Business Accounting Spec Essay

3901 Words Nov 29th, 2015 16 Pages
Unit 5:

Business Accounting

Unit code:


QCF Level 3:

BTEC National

Credit value:


Guided learning hours: 60
Aim and purpose
The aim of this unit is to enable learners to understand the purpose of accounting, and the associated processes and its role in the managing of a business. Learners will develop the skills and knowledge needed to understand financial information.

Unit introduction
Understanding how a business operates and what makes it successful, requires knowledge of the accounting process. Accounting involves recording 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.
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The measurement of an organisation’s financial performance and position requires an understanding of a basic profit and loss account and balance sheet with this understanding learners can analyse profitability, liquidity and efficiency of the organisation through the application of ratio analysis. Analysis will always require comparison of current figures with those from a previous accounting period, or those of a similar business organisation.
Learners will discover how to carry out ratio analysis as well as the meaning and implication of the figures.

Learning outcomes
On completion of this unit a learner should:


Understand the purpose of accounting and the categorisation of business income and expenditure


Be able to prepare a cash flow forecast


Be able to prepare profit and loss accounts and balance sheets


Be able to review business performance using simple ratio analysis.

Edexcel BTEC Level 3 Nationals specification in Business
– Issue 2 – June 2010 © Edexcel Limited 2010


Unit content
1 Understand the purpose of accounting and the categorisation of business income and expenditure
Purpose: record transactions; monitor activity; control; management of the business (planning, monitoring, controlling); measurement of financial performance (gross profit, net profit, value owed to and by the business)
Capital income: sole traders; partners; shares; loans; mortgages
Revenue income: sales (cash and credit

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