Unit 3-Finance and Accounts

1. The differences between capital expenditure and revenue expenditure

2. Sources Of Finance-Internal and External sources of finance(Retained profits,

leasing, hire purchase, bank loan, overdraft, debt factoring, debentures)-Definition,
benefits and limitations(2 marks, 4 marks, 10 marks)

3. Revenue and Cost (Different types of cost-fixed cost, variable cost, direct cost,
indirect cost)

4. Break-even-Calculation; diagram; margin of safety; benefits and limitations)

5. Final Accounts-Income statement and balance sheet-Definition, constructing two

financial statements; benefits and limitations of using final accounts; stakeholders-
final accounts.

6. Ratio analysis- Profitability ratio(meaning); Liquidity ratio (range, comments);

benefits and limitations of using ratio analysis

7. Cash flow-Calculation, constructing cash flow statement; how to improve cash flow;
comment on cash flow; Evaluation of methods to improve cash flow.

8. Investment appraisal-ARR and Payback calculation; benefits and limitations of

using both investment appraisal.