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NGUYEN TAT THANH UNIVERSITY

NTT INSTITUTE OF INTERNATIONAL EDUCATION

EDEXCEL HIGHER NATIONAL DIPLOMA IN BUSINESS


SCHEME OF WORK

Unit title: FINANCIAL ACCOUNTING AND REPORTING


Unit code: F/601/0864
QCF level: 4
Credit value: 15
Course Facilitator:
Email: – Tel:
Guided learning hours 60 ( 40 hrs in classroom)

AIM

In this unit learners will prepare financial statements for different types of business,
complying with relevant legal and regulatory provisions and the basic principles of group
accounts. Learners will also develop tools for the interpretation of financial statements.

UNIT ABSTRACT

It is essential for the success of any business that it has good financial control and record
keeping. Lack of effective control, planning and recording can ultimately lead to poor financial
results. Owners and managers need to be able to recognise the indications of potential
difficulties and take remedial action when required.
The unit considers the current regulations governing financial reporting, the formats of
financial statements and the purpose of these statements for different users.
Learners will use records to complete financial statements. They will consider various
categories of business income and expenditure and use cash flow forecasts, monitoring
and adjusting for the effective management of cash flow. They will measure financial
performance using a profit and loss account and balance sheet and analyse the
profitability, liquidity and efficiency of a business through the application of ratio analysis.

LEARNING OUTCOMES

On successful completion of this unit a learner will:

1 Understand the regulatory framework for financial reporting

2 Be able to prepare financial statements from complete or incomplete records

3 Be able to present financial information in accepted formats for publication

4 Be able to interpret financial statements.


UNIT CONTENT

1 Understand the regulatory framework for financial reporting

User groups: owners; managers; employees; suppliers; customers; lenders; government;


potential investors; different needs from financial statements
User needs: profitability; liquidity; gearing; cash flow; job security; Accounting Standards
Board (ASBs) statement of principles; International Accounting Standards Board (IASBs)
framework for the presentation of financial statements
Legislation: current legislation including Companies Acts 1985, 1989 and 2006; Partnership
Act 1890; European directives
Other regulations: International Accounting Standards (IASs); International Financial Reporting
Standards and the main differences from UK Statements of Standard Accounting Practice
(SSAPs) and Financial Reporting Standards (FRSs); The Accounting Standards Board (ASB)

2 Be able to prepare financial statements from complete or incomplete records

Statements: trial balance; assets, liabilities, income, expenses, capital; profit and loss
accounts; balance sheet; cash flow statement; notes to the accounts; statement of
recognised gains and losses; international equivalents under the International
Accounting Standards (IAS)
Types of business: sole trader; partnership; limited company (public and private);
manufacturing/service/retail, group of companies
Preparation: from trial balance with adjustments eg stock, prepayments, accruals, bad
debts, depreciation; from incomplete records; basic consolidation of accounts; changes to
reporting requirements under the International Accounting Standards (IAS) eg statement of
comprehensive income, statement of financial position

3 Be able to present financial information in accepted formats for publication

Types of business: different formats for the businesses described in learning outcome 2
above; annual report
Formats: requirements of law and generally accepted accounting practice; changes
to reporting requirements under the International Accounting Standards (IAS)

4 Be able to interpret financial statements

Ratios: calculate ratios to reflect profitability, liquidity, efficiency, gearing, investment;


comparison of these ratios both externally (other companies, industry standards)
and internally (previous periods); interpretation of results
Reporting: present findings in a format appropriate to users; weaknesses and limitations
of analysis
MAIN TEXTBOOK:
Unit Outline

Session Topics Suggested Contents Resources,


activities, readings
1 Conceptual framework of International accounting standard, Financial
accounting Financial reporting standard accounting and
reporting
2 Cash flows Cash inflows, cash outflows and cash nt
balance
3 Worksheet Trial balance, adjustments, adjusted trial nt
balance, income statement and balance
sheet
4 Exercises Worksheet Extra materials

5 Financial reporting and Financial ratio analysis Financial


analysis accounting and
reporting
6 Exercises Financial ratio analysis nt

7 The operating cycle and Merchandising transactions under Financial


merchandising operations perpetual and periodic inventory accounting
System
8 A field trip Peace World Trading
and Manufacturing Co., Ltd.

9 Inventories Inventory cost, calculate Financial


inventory cost accounting
10 Exercises Inventory cost, calculate nt
inventory cost
11 Cash and Receivables Cash equivalents, bank nt
Reconciliations
12 Current liabilities and Fair Contingent liabilities, nt
value Accounting time value of money and
13 Exercises interest
Contingent liabilities, nt
time value of money and
interest

14 Long-term assets Long-term assets, capital expenditures, nt


revenue
15 Exercises Long-term assets, capital expenditures, nt
revenue
16 Review, give instructions
assignment 2

UNIT ASSESSMENT CRITERIA

Assessment weighting and methods (subject to be changed by the teacher)

*Please refer to assignment briefs for more details


Grading criteria for PASS

Learning outcomes Assessment criteria for pass


On successful completion of The learner can:
this unit a learner will:

LO1 Understand the regulatory 1.1 describe the different users of financial statements and their
framework for financial needs
reporting
1.2 explain the legal and regulatory influences on financial
statements
1.3 assess the implications for users
1.4 explain how different laws/regulations are dealt with by
accounting and reporting standards
LO2 Be able to prepare financial 2.1 prepare financial statements for a variety of businesses from a
statements from complete or trial balance, making appropriate adjustments
incomplete records
2.1 prepare financial statements from incomplete records
2.3 prepare a consolidated balance sheet and profit and loss
account for a simple group of companies
LO3 Be able to present financial 3.1 explain how the information needs of different user groups
information in accepted formats vary
for publication
3.2 prepare financial statements in a form suitable for
publication by a sole trader, partnership and limited
company
LO4 Be able to interpret financial 4.1 calculate accounting ratios to assess the performance and
statements position of a business
4.2 prepare a report incorporating and interpreting accounting
ratios, including suitable comparisons.

Grading criteria for MERIT

Merit descriptors Exemplar indicative characteristics

Centres can identify and use other relevant


characteristics. This is NOT a tick list.

In order to achieve a merit The learner’s evidence shows, for example:


the learner must:
• identify and apply strategies to • effective judgements have been made
find appropriate solutions
• complex problems with more than one variable have been
explored
• an effective approach to study and research has been
applied
• select/design and apply • relevant theories and techniques have been applied
appropriate methods/techniques
• a range of methods and techniques have been applied
• a range of sources of information has been used
• the selection of methods and techniques/sources has been
justified
• the design of methods/techniques has been justified
• complex information/data has been synthesised and
processed
• appropriate learning methods/techniques have been applied

• present and communicate • the appropriate structure and approach has been used
appropriate findings
• coherent, logical development of principles/concepts for the
intended audience
• a range of methods of presentation have been used and
technical language has been accurately used
• communication has taken place in familiar and unfamiliar
contexts
• the communication is appropriate for familiar and unfamiliar
audiences and appropriate media have been used.

Grading criteria for DISTINCTION

Distinction descriptors Exemplar indicative characteristics

Centres can identify and use other relevant


characteristics. This is NOT a tick list.

In order to achieve a distinction The learner’s evidence shows, for example:


the learner must:

• use critical reflection to evaluate • conclusions have been arrived at through synthesis of ideas
own work and justify valid and have been justified
conclusions
• the validity of results has been evaluated using defined
criteria
• self-criticism of approach has taken place
• realistic improvements have been proposed against defined
characteristics for success

• take responsibility for managing • autonomy/independence has been demonstrated


and organising activities
• substantial activities, projects or investigations have been
planned, managed and organised
• activities have been managed
• the unforeseen has been accommodated
• the importance of interdependence has been recognised and
achieved
• demonstrate • ideas have been generated and decisions taken
convergent/lateral/ creative
• self-evaluation has taken place
thinking
• convergent and lateral thinking have been applied
• problems have been solved
• innovation and creative thought have been applied
• receptiveness to new ideas is evident
• effective thinking has taken place in unfamiliar contexts.

REFERENCE MATERIALS (provided by lecturer)

GUIDANCE

Links

The unit links with the following units within the specification: Unit 2: Managing Financial
Resources and Decisions, Unit 6: Business Decision Making, Unit 9: Management Accounting:
Costing and Budgeting, Unit 11: Financial Systems and Auditing and Unit 12: Taxation.
Additionally, the unit covers some of the underpinning knowledge and understanding for the NVQ
in Accounting as mapped in Annexe B.
The unit covers topics essential for learners aiming to make a career in this field and who
would like to become members of professional accounting bodies.

Essential requirements

Published financial reports of public limited companies are essential and are available from
the companies themselves, or from the free online service provided by The Financial Times.

Employer engagement and vocational contexts

Centres should develop links with local businesses. Many businesses and chambers of
commerce want to promote local business and are often willing to provide work placements,
visit opportunities, information about businesses and the local business context and guest
speakers.
www.businessbritainuk.co.uk provides information about business in Britain and has
extensive links to other business and business news sites.
www.fsb.org.uk The Federation of Small Businesses provides information,
support and guidance about small businesses in the UK.