IB Business Management
Unit 3: Finance and Accounts – Scheme of Work
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Unit 1: Business Organisation and Environment – Scheme of Work
UNIT 3: FINANCE AND ACCOUNTS
UNIT 3: FINANCE AND ACCOUNTS – THEORY OF KNOWLEDGE QUESTIONS
1
Do financial statements reflect the ‘truth’ about a business?
2
What is the role of interpretation in accounting? For example, could we compare businesses just by
looking at their financial statements?
3
Many businesses are introducing metrics about their environmental, social or ethical performance on
the side of financial information. Can well-being, or other social variables be measured?
4
Accounting practices vary from country to country. Is this necessary, or is it possible to have the same
accounting practices everywhere?
5
Does the accounting process allow for imagination?
Small group work: ONE question: 10 minute presentation.
Topic
GECCIS Focus
3.1
Innovation
Incremental or radical improvements to a business idea, or the generation of new ideas
in relation to a final product, service or process, are the result of internal or external
influences. For many business organizations, a key challenge is bringing in ‘the new’ and
managing the process of improvement in a sustainable way.
3.2
Change
Competition, new technologies and markets, and trends in consumer behavior lead
business organisations to adapt their objectives, strategies and operations.
IB Business Management
Unit 3: Finance and Accounts – Scheme of Work
Success emerges from the ability to research and respond to signals in both the internal
and external environment.
3.3
Strategy
Strategy refers to the significant long-term planning decisions that organisations make
in order to meet the needs and wants of their stakeholders. Strategy is about asking
questions: what, why, when, how, where and who?
3.4
Ethics
Every business decision has moral implications. These consequences can be significant
for internal and external stakeholders and the natural environment.
3.5
Culture
Every organisation operates in a range of environments in which its role may be
interpreted differently. These expectations affect planning, decision-making and
strategy implementation. Within an organization, values and backgrounds influence
what stakeholders focus on and how they work.
3.6
Strategy
Strategy refers to the significant long-term planning decisions that organisations make
in order to meet the needs and wants of their stakeholders. Strategy is about asking
questions: what, why, when, how, where and who?
3.7
Change
Competition, new technologies and markets, and trends in consumer behavior lead
business organisations to adapt their objectives, strategies and operations.
Success emerges from the ability to research and respond to signals in both the internal
and external environment.
3.8
Innovation
Incremental or radical improvements to a business idea, or the generation of new ideas
in relation to the final product, service or process, are the result of internal or external
influences.
For many business organisations, a key challenge is bringing in the ‘new’ and managing
the process of improvement in a sustainable way.
3.9
Strategy
Strategy refers to the significant long-term planning decisions that organisations make
in order to meet the needs and wants of their stakeholders. Strategy is about asking
questions: what, why, when, how, where and who?
TOPIC 3: FINANCE AND ACCOUNTS
Time (weeks)
Content
Learning activities
Assessment
Simpson and Smith:
Textbook: pp 225-239
IB Business Management:
3.1 Sources of Finance
1 week
Role of finance for businesses:


Capital expenditure
Revenue expenditure.
The following internal sources of finance:

Personal funds (for sole traders)

Retained profit
Activities A - D
PPT presentation and
summary notes
Exam practice question
Textbook questions:
Revision checklist 117.
Topic Test
Quizzes
IB Business Management
Unit 3: Finance and Accounts – Scheme of Work

Sale of assets.
The following external sources of finance:

Share capital

Loan capital

Overdrafts

Trade credit

Grants

Subsidies

Debt factoring

Leasing

Venture capital

Business angels.
Videos
Flash cards
McDonald’s case study
question – Innovation.
Classroom games –
Kahoot!
Short, medium and long-term finance.
The appropriateness, advantages and
disadvantages of sources of finance for a given
situation.
3.2 Costs and Revenues
1 week
The following types of cost, using examples:

Fixed
Simpson and Smith:
Textbook: pp 240-246
PPT presentation and
summary notes

Variable

Semi-variable

Direct
Textbook questions:
Revision checklist 1-8.

Indirect/overhead.
Flashcards
Total revenue and revenue streams, using
examples.
Classroom games –
Kahoot!
IB Business Management:
Activities A - E
Exam practice question
Quizzes
Topic Test
McDonald’s case study
question – Change.
3.3 Break-Even Analysis
2 weeks
Total contribution versus contribution per unit.
A break-even chart and the following aspects
of break-even analysis:
Simpson and Smith:
Textbook: pp 247-256
PPT presentation and
summary notes

Break-even quantity/point

Profit or loss
Textbook questions:
Revision checklist 1-5.

Margin of safety
Videos

Target profit output
Flash cards

Target profit

Target price.
Classroom games –
Kahoot!
IB Business Management:
Activities A - D
Exam practice question
Quizzes
Topic Test
McDonald’s case study
question – Strategy.
IB Business Management
Unit 3: Finance and Accounts – Scheme of Work
The effects of changes in price or cost on the
break-even quantity, profit and margin of
safety, using graphical and quantitative
methods.
The benefits and limitations of break-even
analysis.
3.4 Final Accounts (some HL only)
2 weeks
The purpose of accounts to different
stakeholders.
Simpson and Smith:
Textbook: pp 257-276
The principles and ethics of accounting
practice.
PPT presentation and
summary notes
Exam practice question
Final accounts:
Topic Test
Profit and loss account
Textbook questions:
Revision checklist 112.
Balance sheet
Videos


Different types of intangible assets.
Depreciation using the following methods (HL):

Straight line method

Reducing/declining balance method.
IB Business Management:
Activities A – E
Quizzes
McDonald’s case study
question – Ethics.
Flash cards
Classroom games –
Kahoot!
The strengths and weaknesses of each method
(HL).
3.5 Profitability and Liquidity Ratio Analysis
1 week
The following profitability and efficiency ratios:

Gross profit margin

Net profit margin

ROCE.
Possible strategies to improve these ratios.
The following liquidity ratios:

Current

Acid-test/quick
Possible strategies to improve these ratios.
3.6 Efficiency Ratio Analysis (HL only)
1 week
The following further efficiency ratios:
Simpson and Smith:
Textbook: pp 277-287
PPT presentation and
summary notes
Textbook questions:
Revision checklist 1-8.
Videos
Flash cards
Classroom games –
Kahoot!
Ratio analysis using
Panasonic’s Annual
Report (Activity D) –
group work
IB Business Management:
Activities A, B and D
Exam practice question
Quizzes
Topic Test
McDonald’s case study
question – Culture.
IB Business Management
Unit 3: Finance and Accounts – Scheme of Work

Inventory/stock turnover

Debtor days

Creditor days

Gearing ratio.
Possible strategies to improve these ratios
Simpson and Smith:
Textbook: pp 288-297
PPT presentation and
summary notes
Textbook questions:
Revision checklist 1-8.
Videos
Flash cards
IB Business Management:
Activities A and B
Exam practice question
Quizzes
Topic Test
McDonald’s case study
question – Strategy.
Classroom games –
Kahoot!
3.7 Cash Flow
2 weeks
The difference between profit and cash flow.
The working capital cycle.
Cash flow forecasts.
The relationship between investment, profit and
cash flow.
The following strategies for dealing with cash
flow problems:

Reducing cash outflow

Improving cash inflows

Looking for additional finance.
Simpson and Smith:
Textbook: pp 298-312
IB Business Management:
Activities A – B
PPT presentation and
summary notes
Exam practice question
Textbook questions:
Revision checklist 113.
Topic Test
Videos
Quizzes
McDonald’s case study
question – Change.
Flash cards
Classroom games –
Kahoot!
Cash flow Monopoly
activity
3.8 Investment Appraisal (some HL only)
2 weeks
Investment opportunities using payback period
and average rate of return (ARR)
Simpson and Smith:
Textbook: pp 313-325
Investment opportunities using net present value
(NPV; HL).
PPT presentation and
summary notes
Exam practice question
Textbook questions:
Revision checklist 116.
Topic Test
Videos
Flash cards
Classroom games –
Kahoot!
3.9 Budgets (HL only)
IB Business Management:
Activities A – D
Quizzes
McDonald’s case study
question – Innovation.
IB Business Management
Unit 3: Finance and Accounts – Scheme of Work
1 week
The importance of budgets for organisations.
The difference between cost and profit centres.
The roles of cost and profit centres.
Variances.
The role of budgets and variances in strategic
planning.
Simpson and Smith:
Textbook: pp 326-334
PPT presentation and
summary notes
Textbook questions:
Revision checklist 1-9.
Videos
Flash cards
Classroom games –
Kahoot!
Formative Assessment:
Unit 3: Finance and Accounts – Formal assessment test
IB Business Management:
Activities A
Exam practice question
Quizzes
Topic Test
McDonald’s case study
question – Strategy.