1.1 identify the sources of finance available to

1.1 identify the sources of finance available to a business

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Learning Outcomes Content Assessment Criteria for Pass

LO1 Understand the

sources of finance

available to a business


Range of sources: sources for different businesses; long

term such as share capital; retained earnings; loans; thirdparty

investment; short/medium term such as hire

purchase and leasing; working capital stock control; cash

management; debtor factoring


Implications of choices: legal, financial and dilution of

control implications; bankruptcy


Choosing a source: advantages and disadvantages of

different sources; suitability for purpose eg matching of

term of finance to term of project


1.1 identify the sources of finance

available to a business


1.2 assess the implications of the

different sources


1.3 evaluate appropriate sources of

finance for a business



LO2 Understand the

implications of finance as

a resource within a



Finance costs: tangible costs eg interest, dividends;

opportunity costs eg loss of alternative projects when using

retained earnings; tax effects


Financial planning: the need to identify shortages and

surpluses eg cash budgeting; implications of failure to

finance adequately; overtrading


Decision making: information needs of different decision



Accounting for finance: how different types of finance and

their costs appear in the financial statements of a business;

the interaction of assets and liabilities on the balance sheet

and on international equivalents under the International

Accounting Standards (IAS)

2.1 analyse the costs of different

sources of finance


2.2 explain the importance of

financial planning


2.3 assess the information needs of

different decision



2.4 explain the impact of finance on

the financial statements


LO3 Be able to make

financial decisions based

on financial information


Budgeting decisions: analysis and monitoring of cash and

other budgets


Costing and pricing decisions: calculation of unit costs, use

within pricing decisions; sensitivity analysis

Investment appraisal: payback period; accounting rate of

return; discounted cash flow techniques ie net present

value; internal rate of return


Nature of long-term decisions: nature of investment

importance of true value of money; cash flow; assumptions

in capital investment decisions; advantages and

disadvantages of each method


3.1 analyse budgets and make

appropriate decisions


3.2 explain the calculation of unit

costs and make pricing

decisions using relevant information


3.3 assess the viability of a project

using investment

appraisal techniques


LO4 Be able to evaluate

the financial performance

of a business


Terminology: introduction to debit, credit, books of prime

entry, accounts and ledgers, trial balance, final accounts

and international equivalents under the International

Accounting Standards (IAS).


Financial statements: basic form, structure and purpose of

main financial statements ie balance sheet, profit and loss

account, cash flow statement, notes, preparation not

required; changes to reporting requirements under the

International Accounting Standards (IAS) eg statement of

comprehensive income, statement of financial position;

distinctions between different types of business ie limited

company, partnership, sole trader.

Interpretation: use of key accounting ratios for profitability,

liquidity, efficiency and investment; comparison both

external ie other companies, industry standards and

internal ie previous periods, budgets

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