In this unit you will study the purpose and importance of personal and business finance. You will also develop the skills and knowledge needed to understand, analyse and prepare financial information.

Mapped Specification

Here you can find a collection of resources that can be used with the BTEC National Level 3 in Business qualification.

In this unit you willl sit a 2 hour written exam in this unit. The paper will be marked out of 100 with 2 sections. Section A contains questions on the personal finance unit content and approximately one-third of the marks, and Section B contains questions on the business finance unit content and approximately two-thirds of the marks.

Download a Student Self Assessment Check List (.pdf document)

Unit Content

 Learning Aim  Content  Video / Assessment Resources
 A1 - Function and Role of Money The ability to handle money received, and to control money paid, is a fundamental requirement for personal and business success. This success relies on understanding what ‘money’ is. • Functions of money: o unit of account o means of exchange o store of value o legal tender. • Role of money is affected and influenced by a number of factors: o personal attitudes towards risk and reward, borrowing, spending and saving o life stages (childhood, adolescence, young adult, middle age, old age), key features of each stage, financial needs and implications at each stage o culture, including religious and ethical beliefs o life events can vary the personal life cycle from individual to individual o external influences/trends and the financial-related effects o interest rates, cost of borrowing versus reward of saving. • Planning expenditure, common principles to be considered in planning personal finances: o to avoid getting into debt o to control costs o avoid legal action and/or repossession o remain solvent o maintain a good credit rating o avoid bankruptcy o to manage money to fund purchases o generate income and savings o set financial targets and goals o provide insurance against loss or illness o counter the effects of inflation.

Function and Role of Money Video 

Factors Infulencing the Role of Money Video

 A2 - Different Ways to Pay The use of money as a payment method, advantages and disadvantages of: • cash • debit card • credit card • cheque • electronic transfer • direct debit • standing order • pre-paid cards • contactless cards • charge cards • store cards • mobile banking • Banker’s Automated Clearing Services (BACS) Faster Payments Service (FPS) • Clearing House Automated Payment System (CHAPS).  Different Ways to Pay Video 
A3 - Current Accounts  Different types, features, advantages and disadvantages, different services offered: • standard • packaged, premium • basic • student.  Current Accounts Video
A4 - Managing Personal Finance  Suitability of different financial products and services against individual needs. • Different types of borrowing, features, advantages and disadvantages: o overdraft o personal loans o hire purchase o mortgages o credit cards o payday loans • Different types of saving and investment features, advantages and disadvantages: o individual savings accounts (ISAs) o deposit and savings accounts o premium bonds o bonds and gilts o shares o pensions. • Risks and rewards of saving versus investment. • Different types of insurance products, features, advantages and disadvantages: o car o home and contents o life assurance and insurance o travel o pet o health 

 Differnet Types of Borrowing Video

Different Types of Investment Video

Different Types of Insurance Video

Different Types of Insurance Student Worksheet (Word Document)

Evaluation Question of Savings Products

 B1 - Features of Financial Insitutions Types of organisations and their advantages and disadvantages: • Bank of England • banks • building societies • credit unions • National Savings and investments • insurance companies • pension companies • pawnbrokers • payday loans.   Features of Financial Insitutions Video
B2 - Communicating with Customers Methods of interacting with customers, advantages and disadvantages: • branch • online banking • telephone banking • mobile banking • postal banking

 Communicating With Customers Video

PPI Watchdog Report (YouTube Video)

B3 - Consumer Protection in relation to personal finance Function, role and responsibilities of: • Financial Conduct Authority (FCA) • Financial Ombudsmen Service (FOS) • Financial Services Compensation Scheme (FSCS) • Office of Fair Trading (OFT) • legislation – consumer credit. Consumer Protection in Relation to Personal Finance Video 
B4 - Information, guidance and advice Function, role and responsibilities, advantages and disadvantages of: • Citizens Advice • independent financial advisor (IFA) • price comparison websites • money advice service • debt counsellors • Individual Voluntary Arrangements (IVAs) • bankruptcy.  
C1 - Purpose of Accounting  Recording transactions. • Management of business (planning, monitoring and controlling). • Compliance (preventing fraud, compliance with law and regulations). • Measuring performance. • Control – assisting with the prevention of fraud, trade receivables and trade payables.

Purpose of Account Video

Purpose of Accounts Worksheet (PDF Document)

 C2 - Types of Income  Capital income: o loan o mortgages o shares o owner’s capital o debentures. • Revenue income: o cash sales o credit sales o rent received o commission received o interest received o discount received

Types of Income and Expenditure Worksheet (Word Document)

Capital and Revenue Income Video

 C3 -Types of Expenditure  Capital expenditure: o non-current assets – tangible (land, buildings and premises, machinery and equipment, vehicles, fixtures and fittings) o intangible (goodwill, patents, trademarks, brand names). • Revenue expenditure: o inventory o rent o rates o heating and lighting o water o insurance o administration o telephone o postage o stationery o salaries o wages o marketing o bank charges o interest paid o straight-line depreciation o reducing balance depreciation o discount allowed.

Capital and Revenue Expenditure Video

What is Depreciation? Video

Calculating Depreciation Straight Line Method Video

Calculating Depreciation Reducing Balance Method Video

Types of Income and Expenditure Worksheet (Word Document)

Depreciation Explained Help Sheet (PDF Document)

Depreciation Questions Worksheet (PDF Document)

 D1 - Sources of Finance  Advantages, disadvantages, short term and long term: • internal: o retained profit o net current assets o sale of assets • external: o owner’s capital o loans o crowd-funding o mortgages o venture capital o debt factoring o hire purchase o leasing o trade credit o grants o donations o peer to peer lending o invoice discounting Sources of Finance Worksheet (PDF Document)
 E1 - Cash Flow Forecasts  Inflows/receipts: o cash sales o credit sales o loans o capital introduced o sale of assets o bank interest received. • Outflows/payments: o cash purchases o credit purchases o rent o rates o salaries o wages o utilities o purchase of assets o Value Added Tax (VAT) o bank interest paid. • Prepare, complete, analyse, revise and evaluate cash flow. • Use of cash flow forecasts for planning, monitoring, control, target setting. • Benefits and limitations of cash flow forecasts.

Cash Flow Forecast Template

Cash Flow Forecasting Worksheet

Cash Flow Forecasting Explained Video 1

Cash Flow Forecasting Explained Video 2

Constructing a Cash Flow Forecast Video

Improving Cash Flow Forecast Video

Any Cash Flow Quiz from Tests & Quizzes Section

 E2 - Break Even Analysis  Costs: o variable o semi-variable o fixed o total. • Sales: o total revenue o total sales o selling price per unit o sales in value and/or units. • Calculation using/manipulating, break-even formula (units and/or sales value), completion of break-even chart, break-even point. • Identification of area of profit, area of loss. • Identify and calculate margin of safety (units and value). • Calculation of total contribution, contribution per unit benefits and limitations. • Use of break-even for planning, monitoring, control, target setting. • Prepare, complete, analyse, revise and evaluate break-eve

Break Even Explained (YouTube Video)

Break Even Tutorial (YouTube Video)

Break Even Basics (YouTube Video)

Rearranging Break Even Formula (YouTube Video)

Calculating Break Even Video 1 (YouTube Video)

Calculating an Average to Use with Break Even Video 2 (YouTube Video)

Rearranging Break Even Formula Video 3 (YouTube Video)

Break Even Quiz

Break Even Quiz 2

Break Even Calculations Quiz

Break Even Starter Quiz

Rearranging Break Even Formula Quiz

Bee Times Break Even Article Activity

 F1 - Statement of Comprehensive Income • Purpose and use. • Completion, calculation and amendment to include gross profit (revenue, opening inventories, purchases, closing inventories, cost of goods sold), calculation of profit/loss for the year (expenses, other income). • Adjustments for depreciation (straight-line and reducing balance). • Adjustments for prepayments, accruals. • Interpretation, analysis and evaluation of statements.

Income Statement Video (Introduction)

Income Statement Level 3 Video

Accruals and Pre-Payments Explained (Video)

Income Statement Interactive Worksheet

Income Statement Interactive Worksheet (Answers)

Accruals and Pre-Payments Worksheet 1


F2 - Statement of Financial Position Purpose and use. • Completion, calculation and amendment of statement using vertical presentation to include: o non-current assets (tangible and intangible, cost, depreciation and amortisation, net book value) o current assets (inventories, trade receivables, prepayments, bank, cash) o current liabilities (bank overdraft, accruals, trade payables) o net current assets/liabilities o non-current liabilities (bank loan and mortgage) o net assets o capital (opening capital, transfer of profit or loss, drawings, closing capital). • Adjustments for straight line (cost x%), depreciation, reducing balance (cost – depreciation to date x%). • Adjustments for prepayments, accruals. • Interpretation, analysis, and evaluation of statements

Statement of Financial Position Key Terms

Introduction to Statement of Financial Position Video

Statement of Financial Position Worksheet

Statement of Financial Position Worksheet 2

F3 - Measuring Profitability Calculation, interpretation, analysis and evaluation of: • gross profit margin: (gross profit/revenue) × 100 • mark-up: (gross profit/cost of sales) × 100 • profit margin: (profit/revenue) × 100 • return on capital employed (ROCE): (profit/capital employed) × 100

Tesco Annual Report (.pdf Document)

Sainsburys Annual Report (.pdf Document)

Morrisons Annual Report (.pdf Document)

Marks & Spencer Annual Report (.pdf Document)

Profitability Ratio Activity

Profitability Ratio Quiz

Calculating Gross Profit Margin Quiz

Calculating Net Profit Margin Quiz

Calculating Mark Up Quiz

Calculating Return on Capital Employed Quiz

Calculating Profitability Starter Quiz

F4 - Measuring Liquidity Calculation, interpretation, analysis and evaluation of: • current ratio: current assets/current liabilities • liquid capital ratio: (current assets – inventory)/current liabilities

Liquidity Ratio Quiz

Liqudity Worksheet

Calculating Current Ratio Quiz

Calculating Liquid Capital Ratio Quiz

Example Profitability and Liquidity Exam Question

Example Answer for Profitability and Liquidity Exam Question

F5 - Measuring Efficiency Calculation, interpretation, analysis and evaluation of: • trade receivable days: (trade receivable/credit sales) × 365 • trade payable days: (trade payables/credit purchases) × 365 • inventory turnover: (average inventory/cost of sales) × 365

Financial Efficiency Ratio Quiz

Financial Efficiency Worksheet

Trade Payables Quiz

Trade Receivables Quiz

Inventory Turnover Quiz

All Ratios Quiz

F6 - Limitations of Ratios  • Limitations of ratios when assessing business performance.  




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