Unit 5: Business Accounting P3 M1 D1
P3 M1 D1
Unit – 5 (Business Accounting)
BTEC National Diploma In Business Level 3
The Date
Your Name
Your Teacher
1
, Unit 5: Business Accounting P3 M1 D1
Unit 5 – Business Accounting
On completion of this unit I should:
1) Understand the purpose of accounting and the categorisation of business income and expenditure.
2) Be able to prepare a cash flow forecast.
3) Be able to prepare profit and loss accounts and balance sheet.
4) Be able to review business performance using simple ration analysis.
Task 1:
1. Prepare a 12-month cash flow forecast to enable an organisation to manage its cash.
2. Analyse the cash flow problems a business might experience.
3. Justify actions a business might take when experiencing cash flow problems.
Sharma and Ryan were both 21 when they attended the Acorn programme run by Engaging
Enterprise. They were keen to learn and have since decided to act upon the advice given during the
12 weeks and to set up in business together. They have decided on a new business called SIGNature
Ltd. The business will manufacture plastic road signs for builders, tourist attractions and local
councils.
Sharma and Ryan have carried out substantial research into potential sales volumes, set-up costs
and revenue expenses. They have approached me to help them set up and understand their first cash
flow forecast. It is important that they get this right as it will form part of the business plan they are
preparing to take to the bank manager in order to try to secure a loan.
I am to prepare a 12-month cash flow forecast for Sharma and Ryan based on the information
presented below. Sales and purchases for the 12 months are predicted to be as follows.
Month Sales (£) Purchases (£)
These sales and purchases figures are
Jan 30000 13500
before VAT has been added. VAT should
Feb 30000 13500
be added at the current UK rate and shown
Mar 30000 13500
Apr 37000 16650 in separate rows for VAT received on sales
May 37000 16650 and paid on purchases. Every three months
Jun 37000 16650 a figure should be shown to either make
Jul 41500 18675 payments to HMRC for VAT owed or
Aug 41500 18675 reclaim VAT if an excess has been paid.
Sept 41500 18675 Sharma and Ryan are the only two
Oct 25000 11250 shareholders, each investing £12,500 of
Nov 25000 11250
their own money into the business. In
Dec 25000 11250
addition to this they secured a bank loan
for £80,000 to be paid back in monthly instalments of £1,000. All of the capital invested was to be
used to buy capital equipment to the value of £105,000. This was broken down into machinery worth
2
P3 M1 D1
Unit – 5 (Business Accounting)
BTEC National Diploma In Business Level 3
The Date
Your Name
Your Teacher
1
, Unit 5: Business Accounting P3 M1 D1
Unit 5 – Business Accounting
On completion of this unit I should:
1) Understand the purpose of accounting and the categorisation of business income and expenditure.
2) Be able to prepare a cash flow forecast.
3) Be able to prepare profit and loss accounts and balance sheet.
4) Be able to review business performance using simple ration analysis.
Task 1:
1. Prepare a 12-month cash flow forecast to enable an organisation to manage its cash.
2. Analyse the cash flow problems a business might experience.
3. Justify actions a business might take when experiencing cash flow problems.
Sharma and Ryan were both 21 when they attended the Acorn programme run by Engaging
Enterprise. They were keen to learn and have since decided to act upon the advice given during the
12 weeks and to set up in business together. They have decided on a new business called SIGNature
Ltd. The business will manufacture plastic road signs for builders, tourist attractions and local
councils.
Sharma and Ryan have carried out substantial research into potential sales volumes, set-up costs
and revenue expenses. They have approached me to help them set up and understand their first cash
flow forecast. It is important that they get this right as it will form part of the business plan they are
preparing to take to the bank manager in order to try to secure a loan.
I am to prepare a 12-month cash flow forecast for Sharma and Ryan based on the information
presented below. Sales and purchases for the 12 months are predicted to be as follows.
Month Sales (£) Purchases (£)
These sales and purchases figures are
Jan 30000 13500
before VAT has been added. VAT should
Feb 30000 13500
be added at the current UK rate and shown
Mar 30000 13500
Apr 37000 16650 in separate rows for VAT received on sales
May 37000 16650 and paid on purchases. Every three months
Jun 37000 16650 a figure should be shown to either make
Jul 41500 18675 payments to HMRC for VAT owed or
Aug 41500 18675 reclaim VAT if an excess has been paid.
Sept 41500 18675 Sharma and Ryan are the only two
Oct 25000 11250 shareholders, each investing £12,500 of
Nov 25000 11250
their own money into the business. In
Dec 25000 11250
addition to this they secured a bank loan
for £80,000 to be paid back in monthly instalments of £1,000. All of the capital invested was to be
used to buy capital equipment to the value of £105,000. This was broken down into machinery worth
2
