Notes WIP

Question 1

Different insurance products:
o products (car, home and contents, life assurance and insurance, travel, pet, health)
o different types of insurance policy for each product
o features of different types of insurance
o advantages and disadvantages of different types and features

Question 2

B4 Information, guidance and advice
Function, role and responsibilities, advantages and disadvantages of:
* Citizens Advice
* independent financial advisor (IFA)
* price comparison websites
* debt counsellors
* Individual Voluntary Arrangements (IVAs)
* bankruptcy.

Question 3

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.

Question 4

• Revenue income:
  o cash sales
  o credit sales
  o rent received
  o commission received
  o interest received
  o discount received

Answer 4

Types of revenue income: Cash sales, credit sales, rent received, commission received, interest received, discount received

Question 5

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).

Question 6

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.

Question 7

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.

Question 8

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.

Question 9

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.

Answer 10

Create a statement of financial position including: non-current assets (tangible and intangible, cost, depreciation and amortisation, net book value) current assets (inventories, trade receivables, prepayments, bank, cash), current liabilities (bank overdraft, accruals, trade payables), net current assets/liabilities, non-current liabilities (bank loan and mortgage), net assets, total equity (opening capital, transfer of profit or loss, drawings, closing capital)

Question 11

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
o Profit for the year = Revenue – cost of sales – expenses
o Capital employed = total assets – current liabilities
o or Capital employed = non-current liabilities + total equity

Question 12

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