Overview

Framework:
RQF
Level:
Level 2
Unit No:
H/615/7615
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 discounts 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, for example through cutting costs, improving revenue, increasing prices.

3

Know about income and expenditure.

Examples of business expenditure may include:

  • operating costs eg facilities management including cleaning, heating, lighting, business insurance
  • staffing eg pensions, national insurance, recruitment costs
  • income tax and VAT

Examples of income may include:

  • sale of products or services
  • government funding
  • loans

Ways of estimating income may include:

  • forecast sales over a specified period of time
  • estimate additional income
  • calculate known expenditure including tax

Assessment Criteria

  • 3.1
    Describe different kinds of business expenditure, for example fixed and variable costs.
  • 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.

The purpose of key financial documents may include:

  • use information for future financial planning
  • monitor income and expenditure
  • identify areas to reduce costs
  • monitor irregularities
  • auditing purposes
  • 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 for example business plan, spreadsheets of income and outgoings, bank statements, payslips, receipts, invoices.
  • 4.2
    Explain how financial information can be checked for errors.