Level 4 Financial Statements (Micro and Small Businesses) *Self Study*

On completion of this qualification, you will be able to carry out the role of an employed or self-employed bookkeeper, preparing the Financial Statement for limited companies in accordance with FRS105 and FRS102 Section 1A.

£85.00

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Prerequisites

If you intend on sitting the exam at the end of this unit, then you will need to be a member of the Institute of Certified Bookkeepers (ICB) and hold a current, valid ICB Level 3 qualification.

Basic numerical skills and a good understanding of the English language would also be advantageous.

The course fee Includes:

  •  2 x New Style Printed Workbooks containing lessons, examples, tasks and assignments
  • Activity Answer Book
  • FREE Postage and packaging within the UK

Chapters

  • Chapter 1: Underpinning Knowledge
  • Chapter 2: Ltd Company and Ltd Liability Partnership Financial Statements
  • Chapter 3: Accounting Concepts
  • Chapter 4: Other accounting concepts and principles
  • Chapter 5: Preparing Statutory Year End Accounts
  • Chapter 6: Introduction to Consolidated (Group Accounts)
  • Chapter 7: Statement of Cashflows
  • Chapter 8: Interpretation of Financial Statements

Learning Outcomes

Underpinning Knowledge

1.1 – Explain the purpose of financial statements, the legal framework that govern these and the role of accounting standards.

On successful completion the candidate will be able to:

  • Define the purpose of Financial Statements
  • Explain the need to comply with the Companies Act
  • Outline the role of the Financial Reporting Council (FRC)

1.2 – Explain the statutory returns that need to be made for an incorporated entity

On successful completion the candidate will be able to:

  • The company Confirmatory Report
  • Annual accounts to Companies House
  • Corporation tax return to HMRC

1.3 – Explain the objectives of financial statements and their use and users.

On successful completion the candidate will be able to:

  • Outline the elements of the conceptual framework for financial reporting
  • Identify the elements of financial statements
  • Understand and apply the qualitative characteristics of financial statements
  • Understand and apply the accounting concepts
  • Identify the user groups and state clearly the way in which they use financial statements

1.4 – Explain the objectives of Internal Management Accounting.

On successful completion the candidate will be able to:

  • Distinguish the difference between Financial and Management accounting

Limited Company Financial Statements

2.1 – Prepare Financial Statements for a Limited Company and/or a Limited Liability Partnership to ensure they comply with the relevant Accounting Standards and Company Legislation

On successful completion the candidate will be able to:

  • Post relevant entries to the accounts for the provision and payment of corporation tax
  • Complete details for the fixed assets register
  • Understand and apply the accounting concepts that are contained in FRS105 Sections 2 and 3 and FRS102 Section 1A
  • Prepare a Statement of Financial Position with the relevant minimum accompanying notes under any of the formats in FRS105 (Section 4) and FRS102 Section 1A (Appendix A)
  • Prepare a Statement of Incomes per the format in FRS105 (Section 5) and FRS102 Section 1A (Appendix B)
  • Prepare a set of notes to the accounts as per the format in FRS105 (Section 6) and FRS102 Section 1A (Appendix C)
  • Understand the nature of voluntary disclosures

2.2 – Explain the elements of company finance

On successful completion the candidate will be able to:

  • Define the terms:
  1. Share capital
  2. Reserves
  3. Equity
  • Distinguish between ordinary shares and preference shares
  • Explain the process of a share issue
  • Explain what is meant by issuing shares at a premium
  • Define the term loan notes

An Introduction to Consolidated (Group Accounts)

3.1 – Explain the general principles of consolidation and prepare a set of Group Accounts to include both a Subsidiary and an Associate under FRS102 Section 9
Note: This is a voluntary disclosure under FRS 102 Section 1 (A)

On successful completion the candidate will be able to:

  • Explain what is meant by the single entity concept
  • Establish the group structure
  1. – Apply what is meant by fair value adjustments and fair value consideration
  2. – Determine the net assets of the subsidiary
  3. – Calculate the goodwill on acquisition
  4. – Calculate the non-controlling interest
  5. – Determine the retained earnings of the group
  6. – Draft a Consolidated Statement of Financial Position
  • Define the term Control
  • Explain the treatment of pre and post-acquisition reserves and acquisition of a subsidiary part way through the year
  • Explain the treatment of inter-company trading
  • Prepare a Consolidated Income Statement
  • Explain what is meant by the terms Associate and significant influence
  • Explain the principle equity accounting
  • Identify an Associate in a group structure

The Statement of Cash Flows

4.1 – Explain the purpose of the Statement of Cash Flows and prepare the Statement based on FRS102 Section 7

On successful completion the candidate will be able to:

  • Explain the need and purpose of The Statement of Cash Flows
  • Outline the elements of The Statement of Cash Flows as detailed in FRS102 Section 7
  • Prepare a Statement of Cash Flows showing clearly cash flow from:
  1. – Operating Activities,
  2. – Investing Activities
  3. – Financing Activities
  4. – The subsequent increase/decrease in cash or cash equivalent
  • Interpret and prepare a set of notes on a company’s cash position as outlined in The Statement of Cash Flows

Interpretation of Financial Statements

5.1 – Analyse and Interpret Limited Company Financial Statements using Performance Indicators and Ratio Analysis.

On successful completion the candidate will be able to:

  • Calculate Profitability Ratios:
  1. – Return on Capital Employed (profits before interest and tax divided by capital employed (total assets less current liabilities)
  2. – Gross Profit % of Sales
  3. – Net Profit % of Sales
  • Calculate Liquidity Ratios and Asset utilisation:
  1. – Current Ratio
  2. – Acid Test
  3. – Receivables Collection Period
  4. – Payables Payment Period
  5. – Inventory Turnover
  6. – Asset Turnover
  • Calculate the following financial structure ratios:
  1. – Gearing
  2. – Interest Cover
  • Analyse and interpret a set of performance indicators for a limited company over a series of years and comment on the financial performance
  • Compare a set of figures with other organisations and industry figures

If you choose to sit the exam at the end of this unit, you would be required to be registered with the ICB first. You would also be required to be qualified to Level 3. You would then contact the ICB to book your exam.

This can be taken from home or work, and comprises of one 3 hour exam. You will have 2 weeks from when you receive the exam to take it. Once activated you will have 3 hours to complete it.

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