OCR Level 3
Cambridge Technicals
in Business
Unit 4: Business
Accounting
What is business
accounting?
Everywhere we look, we are confronted by businesses of
every shape and size imaginable.
From the giants of Ford, British
Airways or HSBC to the local corner
shop, driving instructor or your local
hairdresser.
What is business
accounting?
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.
All businesses will have to
account for their finances and
their business activities
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.
So, what exactly is
business accounting?
Money
comes from:
- Sales
- Investors
- Lenders
Money is
also used to
re-invest in
the business
A manager presented
with accurate accounting
Money is
information
used to: will be in a
costs to make
better- Pay
position
- Pay
more informed
dividends decisions.
Why do we need to do it?
It is important to understand
theofpurpose
of business
Understanding
the purpose
these reports
is
accounting,
because business
reports
a
useful management
skill inaccounting
all industries.
are used by owners to make decisions.
These reports will be used to:
record; monitor and measure;
manage and communicate
business information.
What will you learn?
After completing this unit you will:
Understand the
purpose of
accounting and the
categorisation of
business income and
expenditure
Be able to
prepare profit and
loss accounts
and balance
sheets
Be able to review
business performance
using simple ratio
analysis
Be able to
prepare a
cash flow
forecast
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