Overview

Framework:
RQF
Level:
Level 2
Unit No:
A/618/3394
Credits:
3
Guided learning hours:
24 hours

Assessment Guidance

Portfolio of Evidence.

Aim

The aim of this unit is to help learners understand factors involved in budgeting money and how to manage income and expenditure efficiently.

Unit Learning Outcomes

1

Understand the importance of budgeting in a business context. 

Reasons for budgeting may include:

  • avoid getting into debt
  • controlling costs
  • remaining solvent
  • future planning

Assessment Criteria

  • 1.1

    Describe the advantages of planning a budget in a business context. 


2

Understand key financial concepts.

Learners need demonstrate an understanding of the terms price, cost and profit. Ways to improve profit may include: 

  • increase price on some products
  • no discounting
  • reduce overheads
  • review prices
  • take cash discounting from suppliers
  • know your stock

Assessment Criteria

  • 2.1

    Explain the difference between price and cost and the concept of profit. 

  • 2.2

    Describe how to improve profit through cutting costs, improving revenue and increasing prices. 


3

Know about income and expenditure. 

Examples of business expenditure may include: 

  • fixed and variable costs
  • operating costs, e.g. facilities management including cleaning, heating , lighting, business insurance
  • staffing, e.g. pensions, national insurance, recruitment costs
  • income tax and VAT

Examples on income may include:

  • sale of product or services
  • government funding
  • loans

Ways of estimating income may include

  • forecast sales over a specified period of time using sales volumes and selling prices
  • estimate additional income

Assessment Criteria

  • 3.1

    Describe the different kinds of business expenditure. 

  • 3.2

    Describe different kinds of business income. 

  • 3.3

    Explain how businesses estimate income, for example, forecasting sales volumes and selling prices. 


4

Understand how businesses manage key financial information. 

Key financial business documents are:

  • business plan
  • spreadsheets of income and outgoings
  • bank statements
  • payslips
  • receipts
  • invoices

The purpose of key financial documents may include:

  • use of information for future financial planning
  • monitor income and expenditure
  • identify areas to reduce costs
  • monitor irregularities
  • record of financial transactions

Ways to check for errors may include:

  • double check entry data
  • balance sheets
  • identify errors of omission or commission 
  • independent advisor
  • double entries

Assessment Criteria

  • 4.1

    Explain the purpose of key financial business documents.

  • 4.2

    Explain how financial information can be checked for errors.