2. OCR Level 3 Cambridge Technicals in Business Unit 4: Business Accounting

3. Everywhere we look, we are confronted by businesses of every shape and size imaginable. What is business accounting? From the giants of Ford, British Airways or HSBC to the local corner shop, driving instructor or your local hairdresser.

4. Whatever size the business is, whatever product it makes or sells, however old or new it may be, every business will require some form of accounting. What is business accounting? All businesses will have to account for their finances and their business activities

5. So, what exactly is business accounting? Business accounting is about knowing how much money is in the business, where it has come from, and how it is being used.

6. A manager presented with accurate accounting information will be in a better position to make more informed decisions. So, what exactly is business accounting? Money comes from: - Sales - Investors - Lenders Money comes from: - Sales - Investors - Lenders Money is used to: - Pay costs - Pay dividends Money is used to: - Pay costs - Pay dividends Money is also used to re-invest in the business

7. Understanding the purpose of these reports is a useful management skill in all industries. Why do we need to do it? It is important to understand the purpose of business accounting, because business accounting reports are used by owners to make decisions. These reports will be used to: record; monitor and measure; manage and communicate business information.

8. Understand the purpose of accounting and the categorisation of business income and expenditure What will you learn? After completing this unit you will: Be able to prepare a cash flow forecast Be able to review business performance using simple ratio analysis Be able to prepare profit and loss accounts and balance sheets

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