Business resources

Topics: Business, Income statement, Corporation Pages: 10 (1275 words) Published: July 1, 2014
Woolwich Polytechnic School

BTEC Task Sheet Front Cover

Name of Centre:Woolwich Polytechnic School

Title of Course:Business Studies

Unit Number and Title:Unit 5:

Name of assessors:Mr Warner

Deadline for completion:

Statement of Context:
Understanding how a business operates and what makes it successful requires knowledge of the accounting process. This unit introduces learners to the purpose of accounting and its role in the management of a business organisation. Accounting involves the recording of business transactions, and this in turn, leads to the generation of financial information, which can be used as the basis of good financial control and planning. Inadequate record-keeping and a lack of effective planning ultimately lead to poor financial results. It is vital that owners and managers of businesses are able to recognise the indications of potential difficulties. Remedial action can then be taken. This unit should give learners the skills and knowledge needed to understand and manage finances. The unit is divided into two distinct parts. The first is an understanding of the accounting processes necessary to provide accurate and relevant financial information. The second part is the practical aspect of carrying out those accounting activities.

Scenario 1
Your friend has recently started his own business. They are excited about being their own boss and making a lot of money. However they have also heard that 50% of small businesses fail in the first year of trading. To help prevent this they have been advised to seek some advice with regard to their Accounts and Finances.

As a BTEC National Business student, your friend has asked you to provide them with some financial advice.

P1 describe the purpose of accounting

1. You need to produce a leaflet for your friend explaining the main purpose of Accounting. Include sections on:

What is Accounting
Why Accounting is important to a business
What Accounting shows
Historical Data
Management Accounting and Planning
Measurement of Financial Performance and position

Important: Accuracy is of vital importance in the Accounting world. An extra 0 can mean the difference between thousands and millions. Your leaflet MUST be accurate in both its content and presentation.

Good sources:

P2 explain the difference between capital and revenue items of expenditure and income

1. Add another page to your leaflet that you produced in P1. This page should be titled: Accounting Terminology. Add a paragraph on each of the following which explains what it means using examples:

Capital Income
Capital Expenditure
Revenue Income
Revenue Expenditure

Scenario 2
Your friend has been impressed by your financial advice and has recommended you to Carrie, who has also recently started her own business.

P3 prepare a twelve-month cash flow forecast to enable an organisation to manage its cash

1. Open Carries Cash Flow. Using the information given, accurately complete a 12 month cash flow forecast for Carrie.

2. Once you have completed the cash flow forecast using the template, write a paragraph explaining the purpose and importance of predicting income and expenditure.

M1 analyse the cash flow problems a business might experience

Many profitable businesses fail due to poor cash flow and inadequate financial planning. Using the cash flow forecast from P3, write a short report for Carrie. This report should include sections on the following:

1. Your findings

2. Potential Problems (such as a shortage of cash in a particular month).

3. In the report you also need to explain the dangers and consequences of poor financial planning.

D1 recommend and justify actions a business might take when experiencing cash flow problems

Using the cash flow report that you completed in M1,make appropriate recommendations for Carrie to solve...
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