity 5.3

       Assess your home community and describe any five obstacles for people 
      in that community to achieving saving goals.
       Saving is a conscious and deliberate way of setting aside a portion of the 
      personal income for future use. 
      The following are some of the hindrances to achieving saving goals:
       • Procrastination: Delaying savings or putting savings off for another time.
       • Poor spending habits: It includes spending on unnecessary items; 

      Impulse buying; hedonistic lifestyle.

       • Culture of dependency: Being over dependent on others.
       • Lack of financial literacy: Spending on liabilities or items that 
      decrease in value over time; not knowing how your money will grow 
      or work for you.
       • Not budgeting: A budget is the bedrock of your personal finances. 
      Without a budget, your money may be standing on shaky ground. 
       Why? A budget helps you see how much money you have coming in 

      and going out. And, having a budget in place can help you save money.

       Application Activity 5.3
       Youth are a rapidly growing percentage of the Sub-Saharan African 
      population, and many are economically vulnerable. Financial inclusion 
      for youth, particularly the promotion of savings behavior is associated 
      with a number of positive social and economic outcomes and is an 
      international priority. However, the majority of youth in Sub-Saharan 

      Africa are not saving.

       Question:
       According to the extract above, discuss any ten reasons why majority of 

      youth of sub-Saharan Africa do not save.

       5.4. Where to save
       Activity 5.4

       In your community, you have probably heard people and business 
      people talking about where they save a portion of their earnings. Identify 
      where to save money according to what you have heard normally people 

      talking about.

      Banks provide savings account services
       Some savers place their money in a jar, coffee can or a piggy bank which all is 
      not safe and not encouraged. . It is wise to store money in financial institutions 
      like banks depository institution. The following are examples of where to save 

      money:

       • Banks: Through opening up different savings account, one can save his/
       her money. For instance, if you find a bank or credit union that offers a free 
      savings account, you can open up several savings accounts.  Then every 
      time you get an income, you can put money into each of these accounts 
      for every specific thing that you are saving for. This way you can keep your 
      money safe from accidentally being spent, and it will be there when you 

      need it.

       • Assets: Individuals can save money through investing in fixed assets. 
      A good example can be when someone invests his/her money in rental 
      houses (real estates). The stock market may be down, but your tenants 

      will still be paying some rent every month.

       • Securities: Securities are generally classified as either equity securities 
      such as stocks and debt securities such as bonds and debentures. The sale 
      of securities to investors is one of the primary ways that publicly-traded 
      companies drive new capital for operations. People or businesses can 

      save their money through buying available securities at the market.

      • Small savings groups: This is when someone joins a group comprised of 
      15-25 self-selected individuals who save together and take small loans 
      from those savings. Savings groups provide members the opportunity 
      to save frequently in small amounts, access to credit on flexible terms, etc.
      • Starting a business: Saving can be through starting up a business that 

      may generate incomes and profits in future time.

       Application Activity 5.4
       KABASHA won entrepreneurship competition. He received a cheque 
      of 5,000,000Rwf as a reward, but he doesn’t have a ready plan for that 
      money won. 

      Required: 

      Advise KABASHA to identify where to save his money to avoid needless 

      expenditure.

      5.5. Managing money

      Activity 5.5


      Extract (Money management-How to make your money go further)
       The way you spend your money today will determine what you have 
      in six months from now, a year from now, five years from now, and in 
      your lifetime. You control your financial destiny. You are responsible for 
      the amount of money you earn and for the amount of money you spend. 
      Successful money managers control the way they spend their money. 
      They use money to accomplish the things that are important to them. 
      Good money managers manage their money rather than letting it dribble 

      away from them. 

      Required:
       1. Do you have control of the way you spend your money? If yes, how 
      do you do it?
       2. Do you live within your income, or do you have to borrow money or 
      use savings to meet your regular monthly expenses? Yes/No. Explain 
      your answer.
       Money management is the process of budgeting, saving, investing, spending or 
      otherwise overseeing the financial usage of an individual or group.  The ability 
      to manage money has to be learned, developed, and practiced on a daily basis. 

      There are eight steps to successful money management: 

      1. Get organized.
       2. Decide what you want to do with your money.
       3. Look at all available resources.
       4. Decide how much money you are worth.
       5. Find out how much money you make.
       6. Find out how much money you spend.
       7. Set up a plan for spending your money and stick to it. 
      8. Evaluate your spending plan
       The following are essentials for good money management:
       • Keeping financial records 
      • A simple cash book 
      • Financial forecast  
      • A simple cash flow plan  
      • Practicing money management habits E. g. re-use, recycle, repair and 

      reduce.

       KEEPING FINANCIAL RECORDS
       Good financial recordkeeping enables business organizations to plan properly 
      and also check for misappropriations of resources. Everyone in business must 
      keep records. Keeping good records is very important to your business. A simple 
      cash book, financial forecast and a simple cash flow plan are very important for 

      money management.

       • A simple cash book
       The simple cash book (also known as single column cash book) is a cash book 
      that is used to record only cash transactions of a business. It is very identical to 
      a traditional cash account in which all cash receipts are recorded on left hand 
      (debit) side and all cash payments are recorded on right hand (credit) side in a 
      chronological order.

      The single column cash book has only one money column on both debit and 

      credit sides titled as “amount” which is periodically totaled and balanced like a 
      T-account. As stated earlier, a single column cash book records only cash related 
      transactions. The entries relating to checks issued, checks received, purchases 
      discount, and sales discounts are not recorded in single column cash book.

       

      Format of Simple Cash Book:


      The purpose of four columns used on both sides of a single column cash book 
      is briefly explained below:
       • Date: The date column of the cash book is used to record the year, 
      month and actual date of each cash transaction. This column ensures the 
      chronological record of each business transaction involving receipt or 
      payment of cash.
       • Details: The details column is used to record the account titles to be 
      debited or credited as a result of each cash transaction. This column is 
      sometimes titled as “particulars”.
       • Ledger Folio: This column is used to write the page number of each 
      ledger account named in the description column of the cash book.
       • Amount: The amount column of single column cash book is used to 
      record the money value of each cash transaction.
       • Note: The debit side (receipt side) of a single column cash book is always 
      heavier than the credit side (payment side) because we cannot pay more 
      cash than what we receive during a period.

       Example:
      The Student business club at one of TTCs uses a single column cash book to 
      record all cash transactions. It engaged in the following cash transactions 
      during the month of September 2019.
       • Sep.01: Cash in hand at the beginning of the month Rwf 4,654.
       • Sep.02: Paid salaries to employees for the last month Rwf 3,000.
       • Sep.05: Cash received from S & Co. for a previous credit sale Rwf 2,720.
       • Sep.06: Merchandise purchased for cash Rwf 1,400.
       • Sep.07: Merchandise sold for cash Rwf 4,700.
       • Sep.10: Office furniture purchased for cash Rwf 3,080.
       • Sep.12: Stationery purchased for cash Rwf 170.
       • Sep.15: Merchandise sold for cash Rwf 9,000.
       • Sep.17: Cash paid to A & Co. for a previous credit purchase Rwf 1,780.
       • Sep.20: Merchandise purchased for cash Rwf 2,460.
       • Sep.21: Merchandise sold for cash Rwf 4,680.
       • Sep.24: Cash received from S & Co. for a previous credit sale Rwf 2,400.
       • Sep.28: Cash paid for office rent Rwf 1,600.
       • Sep.30: Merchandise sold for cash Rwf 7,200
       Required: Record the above transactions in a single column cash book (simple 
      cash book)                                     Solution:

      The Student business club’s simple cash book for the month of September 2019

       Financial forecast
       ‘Forecast’ means to form an opinion beforehand i.e. to make a prediction. Thus 
      financial forecasting means a systematic projection of the expected action of 
      finance through financial statements. It is a kind of plan which will be formulated 
      at a future date for a specified period.
       
      The merits of the financial forecasting are noted below:

       (i) It can be used as a control device in order to fix the standard of performances 
      and evaluating the results thereof
       (ii) It helps to explain the requirement of funds for the firm together with the 
      funds of the suppliers.
      (iii) It also helps to explain the proper requirements of cash and their 
      optimum utilization is possible and so surplus/excess cash, if any, 
      invested otherwise.
       
      Elements of Financial Forecasting:

       Financial forecasting involves preparation of proforma financial statements 
      and also the preparation of Cash Budget.
       
      Therefore, it includes the preparation of:

       A. Pro-forma Income Statement: Pro forma income statement is the statement 
      prepared by the business entity to prepare the projections of income 
      and expenses which they expect to have in the future by following certain 
      assumptions such as competition level in the market, size of the market, 
      growth rate
       B. Pro-forma Balance Sheet: This summarizes the projected future status 
      of a company after a planned transaction, based on the current financial 
      statements.  
      C. Cash Budget: A cash budget is an estimation of the cash flows for a business 
      over a specific period of time. This budget is used to assess whether the 
      entity has sufficient cash to operate
       
      A simple cash flow plan
      Cash flows statement is a statement that provides valuable information about 
      a company’s gross payments and receipts and allows insights into its future 
      income needs. Cash flow statement is important because:
       • Cash from operating activities can be compared to the company’s net 
      income to determine the quality of earnings. If cash from operating 
      activities is higher than net income, earnings are said to be of “high 
      quality.”
       • This statement is useful to investors because, under the notion that 
      cash is king, it allows investors to get an overall sense of the company’s 
      cash inflows and outflows and obtain a general understanding of its 
      overall performance.
       • If a company is funding losses from operations or financing investments 
      by raising money (debt or equity) it will quickly become clear on the 
      statement of cash flows
       
      Why is it necessary for an entrepreneur to make a Cash flow statement?
       • It helps to identify the source of cash inflows in the business and also 
      identify how cash was used
       • It helps management in proper cash planning to avoid excess cash or 
      cash deficits in the business
       • It reports the total amount of cash used during a given period in long 
      term investment activities such as purchase of fixed assets
       • It shows the amount of cash received from various financing sources 
      such as long term loans and sale of shares
       • It helps management to avoid liquidity problems by anticipating when 
      cash is expected to flow in and plan payments accordingly
       • It helps investors to understand how a company’s operations are 

      running, where its money is coming from and where it is spent. 

      FORMAT OF CASH FLOW STATEMENT

       Cash flow statement for the year ended as at……/ …… /……... 

      At the end of that given period, the business will have a surplus if cash inflows 
      are more than the cash outflows or deficit if cash inflows are less than the cash 

      outflows.

      Example:  Prepare Didi’s cash flow for the month of January, February, March 
      and April 2006, given the following information below:
       Cash balance b/d or b/f in January was 15000,000Rwf
       Monthly rent income was 5000,000Rwf
       Monthly credit sales to be paid in the next month were 4000,000 Rwf
       Sold a business van in February 14,500,000 Rwf
       Monthly commission received was 3000,000Rwf 
      Monthly cash sales 10,000,000 Rwf
       Monthly cash purchases 12,000,000Rwf
       Bought a truck in January 800,000 Rwf
       Monthly salaries and wages 5000,000Rwf
       Bought machinery worth 15,000,000Rwf, payment of 8,000,000 Rwf was 
      made in January and the balance was paid in two equal installments during 

      the month of February and March.

      Solution
       DIDI’S CASH FLOW STATEMENT FOR JANUARY, FEBRUARY, MARCH AND APRIL

       PRACTICING MONEY MANAGEMENT HABITS
       With the cost of goods and materials rising, using resources efficiently and 
      reducing your business’ waste makes good financial sense. It’s also better for 
      the environment. The cost of sending waste to landfill is increasing, and so 
      are the restrictions on what you can send. You can face penalties if you do not 
      handle waste appropriately or have the right paperwork before it leaves your 
      premises.

      You can save money and make your business more efficient by focusing on how 

      you reduce, reuse, recycle or recover and repair in your business, and how you 
      deal with the waste that remains.
       
      1. Reducing waste

       • Cutting the amount of waste your business has to handle is the most cost
      effective and environmentally-friendly method of dealing with waste.
       • There are a number of areas you could focus on:
       -Procure carefully - buy only what you need, control stock and 
      streamline processes across departments. Buy equipment in bulk to 
      reduce packaging and consider the product›s durability and lifespan - 
      replacing equipment less often will reduce the waste you create. 
       -Look for easy wins - seemingly trivial changes can produce significant 
      savings, such as printing and photocopying double-sided, refilling 
      printer cartridges, switching off lights and electrical equipment, and 
      using rechargeable batteries.
       -Review your processes - ensure that equipment and materials are 
      used efficiently and packaging is kept to a minimum.
       -Product design - keep the amount of materials you use in products to 
      a minimum.
       -Packaging design and use - make sure you use as little packaging as 
      possible to achieve an adequate level of protection for your products.

       2. Reusing waste

       You may be able to reuse materials and equipment in your own business or 
      another organization.   

      For example, consumers can refill a purchased bottle of water with water from 

      home to minimize the number of plastic bottles being discarded.

      Reusing your own business waste can reduce your costs as you won’t need to buy 

      raw materials or pay to dispose of the waste. You may also be able to generate 
      income from materials and goods that are valuable to another organization.

      3. Recycling waste

       Recycling is the third-best waste management option for your business, after 
      reducing and reusing waste. Even so, recycling is important because it reduces 
      the amount of waste sent to landfill and reduces the need to use new raw 
      materials. Recyclables include glass, newspaper, aluminum, cardboard and a 
      surprising array of other materials. 

      4. Repair

       The business can repair broken materials and equipment such as lamps 

      instead of buying new ones

      Application Activity 5.5

      1. Write up a single column cash book of UBUMWE Enterprise for 

      the month of April 2015, from the following? 


       Requirement: Prepare cash book at April 30, 2015:
       2. Given the information below on Central Trading Company Ltd for 
      the month of April, May & June
       • On 1st April, 2005 Central Traders Company Ltd had a cash 
      balance of 10,000,000 Frw.
       • It expected monthly cash sales of 5000,000 Frw.
       • Credit sales were 3,500,000 Frw per month and the payments
       • would be made in the       following months.
       • Monthly rent income from some of its properties was expected 
      to be 1,000,000  Frw
       • Monthly cash purchases were 6,000,000 Frw.
       • Monthly salaries and wages bills were projected at 800,000 Frw.
       • A loan from Umwalimu Sacco was 10,000,000 Frw was received in May.
       • Monthly interest payment of 100,000 Frw on the loan. 
      • Monthly raw material for 5000,000 Frw.
       Required: Prepare central trading company’s cash flow statement for 
      the month of April, May, and June
       
      Skills lab 5
       Discuss and suggest strategies or how you will cut costs/expenses 
      using the 4Rs (reducing, recycling, repairing and reusing) in your 
      student business club. Prepare a new projected cash flow statement 
      after applying the suggested strategies.

      End of unit 5 Assessment

       1. Read the following dialogue and answer the questions that follows;
       Peter: Does what you know now about money management affect 
      your future?
       Peace: Of course what you know today affects tomorrow. You 
      couldn’t drive a car without a license, and that is why you need to 
      begin learning about how to spend your money wisely today.
       Peter: How does your attitude towards money change as you age?
       Peace: Five-Year-Old: Come On mom, can I have some money to buy 
      that ring?
      Fourteen-year-old: Mom, I want 10,000Frw to buy designer label 
      top and those cool pants. 
      Eighteen-Year-old: Shoot, I know how i can get money for college. 
      I will ask mom. 
      Forty-Year-Old: I need to save for my retirement. No excessive 
      spending.
       
      Questions
       i. With examples explain how your money management affects your 
      future wellbeing.

       ii. Where do you think a person can save? 

    • UNIT 6: FINANCIAL INSTITUTIONS

      [

      Key unit competence: To be able to choose suitable financial institutions for 

      business transactions.

      Introductory activity

      Today, people with full time jobs or part time jobs who use debit cards, 
      credit cards are most likely to have a close relationship with financial                                                            
      institutions. Basing on the knowledge and the community you live in, 

      a) Identify any financial institutions known to you.

      b) Do you think those financial institutions are important in managing local 

      businesses? Support your answer.  

      6.1. Meaning of financial institutions
       Activity 6.1

       i) Read the case study and answer the questions that follow;
       Keza started up a project of making paper bags at school having seen that 
      a lot of paper was trashed and littered around the school compound. She 
      sold these paper bags to the neighboring shops. She got a lot of money 
      and felt insecure to keep it in the dormitory, so she thought of opening 
      an account in the nearby bank. She also thought of saving the money in 
      the bank so that it accumulates interest and also in the long run acquire a 
      loan and expand her business by making flower vases, artefacts.

       a) Do you think Keza took a wise decision? Why?

       b) If it were you, what would you do to feel secure with the money 
      while at school and why?
       c) How would you define financial institutions?

      ii) Differentiate banking from non-banking financial institutions.


       Financial institutions are institutions that deal in providing financial services 
      to their clients. They offer both short- and long-term finance to entrepreneurs 
      for their business operations. Financial institutions include; Central bank, 
      commercial banks, microfinance institutions, merchant banks, development 
      banks, Savings and Credit Societies and insurance companies etc. 

      Financial institutions provide a variety of financial services to the public which 

      include deposits and withdraw services, loan services and financial advice to 

      entrepreneurs among others.

       Types of financial institutions
      a) Banking financial institutions are financial institutions that are authorized 
      to receive deposits and create credit. These banking institutions include:
       1. Central bank, 
      2. Commercial Banks
      3. Other Banks:
       • Development Banks
       • Savings and Credit cooperatives (SACCOs)

       • Micro finance institutions and Microfinance banks. etc

      b) Non- banking financial institutions these are institutions that accept 
      deposits but don’t create credit and offer other bank related services such as 
      investment and risk pooling. 

      Examples include: 

       -Insurance companies
       -Building societies
       -Pension funds

       -Capital markets

       Application Activity 6.1
       Imagine you are to start up a business in your community.
       a) Which type of financial institution will you work with closely and why?
       b) Why would you insure your business?
       
      6.2. Factors for selecting suitable financial institutions to deal with
       Activity 6.2
       Analyse the factors that would be considered to choose a suitable 
      financial institution to work with.
      There are several factors considered while selecting suitable financial 
      institutions which include the following:
       
      i. Interest rate
      : In case of borrowing money from the banks. Entrepreneurs will 
      opt for banks with lower interest rate and when it comes to entrepreneurs 
      saving their money in banks, they will prefer a relatively higher interest rate.  
      ii. Proximity: Most people will prefer banks that can easily be accessed. This 
      means institutions that have many branches.  
      iii. Customer care: Financial institutions which provide good customer care 
      are normally liked than those without.  
      iv. Payback period: Refers to the time taken to recover the initial investment. 
      Financial institutions that give a long pay back period are normally considered 
      preferable than those that give short payback period. 
      v. Terms and Conditions of issued loans: Financial institutions that provide 
      soft loans are chosen faster than those that give hard loans. Soft loans are 
      loans with low interest rate or not at all.
       Vi. Legal procedures: The financial institutions that have licenses to operate 
      and are recognized by the central bank are always preferred.  
      vii. Time of operation: It is better to deal with a well-established financial 
      institution than a newly established one. In other words, it is better to deal 
      with those that have been in operation for a longer period than new ones.  
      viii. Collateral Security required: Banks which don’t require a lot of collateral 

      security are always considered by most people. 

      Application Activity 6.2
       Role play on the factors for choosing a suitable financial institution to 
      deal with.
       Visit a nearby financial institution to identify services offered by that 

      institution

      6.3. Services offered by financial institutions


       Activity 6.3

       Examine the services offered by:

       a) Commercial banks

       b) Central bank

       c) Insurance companies

       Various services offered by financial institutions:

       Central Bank (National Bank) Eg: BNR- National Bank of Rwanda

       • Issuing of currency: The National Bank is the only bank that is authorized 

      to issue and renew the old notes and coins of a given country. 

      • It is a banker to all other commercial banks. 

      •  It stabilizes the country’s currency in circulation by using various 

      monetary policies. 

      • It acts as an advisor to the government on issues regarding the economic 

      situations like how to control inflation, etc  

      • It acts as a lender of last resort to commercial banks. 

      • It manages the government debts that is both internal and external 

      debts. 

      • It licenses, controls and supervises all the banking activities of 

      commercial nature.

       • It’s a banker to international institutions working in the country e.g. 

      FAO, Red Cross, WHO, UNICEF etc. 

      Y2_Entrepreneuship_SB.indd   91 22/07/2020   04:44:43

      Commercial Banks ( Eg: BK, Equity Bank, KCB, I&M Bank, etc)

       • They accept customer’s deposits.

       • They also advance short and long term-loans to the public in order to 

      generate interest as profit.

       • They facilitate easy transfer of money nationally and internationally 

      and from one account to another.

       • They facilitate international trade through offering or selling travelers 

      cheques. 

      • They provide foreign exchange services where one can easily exchange 

      one currency to other currencies. 

      • They provide overdrafts to clients that is, where one can withdraw 

      money which is in excess of  his / her bank account balance. . 

      • Most commercial Banks provide financial training.  

      • They provide a variety of accounts to the public to be used when 

      depositing or withdrawing their money each with varying benefits 

      such as savings accounts, fixed deposit accounts, current accounts etc. 

      • They act as referees or trustees where one can trust them to safeguard 

      valuable items like land titles, car log books, Wills and other valuable 

      items. 

      • They act as agents of stock exchange. They buy/sell shares of different 

      limited companies on behalf of their clients.  

      • They provide foreign exchange to the customers operating foreign 

      exchange accounts e.g. dollar accounts. 

      • They also protect business properties.

       Insurance companies (Non Banking Financial institutions)

       An insurance company refers to a business that provides coverage, in the form 

      of compensation resulting from loss, damage, injury, treatment or hardship in 

      exchange for premium payments. The company calculates the risk of occurrence 

      then determines the cost to replace (pay for) the loss to determine the premium 

      amount. Eg: RADIANT, CORAR, SAHAM, UAP, BRITAM, etc

       The following services are offered by insurance companies:

       • Business Insurance,

       • Professional Indemnity,

       • Property Insurance. ...

       • Motor Insurance,  

      • Home & Contents Insurance,

       • Cyber Insurance, etc


      Application Activity
       a) Carryout research on any two financial institutions that are near your 
      school and evaluate the services they offer.
       b) Select an appropriate financial institution to deal with in your school 
      business club. Give reasons to justify.
       
      6.4. Role of financial institutions in social economic development
       Activity 6.4
       Describe the role of financial institutions in social economic development
      Financial institutions play an indispensable role in the overall development of 
      a country. They include the following;
       
      a. Financial institutions play a key role in creating employment in an 

      economy. Many people are employed in different financial institutions thus 
      improving their wellbeing.
       b. They help to control inflation in the country by use of the monetary policy 
      tools.
       c. They provide loans to the public which are used to start-up businesses 
      hence improving their standards of living. 
      d. They offer a safe custody for the public finances thus reducing cases of 
      theft.
       e. Financial markets help in boosting economic growth. They encourage 
      people to save by buying shares and bonds and then use it to invest in large 
      projects and industries.
       f. Financial institutions do offer loans to businesses at substantial interest 
      rates. This helps businesses to increase their production and distribution 
      activities.
       g. They promote foreign exchange markets through supporting entrepreneurs 
      in exporting and importing goods and services. Businesses can receive and 
      transfer funds in other currencies.
       h. Economic growth depends on the growth of infrastructural facilities of the 
      country. These infrastructures require a lot of funds which are funded by 
      these financial institutions.
       i. They also help to facilitate domestic and international trade.
       j. They help to balance economic growth since all the different sectors in an 
      economy rely on financial institutions. The primary, secondary and tertiary 
      sector industries all need sufficient funds from these institutions.
       k. They help to attract foreign capital through the capital market authority. 
      Foreign companies can buy shares, stocks in another country. Such as KCB, 
      IM bank, equity bank among others. 
      l. Financial systems of different countries can promote economic integration. 
      This is when common economic policies, such as common employment 
      laws, commercial laws are applied. For example, the East African 
      Community (EAC).
       m. They also help in the development of new technology to be used. For 
      instance, computers and other new technologies to be used in recording 
      information. 
      In general, financial institutions play a key role in social economic development 
      of any economy and no economy can run successfully without a sound financial 

      system.

       Application Activity 6.3
       Write an essay on the following statement: “Financial institutions are 

      the key engine to the development of the country

       Skills lab 6
      a) As future entrepreneurs, discuss the financial needs you have in your 
      school business club. 
      b) Research on the internet and through resource persons in your 
      community for the terms and services offered by other financial 
      institutions as much as savings and credit cooperatives are concerned. 
      Then, compare with those discussed in this book and choose the one 
      that is more appropriate to your business club.  Give clear reasons as 

      to justify your choice.

       End of unit 6 Assessment
       1) As an entrepreneurship student, choose two suitable financial 
      institutions to work with in the school business club and give reasons 
      why you chose the above institutions? 
      2) Why is the government of Rwanda encouraging people to invest in 

      capital markets?

    • UNIT 7: QUALITY ASSURANCE AND QUALITY COMPLIANCE IN BUSINESS

      Key Unit competence: To be able to maintain effective quality compliance 

      system in business.

      Introductory activity
       Quality assurance and Compliance Case Study:
       The government of Rwanda through Rwanda Standards Board is mandated 
      to provide National standards and conformity assessment guidelines 
      that entrepreneurs/traders ought to follow during production and selling 
      of their goods and services. These guidelines help entrepreneurs to be 
      cautious and careful with the quality and measurements of raw materials 
      used, goods produced and the technology used. If your business conforms 
      to the required quality management, assurance and compliance standards, 
      it reduces mistakes and inconsistencies that could make these goods unsafe. 
      If you manufacture a food product, your quality control processes should 
      monitor temperature and foreign bodies to decrease the likelihood that 
      you will make someone sick. Ensuring customer safety saves your business 

      money and averts damage to your reputation.

      One of the ways that the business can strengthen its quality is by listening to 
      its customers and incorporating their feedback in the business processes and 
      production systems. Product quality issues that customers normally report 
      should be tracked and managed through a rigorous process of investigation 
      and resolution. These and more processes help the business to continually 
      enhance customer satisfaction. It’s also important that businesses are 

      genuine in their measurements of goods produced and sold.

       Questions
      Referring to the above case study, answer the following questions below;
       a.What does the National Standards and conformity assessment 
      guidelines expect entrepreneurs to do ?
       b. What are likely negative effects the business may face if customers are 
      not satisfied as a result of wrong measurements of the goods bought ?
       c. What strategies would you propose to the entrepreneurs to implement 
      and ensure the safety of their customers?
       d. Design a simple quality management system of the business idea you 

      intend to start in your community.

      7.1. Quality assurance and quality compliance
       Activity 7.1

       Explain the meaning of:
       1. Quality assurance,
       2. Quality compliance and 

      3. Quality management

       7.1.1. Meaning of quality assurance
       Quality assurance (QA) is any systematic process of determining whether a 
      product or service meets specified requirements. It is also referred to as the 
      maintenance of a desired level of quality in a product or service, especially by 
      means of attention to every stage of the production process  or delivery.
       
      A quality assurance system is meant to increase customer confidence and a 

      company’s credibility, while also improving work processes and efficiency, and 
      it enables a company to better compete with others.

      Quality assurance is very important because it helps a company create 

      products and services that meet the needs, expectations and requirements of 
      customers. It yields high-quality product offerings that build trust and loyalty 
      with customers. The standards and procedures defined by a quality assurance 
      program help prevent product defects before they arise. Quality assurance 

      includes two principles: 

      1. “Fit for purpose” (the product should be suitable for the intended 
      purpose); and 
      2. “Right first time” (mistakes should be eliminated). 
      It includes management of the quality of raw materials, assemblies, products 
      and components, services related to production, and management, production 

      and inspection processes

       7.1.2 Meaning of quality compliance
       Quality compliance 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. Complying with the quality 
      requirements helps the business in different ways such as satisfying customers’ 
       needs, increasing the level of sales due to a large number of customers attached 
      to the product or service, complying with the state’s quality requirements 

      among others.

       Application Activity 7.1
       Using typical examples differentiate quality assurance from quality 

      compliance.

      7.2. Measurement standards
      Activity 7.1

       1. Study the illustrations below and answer the questions thereafter.




      a) What do you observe in the above illustrations?
       b) What lessons do you learn from the above illustrations?
       c) Why should buyers of given products make sure that products 

      bought conform to the right measurements?

      2. Based on your knowledge in Physics(O’level), explain the measurement 

      standards used in business activities

       Measurements are often made using instruments such as measuring tapes, 
      weighing scale, rulers, clocks, etc. Measurement is a comparison process. It 
      involves comparison of the quantity to be measured with a chosen standard 
      or unit. In the past, for example, the length of an object was compared with 
      familiar lengths: strides, length of a man’s foot, arm and fingers. Ancient people 
      also used stones or seeds as their standards or units to measure weight. The 
      position of the sun and the moon were used to tell time and seasons, the 
      dimensions of the human body. Below are some of measurement standards 

      that are used in business activities.

      The base quantities according to the International System of Quantities 

      (ISQ) are listed in the following table:


       Other quantities are derived from the base quantities and some of them 

      are listed in the table below.


      Examples of measurements in business (measurement standard and 

      measurement materials)


      Application Activity 7.2
       For the business you intend to start in your community, analyse different 

      measurement standards you would emphasize, and why?

       7.3. Meaning and relationship between quality 
      management, assurance and quality compliance

       Activity 7.3
       Describe the relationship between quality management, quality 
      assurance and quality compliance
       
      It is important for businesses to pay close attention to Quality Assurance (QA), 

      Quality Compliance (QC) and Quality Management (QM) since they form an 
      integral part of the business’ success. Customer satisfaction and maintenance 
      (customer retention) rely heavily on the applicability of the quality assurance, 
      compliance and management in production and management processes.

      Looking at the above illustration, quality assurance and compliance must be 

      managed and controlled by the given quality control department of the business. 
      The illustration shows that if businesses have clear processes of managing 
       quality and abide to laws and guidelines set by regulatory body (RSB), then 
      there is quality management.
       
      The relation between the three in terms of standards means that quality 

      management system is comprised of quality assurance and compliance activities 
      that ensure the establishment of a set of quality policies and objectives which 
      act as guidelines within an organization or business.
       
      Quality Management system
       A Quality Management System (QMS) is a formalized system that documents 
      processes, procedures, and responsibilities for achieving quality policies and 
      objectives.

      For businesses to be able to promote quality standards, they need to develop 

      quality management system. This system becomes part and parcel of business 
      culture and it is monitored by the business’ quality control team. The following 
      is a quality management system that can be used by business to promote and 
      ensure the quality of their products or services:
       
      i) 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 what kind of raw materials will have to be used.
       
      ii) 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.

       iii) Quality objectives must be communicated
      to the team and well 
      understood,
      ISO requires that quality objectives are derived from quality 
      policy and measures.
       
      iv) Define the product
      defect; that is what contributes to poor quality, 
      whenever such defects are seen they must be recorded and communicated 
      accordingly.

      v) Develop the documents
      for the system. This could be a manual that 
      includes the necessary policies, procedures and forms. 

      vi) Define the quality process;
      this includes corrective and preventive action 
      process, management review and communication process. In short this 
      involves ways of solving given challenges to quality implementation.
      vii) Determine the training needs; Entrepreneurs must identify the gaps 
      within the team so that the workers are trained and supported accordingly 
      to meet and comply with quality standards.
      viii) Use the system. This is the stage when the system is implemented 
      accordingly.
       ix) Measure and monitor performance. Measuring performance happens 
      after implementation and would vary greatly from organization to 
      organization depending on size, potential risk, and environmental impact.
       x) Take action that improves performance. This is the last step that is 
      implemented and when solutions to the risks are identified as per the quality 

      process, they communicate them to the employees.

       Application Activity 7.3
       1. Interrelate quality management, quality assurance and quality 
      compliance
       2. Think about businesses that exist in your community, how have they 

      failed to observe quality expectations?

       7.4. Levels of accreditation and accreditation bodies

       Activity 7.4

       1) What do you understand by the term accreditation?
       2) Identify levels of accreditation and accreditation bodies.
       Accreditation is one of the critical quality infrastructure elements that facilitate 
      trade. Accreditation of conformity assessment bodies provides the acceptance 
      of tests results, inspection reports and certificates that accompany products 
      and services traded across borders.

       There are three levels for accreditation which include the following;

       National standards
      The national standards body helps to develop consensus-based standards. 
      As such it considers the balanced views of all stakeholders (traders, industry, 
      consumer associations, regulators, academia, research institutions, Non
      Government Organizations etc.) the standards developed at the national level 
      can also be used as inputs to develop international standards.

      Examples of national standard bodies in Rwanda: Rwanda Standards Board, 

      Rwanda Environmental Management Authority, Ministry of Health, Rwanda 
      Development Board, Rwanda National Police, Ministry of Agriculture and 

      Animal Resources etc.

       Regional standards
       These are standards set in each region such as EAAB, East Africa Community 
      Standards (EACS) to enforce standard of goods and services in each region. They 
      promote trade and commerce in accordance with the progress and prosperity 

      of a given region.

       International standards
       The international standards bodies develop standards at the international 
      level. They are composed of representatives from various national standards 
      bodies. They help to overcome technical barriers in international trade. 
      Examples of such bodies include, International Organization for Standards 

      (ISO), International Electro-technical Commission (IEC)


      Application Activity 7.4
       1) Visit the Rwanda Standards Board website and research about 
      products made in Rwanda with S mark and ISO.
       
      2) Research from internet to come up with different recognized 

      accreditation bodies which ensure quality compliance.

      7.5. Role of quality compliance in business 

       Activity 7.5

       Why is it important to comply with quality requirements in business?


      Compliance means meeting the regulatory requirements.

      1) Quality compliance in business ensures that the product satisfy their 

      intended use.
       2) It also reduces the risk of fines, penalties and closure of businesses. When 
      a business does not meet some compliance requirements it faces the law.
       3) It leads to improved health and safety.
       4) It leads to improved health and safety quality improvement.
       5) Quality compliance maintains or increase market share for the 
      businesspeople.
       6) There is fair competition among businesses hence increasing customers 

      satisfaction from the products.

       Application Activity
       1.Research on the Rwanda Standards Board website about the 
      requirements needed to get an ‘S’ mark for the products in the 
      school business club. 
      2. 2) use the link below and explain the importance of the program  

      “Zamukana Ubuziranenge “http://ryaf.rw/?p=2333

       Skills lab 7
       For any product you produce in the school business club: Discuss and 
      write down the steps, measurements and procedures of making that 
      product to ensure standardization of practices in your business, align 
      with the acceptable RSB standards and make an action plan to acquire 
      RSB certification for services or products that your business club 

      produce or offer. Then, share with the class.

       End of unit 7 Assessment
       1. James and Rosset intend to start a business of making Chapati and 
      mandazi, but they have a challenge ensuring consistency in quality 
      (maintaining the same test, size and thickness) . With your knowledge 
      on quality assurance and standardisation; 
      a) Advise  James and Rosset on how they can set quality standards 
      in their business.
       b) What measurement tools could they use to achieve the quality 
      standards?
      2. Explain the importance of accreditation for certification services and 

      testing laboratories.

    • UNIT 8: FINANCIAL STATEMENTS

       Key Unit Competence: To be able to recognize the value of accounting in 

      managing the business.

      Introductory activity

      Financial Statements “The language of business decision making.
       James is a local entrepreneur in Huye town, he is so passionate and 
      committed to solve community problems in his home town and country, he 
      started a crafts business in Huye town, he moves to villages and collect crafts 
      from women groups and put them in his shop which is strategically placed 
      to target tourist heading to Nyungwe forest and Akanyaru Centre. He had 
      a book where he instructed his workers to be recording all sales for each 
      day, supplies and operating expenses. He believed that this is the best way to 
      keep track of all business transactions and a sure way to growth.

      He wanted to expand the business and felt that 5 million Francs would be 

      enough. He was advised by his sister Uwera a student of entrepreneurship, 
      to approach investors and bankers and pitch his business and convince them 
      to provide funding to enable him to meet the business growth needs.

      The investors only gave him 10 minutes to explain the profitability of his 

      business, the net financial position and the financial projection he needed 
      for the next 2 years, but this challenged him because the book he kept could 
      not easily provide this information in the given time, so he failed to convince 
      the investors and missed the funding.

      James realized that he needed to have organized the financial information he 

      was keeping in a certain order that would enable him to make quick decisions 

      and make it more presentable and easy to explain to external stakeholders.

       Questions:
       1. What kind of documents James would have used to organize his 
      business’s financial information before presenting to investors?
       2. What do you understand by financial statements?
       3. What is the difference between financial statements and the books of 
      accounts? Give examples of each.
       4. Why is financial information important to any business?
       5. What is the purpose of financial statements in business?

       6. Distinguish between income statement and balance sheet 

      8.1. Meaning and importance of Financial Statements

      Activity 8.1

      Study the quote below and respond to the questions that follow.


      1.What does the quote above mean to you as a student of 
      entrepreneurship?
       2. Why does the author of the quote emphasize the reliability of the 
      financial statements? 
      3. What is the meaning of financial statements?
       4. What financial statements should every entrepreneur use to 

      communicate and manage businesses effectively? Why?

      8.1.1. Meaning of Financial Statements 
      Financial statements are reports prepared by a company’s management to 
      present the financial performance and position of a business at a point in time. 
      Financial statements consist of four statements namely:
       1. Income statement
       2. Balance sheet
       3. Statement of owner’s equity and
       4. Cash flow statement
       
      Generally, the most important financial statements are:

       (i) The income statement / Financial performance statement or Trading, profit 
      and loss account.

       (ii) Balance sheet or the Financial position statement.

       8.1.2. Importance of Financial Statements
       Evaluation

       It’s possible to assess future cash flows, and compare economic and financial 
      results year by year.
       
      Internal Decision Making
       The management can use all the information to guide and lead the company 
      through future performances.
       
      Planning
       Financial Report can be the basis to plan the activity, allocate resources, schedule 

      Activities  etc.

       External Decision Making

       External users can evaluate the possibility to invest in the business or company

       Application Activity 8.1
       With clear examples, explain the reasons why the following people may 
      be interested in looking at the financial statements of any business?
       -Employees
       -Business Manager
       -Entrepreneur
       -Government

       -Investors

       8.2 Income statement (Trading, Profit & Loss Account)
       Activity 8.2

       “An income statement is mostly important for well established companies 
      like Bralirwa, Rwandair, among others, a developing entrepreneur only 
      needs a book to record day to day transactions” 
      a. Do you agree with the above assertion? Explain your decision.

       b. What is an income statement?

      Main elements of Income Statement


      Income statement is a financial statement that reports a company’s financial 
      performance over a specific accounting period. Financial performance is 
      assessed by giving a summary of how the business incurs its revenues and 
      expenses through both operating and non-operating activities. The income 
      statement is made of two accounts:

      • Trading account
      where the value of the gross profit is determined by 

      deducting the cost of goods sold from net sales i.e.  


       1) Trading account 
      Trading account is an account which is prepared to determine the gross profit 
      or gross loss of the business concern. It shows the revenues from sales, the cost 
      of those sales or goods sold and the gross profit or loss from the specific period 
      ended. It is prepared after the preparation of the trial balance. 

      Items found in a trading account:

       a) Sales: Refer to the value of goods which were bought for resale and have 
      been sold by the business. It is revenue earned from goods sold. They are 
      entered in the trading account for the purpose of calculating gross profit or loss.
       
      b) Sales return:
      Roods that were previously sold but have been returned to the 
      business due to different reasons including but not limited to poor quality/ 

      defects, wrong pricing and delayed delivery. 


      c) Opening stock: Unsold goods in the business available at the beginning of 
      the new trading period.
      d) Purchases: Goods bought by the business for resale.
      e) Purchases return: Goods previously bought by the business for sale but 
      have been sent back to the suppliers. This value is treated in the trading 

      account and its subtracted from the purchases to get the net purchases i.e. 

       f) Carriage inwards: Refers to the cost of transporting the goods or bringing 
      the goods up to the premises. It forms part of the goods bought hence added 

      to purchases in the trading account.

      g) Closing stock: Goods not sold by the business at the end of a trading period. 
      It’s included in the trading account and it is subtracted from the goods 

      available for sale to get cost of sales. i.e:

      h) Drawings of goods: Sometimes an entrepreneur may take physical items 
      out of the business for private use. This must be subtracted from the goods 
      available for sale in the trading account. It should be noted that “only 
      drawings in form
      of goods”  must be treated in the trading account.
       
      i) Gross profit:
      Excess of net sales over the cost of goods sold or cost of sales. It 
      also refers to the total profit obtained by an enterprise before paying off the 
      operating expenses. Thus 
      Gross profit = net sales – cost of sales

      j) Gross loss: This is excess of cost of sales over the net sales of the business. 

      Format of a trading account
       There are basically two formats that are used to prepare a trading account. i.e 
      a) Horizontal 
      b) Vertical format

      Horizontal format / T - Format


       Note: 
      • Goods available for sale (GAS) = Opening stock + Net purchases
       • Cost of Goods Sold (COS) = Goods Available for Sale – Closing stock.
       • Gross profit = Net sales – Cost of Goods Sold

       Vertical format of an Income statement

       Income statement for the year 

      ended. date 





       b) Notice use of brackets on the amounts mean deduction of the amount. The 
      other option would be to use the word ‘Less’ before the item concerned.
       
      Profit and Loss account:

       As seen in the above vertical format of an income statement, you will realize 
      that  Profit and Loss account part represent the company’s NET PROFIT or 
      NET LOSS which is determine by deducting operating expenses (these include 

      selling and distribution expenses and administrative expenses) from the Gross income.


      Application Activity 8.2
       KUNDUMURIMO Enterprise showed the following balances as on 31st 

      December 2012 

      Required: Prepared an income statement for KUNDUMURIMO 

      Enterprise for the period ended 31st December 2012.

      8.3. Balance sheet


      Activity 8.3



      A balance sheet is a statement of assets and liabilities of a business organization 
      at a given period of time. It is a statement that shows what you own, what you 

      owe, and what you are worth at the end of each accounting period.

       A balance sheet is not an account therefore, not part of the double entry but 
      it is prepared based on the ACCOUNTING EQUATION, which states that:  Assets 
      =capital + liabilities. That is why a balance sheet is also defined as “a statement 

      in which the business accounting equation is expressed” 

      Parts of a balance sheet:
       There are three major parts of a balance sheet;
       • Assets
       • Liabilities

       • Capital / Owner’s equity

       Assets
       These are possessions owned by the business and have got money value. 
      They are grouped into two;
       • Fixed assets
       • Current assets
       a) Fixed assets: These are the possessions of the business which are of a 
      durable nature bought for use in the business for a long period of time 
      usually above one year. E.g. land, equipment, machinery, fixtures and fittings, 

      motor vehicle etc.

       b) Current assets: Possessions or properties of the business which lasts for 
      a short time and usually easily changed into cash. Current assets keep on 
      being converted from one form to another e.g. stock of goods, debtors,  cash 
      at hand , prepaid expenses or expenses paid for in advance, outstanding 

      income etc.

       Liabilities
       These are debts or amount of money that the business owes the outsiders. 
      They are claims of outsiders on the business’ assets. They are also properties/
       possessions that are used by the business and which must be paid back in the 
      future. There are 2 types of liabilities: 
      • Long term liabilities
       • Short term liabilities
       a) Long term liabilities:  These are debts of the business that are expected to 
      be paid after a long time usually after one-year e.g. bank loans, debentures.
       b) Short term liabilities/current liabilities: These are debts of the business 
      which are to be paid within a short time usually within a year. They are claims 
      by outsiders of the business that are repaid within one accounting year e.g. 
      trade creditors, bank overdraft, outstanding expenses, prepaid income etc.
       
      Capital
       These are the resources invested by the owner or the entrepreneur in the 
      business. Capital is also known as owner’s equity. To start any business a person 
      requires capital; which can be in the form of money or other physical resources.
       
      The balance sheet can be reported in two different formats: Horizontal format 

      referred as account form and Vertical format referred to as report form. 
              • The Horizontal format consists of two columns displaying assets 
                 on the left column of the report and liabilities and equity on the right 

                column. 

       An example of the balance sheet in horizontal format:

       BALANCE SHEET AS AT ……/………/……….    


       • The Vertical format, on the other hand, has only one column. This 
      form is one of the most widely used today.  Assets are always presented 

      first, followed by liabilities and equity.  

      An example of the balance sheet in Vertical format:



       Also assets and liabilities can be arranged according to their realization and 
      payment preference, which is called liquidity order basis or on the assumption 
      that these will be sold and paid only on the liquidation of business which is 
      called the permanence/fixity basis.
        
       Application Activity 8.3
       Analyse the accounting information below in the trial balance and 

      discuss the questions that follow.

      Required:
      a) Prepare KALISA’s Balance sheet as at 31st Dec. 2011
      b) What advice would you give KALISA to improve on his business’s 

      financial position?

       Skills lab 8
      Use the current financial data you have so far in the business club and 
      prepare an income statement and a balance sheet (or projected income 
      statement & Balance sheet) for your business club. Analyse the Income 
      statement and Balance sheet, describe the net financial position of the 
      business club. Basing on the financial position, suggest action steps to 
      improve the financial life of your Business club.
       
       End of unit 8 Assessment
       1) The following information was obtained from the books of Kaneza 

      and Kamali Ltd Company as at 31 March 2010.


       You are required to:
       a) Prepare the business balance sheet as at 31 March 2010 in both 
      formats (Horizontal and vertical).
       b) How do you describe the financial status of Kaneza and Kamali 
      Ltd Company given their balance sheet status?
       2) The following was extracted from the books of Alexis traders Ltd as 

      at 31st December 2011



      Additional Information:
       • Stock at 31st December 2011 was valued at 42,000Rwf.

       Required:  

      Using a Vertical format, Prepare Alexis traders’ Ltd trading, profit and 
      Loss account for the year ended 31st December 2011.
       What advice would you give to the business operators given the nature 

      of the profit and loss account?

    • UNIT 9: RIGHTS AND RESPONSIBILITIES OF WORKERS AND EMPLOYERS


      Key unit competence: To be able to demonstrate rights and responsibilities of 
      employees at  workplace.

      Introductory activity

      OPTIMISMUS Ltd is a company based in KAJEVUBA village. When AKALIZA, 
      a head of production department claimed to correct some dangerous 
      aspects in the production system, MAHORO, the Managing Director refused 
      because it could take 2 weeks to fix the problem while it was a period of busy 
      production due to a big number of orders received  from the company loyal 
      customers. When AKALIZA was called to report to the Managing Director’s 
      office to discuss about that issue, she rudely talked to MAHORO, Director of 
      the company accusing him of not caring about the lives of workers in her 
      department.   
      1. Describe the rights that have been violated in regard to employment 
      relationship.
       2. Basing on the scenario above, identify responsibilities which have not 
      been fulfilled on both employer and employee sides.

      9.1. Meaning of rights and responsibilities

       Activity 9.1

       In 2019, GIRAMAHORO Enterprise dealing in agricultural activities was 
      established and based in NTARABANA sector. For the smooth running 
      of the business, the owner took an initiative of using his employment 
      right to recruit five new workers (employees) to help in achieving the 
      business objectives. On one hand, some of the main responsibilities of 
      an employer is to clearly show the worker’s tasks, to train new workers 
      for better performance of the tasks, and pay the workers regularly for 
      the work done. Besides, the earlier stated responsibilities of employers 
      are to give rights to the five recruited workers. The later have 
      responsibilities of performing the tasks as instructed by the employer, 
      to report at work on time, etc.
       Referring to the above case, answer the following questions:
       1. In the case study above, the enterprise owner had the right to hire 
      workers. What do you understand by rights?
       2. Basing on the workers’ responsibilities stated in the case study, 
      explain what you understand by responsibilities.
       3. Explain the difference between rights and responsibilities.

      Rights
      are moral or legal, social, entitlement to have or do something. That is, 

      rights are the fundamental normative rules about what is allowed of people 
      or owed to people, according to some legal system, social convention, or 
      ethical theory. Examples: Right of peaceful assembly and association, Right to 
      participate in government and in free elections, Right to be considered innocent 
      until proven guilty, etc.

      Responsibility
      is the state or fact of having a duty to deal with something or 

      of having control over someone. It is also referred to as a state or fact of being 
      responsible, answerable, and accountable for something within one’s power, 
      control, or management. E.g. an employer is responsible to supervise the 
      worker and make sure that the work is done in suitable conditions as far as 
      security, health and dignity of the worker are concerned
       
      Workers’ rights or labour rights are a group of legal rights and claimed human 

      rights having to do with labour relations between workers and their employers, 
      usually obtained under labour and employment law. In general, these debates 
      are about negotiating workers’ pay, benefits, and safe working conditions. 

       Application Activity 9.1
       Youth are a rapidly growing percentage of the Sub-Saharan African 
      population, and many are economically vulnerable. Financial inclusion 
      for youth, particularly the promotion of savings behavior is associated 
      with a number of positive social and economic outcomes and is an 
      international priority. However, the majority of youth in Sub-Saharan 
      Africa are not saving.
       The following are the rights and responsibilities of workers. Based on your 
      understanding and skills, tick the following statements where appropriate;


      9.2. Examples of rights and responsibilities of workers 

      and employers


       Activity 9.2
       1. Read the following scenario and answer the questions thereafter.

       KEZA is a newly-hired employee at a restaurant based in Kajevuba 
      village. KABERA, the human resource manager, pays a lot of attention 
      to her. At first, she feels flattered, but when he starts touching and 
      cuddling her she worried. She wants him to stop but is afraid that 
      if she says anything she might lose her job or strain the working 
      relationship.
       
      Required:

       a. How were KEZA’s  rights  violated?.
       b. Discuss the obligation of an employer that was ignored by KABERA 
      the  line manager to KEZA.
       
      2. Read the following extract, and answer the questions that follow,

       Labour  law covers all rights and obligations within the
       employer
      employee relationship whether current employees, job applicants, 
      or former employees. Because of the complexity of employment 
      relationships and the wide variety of situations that can arise, labour 
      law involves legal issues as diverse as discrimination, wrongful 
      termination, wages and taxation, and workplace safety. 

      Many of these issues are governed by applicable  state law. But, where 

      the employment relationship is based on a valid contract entered into 
      by the employer and the employee, state contract law alone may dictate 
      the rights and duties of the parties.
       (a) Describe any 3 rights of workers in a business .
       (b) Explain any 4 responsibilities of the workers in the business.
       
      9.2.1. Rights and responsibilities of workers

       Employers and employees have responsibilities to each other; they should 
      also expect their rights to be upheld. These rights and responsibilities relate 
      to areas such as Health and Safety, the provision of terms and conditions of 
      employment, equal opportunities and the right to be paid a minimum wage.
       
      Employees have the right to:

       1. Be given by the employer the agreed work  conditions, at the time and place 
      as agreed;
       2. To implement the work contract signed with the employer;
       3. To be paid by the employer the agreed remuneration regularly and in due 
      time;
       4. To be affiliated by the employer to the social security scheme;
       5. Enjoy the rights that are provided for workers with dependents by the law;
       6. To enter into a performance contract with the employer based on collective 
      negotiation within the establishment;
       7. Work in a respectful, inclusive work environment free of discrimination;
       8. A safe and healthful workplace;
       9. Ask employer to correct dangerous conditions;
       10. Receive training from employer;
       11. To be given the needed means for the execution or completion of the work;
       12. To benefit from all legal provisions related to the work.
       
      The responsibilities of the worker

       According to the article 48 of Labour law in Rwanda, the worker has the 
      following:

      Principal responsibilities:
       1. To personally carry out the duties of his/her position: The worker must 
      personally execute the contract of employment in the time, place and under 
      conditions agreed between the parties. He/she is not competent to request a 
      third party to do his/her job or to assist him/her without the consent of the 
      employer even when the remuneration of the third party will be paid by the 
      employee or gratuitous.
       2. To respect the employer’s or his/her representative’s orders when given so 
      as to have the work done.
       3. To abstain from all that might threaten his/her security or that of his/her 
      companions or third party, or jeopardize his/her dignity and the one of his/
       her colleagues.
       4. To respect workplace rules, regulations, policies and legislation prescribed 
      by the establishment, its branch or the place where he/she is to do his/her 
      work.
       5. To keep in good conditions tools given to him/her and give them back to the 
      employer at the time the work is completed. 
      6. Treating clients, coworkers and the public with respect and dignity.
       
      9.2.2. Rights and responsibilities of employers

       The employer has the following principal rights:
       • Hiring rights: The employers have the right to hire the workers in 
      accordance with proper procedures and to expect reasonable performance 
      from their employees.
       • Firing an employee: Basing on some legal reasons and after official 
      warnings, the employer has the right to fire an employee. Some legitimate 
      reasons for firing a worker include:
       - Poor performance/productivity problems
       - Gross misconduct/unprofessionalism at work
       - Stealing
       - General layoffs, etc.
       • To see his orders respected: An employee is required to respect 
      the orders of the employer or his/her representative when given in 
      furtherance of work, but the level of devotion required of an employee 
      should not exceed his obligations. In as much as the employee owes 
      the entirety of his professional activities to the enterprise, nonetheless, 
      outside his working hours, it is lawful for him to perform any activity of 
       a professional nature which is not harmful to the proper execution of his 
      obligations as per the terms of his contract of employment.
       • To see his work well executed: The employer has the right to see the 
      work wholly done by the worker in the time, place and under conditions 
      agreed between the parties.
       • To see all legal provisions in his favor being respected: The employee 
      is required to respect all obligations contained in the contract of 
      employment. If the employee is in breach of his/her contractual obligation, 
      he may be liable to indemnify the employer.

       The employer has the following main responsibilities:

       • To give to the workers the agreed work conditions;
       • To ensure the responsibility of implementing the work contract signed on 
      his/her behalf;
       • To supervise the worker and make sure that the work is done in suitable 
      conditions as far as security, health and dignity of the worker are 
      concerned;
       • To pay the worker the agreed remuneration regularly and in due time;
       • To avoid whatever may hamper the company’s functioning, its workers 
      and the environment;
       • To affiliate workers to the social security scheme;
       • To make those workers with dependents enjoy the rights that are provided 
      for by the law;
       • To enter into a performance contract with the worker based on collective 
      negotiation within the establishment;
       • Ensuring no discrimination in the workplace; 
      • Provide a workplace safe and free from hazards;
       • Provide training to employees;
       • Provide competent supervision, etc.

      Application Activity 9.2

       A. Circle the correct answer for each statement.
       1. In Rwanda, an employer does not need to:
       a. Provide regular breaks for employees
       b. Maintain a safe workplace
       c. Pay employees the agreed-upon wage on time
       d. Pay for employee’s transportation to work
       
      2. In Rwanda, an employee has the responsibility to:

       a. Respect and follow the directions given by the employer
       b. Avoid hazards at the workplace
       c. Keep equipment in good working order
       d. Show up on time
       e. All of the above
       
      B. State whether the following statements are True or False

       1.Rights and responsibilities are the same for employers and 
      employees
       2. The Rwandan labor law protects workers against harassment, 
      intimidation and violence.
       3. Women should not report sexual harassment by their supervisors 
      because they will lose their job.
       4. Rwandan labor law protects adults, not youth.
       5. Think about a business, organization or any other institution in your 
      home locality employing workers. Answer the following questions:
       a. Discuss the responsibilities of the employer ( business/
       organization employing workers)
       b. What rights do employers expect their employees to provide?

       Skills lab 9
       1. For the business you intend to start in your community;
       i) How will you ensure that the rights of workers are observed?
       ii) What will be the responsibilities of different workers that you 
      will employ?
       iii) As the employer, what will be your responsibilities?
       iv) How will you ensure that workers have performed their 
      responsibilities?
       2. Draw 3 pictures showing human rights violation in your portfolio 
      notebooks.

       End of unit 9 Assessment

       KAZENEZA, an Adventist by religion was selected as the best candidate 
      to work as a teller at URWUNGUKO bank. Saturday is always a  very busy 
      day of the week most especially to cashiers due to the fact that, on this  
      day, the bank experiences huge amounts of deposits and withdrawals 
      in almost equal proportions hence many customers. In the employment 
      contract, the bank highlighted Saturday as a  special working day under 
      the  terms and conditions of working days.
       
      Questions:

       1. What advice would you give to KAZENEZA taking into consideration 
      his religious beliefs and the bank’s terms and conditions of the 
      employment contract?
       
      2. Assume that you are selected by RITCO Ltd; one of the biggest 

      and famous transport companies in Rwanda to train company 
      administrative and managing staff on the rights and responsibilities 
      of employer. 

      3. Discuss what will be contained in your training presentation as 

      the rights and responsibilities of employers to make sure that 
      employees’ rights and responsibilities are not violated by their 
      employers.
       

      BIBLIOGRAPHY

       A-Text books:
       Agriculture, U. o.-C. (1989). Money Management-How to Make Your Money Go Further. 
      University of Kentury.
       Akazi Kanoze Youth Livelihood project, (2009), Work Readiness Trainers’ Manual
       Ashe-Edmunds, S. (2018, October 15). Importance of Compliance in Business. 
      Retrieved       October 22, 2019, from https://smallbusiness.chron.com
       Board, R. E. (2018). Taxes in business. In R. E. Board, Entrepreneurship S5 text book. 
      Kigali: Rwanda Education Board.
       Board, R. E. (2018). Entrepreneurship S.5. Kigali: Rwanda Education Board.
       Educate! Exchange, ( 2017),  Resources & Competency-based Entrepreneurship 
      Subject S4 Skills Lab Lesson Plans
       Gorgio. (2019, September 27). Rights of employees and employers. Retrieved October 
      18, 2019, from Businesscasestudies: https://businesscasestudies.co.uk
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       Kalungi Rogers, Ngobi Dennis, Mutegaya Herbert, Okoroi David, Entrepreneurship for 
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      Stebbing, L. (1993). Quality Assurance: The Route to Efficiency and 
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      B- Online sources:

       Li Zou, S. M.-T. (2015, April 28). Facilitators and Obstacles in Youth Saving: Perspectives 
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       springer.com/
       Margaret Rouse, D. S. (2019, July). Quality Assurance (QA). Retrieved October 22, 
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       Seth, t. (n.d.). Characteristics of a Good Tax System. Retrieved October 21, 2019, from 
      http://www.economicsdiscussion.net
       Labor, M. (2013). Employee Rights and Responsibilities. Retrieved October 18, 2019, 
      from safety Works: https://www.safetyworksmaine.gov
       Limited, M. B. (n.d.). Money management case study. Retrieved October Thursday, 
       2019, from Macquarie Online Trading: https://www.macquarie.com
       What Are The Characteristics Of a Good Tax System? (2016, September 11). Retrieved 
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       www.smallbusinesschron.com  /disadvantages of+ information technology
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       Adapted from https://wonderopolis.org/wonder/why-do-you-have-to-pay-taxes)