business finance

• The exam that you're going to take is 2 hours long and the exam is also split into two parts Part A and Part B
• Part A is the personal finance section where they recommend you spend 45 minutes on and part B is the business finance section where they recommend you spend 1 hour and 15 minutes on
• It is important to keep a note of those times, you don't want to be spending an hour for example on personal finance and they're not having sufficient time to complete the business finance section
• Topics for personal finance section


  • Understanding the importance of managing personal finance
  • Different ways to pay
  • Current accounts
  • Managing personal finance
  • Exploring the personal finance sector
  • Consumer protection in relation to personal finance
  • Information, guidance and advice
• Topics for business finance section


  • Purpose of accounting
  • Different types of income
  • Different types of expenditure
  • Sources of business finance
  • Cash flow forecasts
  • Break even analysis
  • Statements of comprehensive income
  • Statements of financial position
  • Measuring profitability, liquidity, efficiency
• Learners will be able to apply principles of personal and business finance in order to critically evaluate real life situations and determine appropriate courses of action
• Learners can apply relevant concepts, models and theories in order to present reasoned evaluations in realistic personal and business scenarios
• Learners make appropriate judgments and present fully justified recommendations for courses of action based on the analysis of financial data
• Learners understand the importance of statements of comprehensive income and statements of financial position and can analyze these statements methodically and critically
• Learners can fully justify recommendations for personal finance and business improvement based on a thorough analysis of financial information
• Command words/terms used in the exam


  • Analyze
  • Assess
  • Calculate
  • Describe
  • Discuss
  • Evaluate
  • Explain
  • Give
  • Identify
  • Illustrate
  • Outline
• Formulas to know


  • Total revenue = Selling price x Quantity sold
  • Break even analysis formulas
  • Profitability ratios
  • Statement of financial position formulas
  • Statement of comprehensive income formulas
  • Liquidity ratios
  • Efficiency ratios
  • Cash flow forecast formulas
• Functions of money


  • Unit of account
  • Means of exchange
  • Store of value
  • Legal tender
• Factors influencing personal view of money


  • Personal attitudes
  • Life stages
  • Culture
  • Life events
  • External influences
  • Interest rates
• Reasons to plan expenditure


  • Control costs
  • Avoid legal action and repossession
  • Maintain good credit rating
  • Avoid bankruptcy
  • Fund purchases
  • Generate income and savings
  • Set financial targets
  • Provide insurance against loss or illness
• Our debts are more than what you can afford to pay back and you have to declare yourself bankrupt
• Managing your money


  Funding purchases rather than just going out and buying things, managing money or putting money aside into certain pots to save up for future purchases, planning expenditure
• Generate income and savings


  Putting money away each month from what's left over after paying expenses, setting financial targets and goals
• Provide insurance against loss or illness

  Having money put aside can cover future expenses
• Counter the effects of inflation


  Having savings and interest income can help offset high inflation
• Avoid getting into debt


  Knowing where your money is coming in and going out
• Different ways to pay


  • Cash
  • Debit card
  • Credit card
  • Cheque
  • Electronic transfer
  • Direct debit
  • Standing order
  • Prepaid card
  • Contactless card
  • Charge card
  • Store card
  • Mobile banking
  • BACS and CHAPS payments
• Cash


  Notes and coins
• Debit card


  Money has to be in your bank account for the payment to be authorised
• Credit card


  Issued by banks, have a credit limit, you pay back the balance either in full or partially with interest
• Cheque


  A piece of paper promising to pay a certain amount, dwindling in use nowadays
• Electronic transfer


  Transferring payment to others using a banking app
• Direct debit


  Automatic payment that comes out on a particular date, you need to have the money in your account
• Standing order


  Instruction to pay a certain amount on a particular day to a certain person
• Prepaid card


  For people who can't get a credit card, you put money onto the card and can then use it like a credit card
• Contactless card


  You just tap to pay, only works if you have money in your account
• Charge card


  Issued by finance companies, allows you to pay on the card like a short-term loan, expect you to pay it back in full in about 28 days
• Store card


  Issued by retailers to certain customers, allows you to buy items on credit and pay back later, can only be used in that store
• Mobile banking


  Accessed via website or banking apps
• BACS and CHAPS payments


  Electronic payments from one bank account to another, CHAPS is a same-day transfer
• Types of current accounts


  • Standard current account
  • Packaged/Premium current account
  • Basic current account
  • Student current account
• Standard current account


  Customers must have a fair credit rating, comes with a debit card and possibly an overdraft, wages are usually paid into this account
• Packaged/Premium current account


  For people with a better credit rating, comes with a monthly fee but also extra features like travel insurance or cash back
• Basic current account


  For people with a poor credit rating, has limited features and unlikely to come with an overdraft or credit card
• Student current account


  Offered to students, for those with a good enough credit rating