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
project
LO2 Understand the
implications of finance as
a resource within a
business
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
makers
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
makers
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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