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LCCI International QualificationsLevel 3 Certificate inAdvanced Business CalculationsSyllabusEffective from 2001For furtherinformationcontact us:Tel. 44 (0) 8707 202909Email. [email protected]

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INTRODUCTIONEDI is a leading international awarding body that was formed through the merger of the LondonChamber of Commerce and Industry Examinations Board (LCCI) and GOAL a leading onlineassessment provider. EDI now delivers LCCI International Qualifications (LCCI IQ) through anetwork of over 5000 registered centres in more than 120 countries worldwide. Our range ofbusiness-related qualifications are trusted and valued by employers worldwide and recognisedby universities and professional bodies.Level 3 certificate in Advanced Business CalculationsAimsThe aims of this syllabus are to enable candidates to develop: A broad knowledge and understanding of advanced business calculations in relation tosimple and compound interest, stock exchanges, business ownership, profitability andliquidity, investment appraisal, bankruptcy, depreciation of business assets and indexnumbers The ability to apply this knowledge and understanding in a business situation A knowledge and understanding of related terminologyTarget Audience and Candidate ProgressionThis qualification is intended for candidates who have already passed the LCCI IQ BusinessCalculations Level 2 or equivalent.It is specifically designed for persons intending to perform a range of advanced businesscalculations within a business environment.It provides a suitable mathematical preparation for the LCCI IQ Level 4 examination, CostAccounting and Quantitative Methods.Taken with other LCCI IQ business courses, it provides a suitable preparation for candidatesintending to work at an advanced level in a business environment.The syllabus is also suitable for the student with a general interest in the subject.Level of English RequiredCandidates should have a standard of English equivalent to LCCI IQ English for BusinessLevel 2, together with a standard knowledge of mathematical English equivalent to that used inLCCI IQ Business Calculations Level 2.2

Structure of the QualificationThe level 3 Certificate in Business Calculations is a single unit qualification that consists of therange of topics detailed below.1Simple and compound interest2Stock exchanges3Business ownership4Profitability and liquidity5Investment appraisal6Bankruptcy7Depreciation of business assets8Index numbersGuided Learning HoursEDI recommends that 140 - 160 Guided Learning Hours (GLHs) provide a suitable courseduration for an "average" candidate at this level. This figure includes direct contact hours aswell as other time when candidates' work is being supervised by teachers. Ultimately, however,it is the responsibility of training centres to determine the appropriate course duration based ontheir candidates' ability and level of existing knowledge. EDI experience indicates that thenumber of GLHs can vary significantly from one training centre to another.3

ASSESSMENTAssessment ObjectivesAfter successfully completing this examination candidates will be able to: Calculate simple and compound interest in business situations over periods measured indays, months, or years, including the use of the appropriate formulae Perform standard business calculations involving shares, debentures, stocks and unittrusts Perform standard business calculations involving revenue and costs, trading and profitand loss accounts, balance sheets, and including break-even analysis Perform standard business calculations involving the more common ratios used to assessprofitability and liquidity Perform standard investment appraisal involving payback, average rate of return, internalrate of return, and net present value Perform standard bankruptcy calculations involving assets and liabilities, secured andunsecured creditors, and dividends Perform standard calculations of the depreciation of business assets involving the equalinstallment method and the diminishing balance method Perform calculations of index numbers involving basic indices relative to price and toquantity, including a change in the base year Use and understand appropriate mathematical and business terminologyCoverage of syllabus topics in examinationsEach examination will be broadly representative of the balance of topics in the detailedsyllabus. Some flexibility is appropriate in order to provide a suitable variety of questions andbusiness contexts, and to maintain an appropriate balance of difficulty.Each examination will include topics from most or all sections of the syllabus. A single questionmay relate to a single section of the syllabus, or to more than one section.Important NoteThe topics listed in the extended syllabus for Level 1 Commercial Calculations and Level 2Business Calculations are also examinable in Level 3 Advanced Business Calculationsexaminations.Examination format The time allowance for the examination is 3 hours Questions will normally be set within an appropriate business context Candidates will be required to answer all 8 questions4

Candidate Answer GuidanceMarks are awarded for correct working as well as for correct answers and for an appropriatelevel of accuracy. Where a correct answer is seen, without working, a candidate will normallybe given full marks for that section. However, where a question asks for a specific method,then that method must be used and shown, otherwise the candidate will normally receive nomarks for that section. Candidates are advised that it is normally to their advantage to show allworking.Candidates who make an error at an early stage in a question will be given credit for later workif it involves a correct method, appropriate to the question.Candidate Performance MeasurementQuestions will not necessarily carry equal marks. Questions of different difficulty or differentlength will normally carry different marks.Marks will be awarded for the appropriateness of the method used as well as for the accuracyof the answer.Marks will not normally be reserved for appropriate use of English, correct use of grammar, fora specific format of answer, or for presentation, except where specifically stated in the question(such as asking for the answer in a particular format). Candidates should, however, be awareof the need for clear, intelligible and unambiguous answers. An answer must becomprehensible in order to gain marks.CertificationSuccessful candidates will be awarded the level 2 Certificate in Advanced BusinessCalculations based on the achievement of the percentages and grades below.PassMeritDistinction50%60%75%5

Recommended Reading List and Support MaterialReading ListTitleAuthor(s)PublisherISBN CodeQuantitative MethodsD FriendLongman0582 22969 6 XAccounting for Non-AccountingStudents (4th edition)J R DysonPitmans0273 625756Accounting in a Business ContextAidan Berry& Robin JarvisPitmans0993 611052Support MaterialModel answers and past question papers as well as Annual Qualification Reviews (AQR’s) areavailable from the LCCI website, www.lcci.org.ukHow To Offer This QualificationTo offer this qualification you must be an LCCI IQ registered examination centre. To gain centreapproval please contact Customer Support on 08700 818008 between the hours of 0830 and1700 (GMT) Monday to Friday or by email on [email protected] you may contact your Regional LCCI Office or Co-ordinating Authority.6

Syllabus Topic1Items CoveredSimple and compound interest1.1TerminologyCandidates must be able to:1.2Simple interesta)Understand the terms: principal, rate ofinterest, time period, loan, overdraft,investor, borrower, drawer, drawee,acceptor, negotiable instrument,endorsement, banker’s discount,maturity, face value, tender, at par,redemption, hire purchase terms,deposit, instalment payment, balanceowing, present valueb)Calculate the amount of simple intereston a sum borrowed or deposited for:(i)(ii)(iii)(iv)(v)c)a single yeara number of yearsa number of monthsa number of daysa combination of the above, whichmay involve a fractional or decimalformCalculate simple interest, using theformula:Interest Principalx Rate(percent)x Numberof y ears100I PRN100d)Use a rearranged formula to calculate:100 IPN(i)rate of interest: R (ii)principal borrowed or deposited:IP 100RN(iii)the number of years for which theprincipal was borrowed ordeposited:IN 100PRe)Use the formula to calculate:(i)(ii)(iii)7the rate of interest charged fordiscounting a bill of exchangethe present value of a bill ofexchangethe amount of interest payable on adiscounted bill of exchange

(iv)the amount of interest payable on atreasury bill before redemption(v)the amount of interest charged on ahire purchase transaction(vi) the rate of interest charged on ahire purchase transactionf)1.3Compound interestUse the ‘products method’ to calculatethe amount of simple interest:(i)Payable to the holder of a bankaccount(ii)Payable by the holder of a bankaccountg)Calculate the final balance figure on abank accounta)Calculate the amount of compoundInterest on a sum deposited or borrowedfor:(i)(ii)(iii)(iv)(v)b)a single yeara number of yearsa number of monthsa number of daysa combination of the above, whichmay involve a fractional or decimalformCalculate compound interest, using theformula:Amount Principal 1 Rate of100interest R A P 1 100Number of yearsNc)8Use the compound interest formula tocalculate:(i)appreciation in value of property(ii)an increase in a sum deposited inan interest bearing account(iii)an increase in a sum borrowed(iv)an increase in the value of aninvestment

d)Compare amounts of compound interestand simple interest on a sum borrowed ordepositede)Compare an appreciation in value ofproperty at compound interest with thecost of a loan at simple interest topurchase the propertyf)Use the rearranged compound interestformula to calculate:(i)The present value (P) of aninvestmentP (ii)A R 1 100 The rate of interest (R) usingR 1 100N2N APStock exchanges2.1TerminologyCandidates must be able to:2.22.3Company sharesDebenturesa)Understand the terms: issued capital,ordinary shares, preference shares, par(or nominal) value, market value, sharedividend, percentage yield, debenture,interest rate, stock, unit price, bid andoffer prices, commission charge,investor’s incomeb)Calculate the value of a purchaseand/or a sale of sharesc)Calculate commission costs in thepurchase and sale of sharesd)Calculate profits or losses from thepurchase and sale of sharese)Calculate dividend payments onsharesf)Calculate the percentage yield on aninvestment in sharesa)Calculate the value of a purchaseand/or a sale of debenturesb)Calculate the interest/payment ondebentures9

2.42.53StocksUnit trustsc)Calculate the profit remaining forshareholders after payment of intereston debenturesd)Calculate the percentage yield on aninvestment in debenturesa)Calculate the value of a purchaseand/or a sale of stockb)Calculate commission costs in thepurchase and sale of stockc)Calculate interest payments on stockd)Calculate profits or losses from thepurchase and sale of stocke)Calculate the percentage yield on aninvestment in stocka)Calculate the value of a purchaseand/or a sale of unitsb)Calculate commission charges in thepurchase and sale of unitsc)Calculate the profits or losses from thepurchase and sale of unitsd)Calculate dividend payments on unitse)Calculate the percentage yield on aninvestment in unitsBusiness ownership3.1TerminologyCandidates must be able to:a)10Understand the terms: sole trader,partnership, limited company, fixed costs,variable costs, total costs, cost price,selling price, opening stock, closingstock, average stock, cost of stock sold(cost of sales or cost of goods sold),gross profit or loss, net profit or loss,revenue break-even point, overheadexpenses, turnover, fixed assets, currentassets, amounts due after more than 1year (long term liabilities), amounts duewithin 1 year, (current liabilities), capitalinvested, net worth

3.23.33.43.5Revenue and costsBreak-even analysisTrading and profitand loss accountsBalance sheetsa)Calculate fixed costsb)Calculate variable costsc)Calculate total costsd)Interpret a figure for total costse)Calculate sales revenuea)Draw and interpret a break-even chartb)Use a break-even chart to estimate:(i)A break-even point(ii)The level of output which yields aspecific level of profit(iii)The profit or loss at a specific levelof outputc)Calculate a break-even pointd)Calculate the level of output whichyields a specific level of profite)Calculate the profit or loss at a specificlevel of outputf)Calculate the contribution per unita)Calculate average stockb)Calculate cost of stock soldc)Calculate gross profitd)Calculate overhead expensese)Calculate net profita)Calculate fixed assetsb)Calculate current assetsc)Calculate amounts due after more than1 year (long term liabilities)d)Calculate amounts due within 1 year(current liabilities)e)Calculate total assets and totalLiabilities11

f)g)4Calculate capital(i)At the start of a year(ii)At the end of a yearCalculate net worthProfitability and liquidity4.1TerminologyCandidates must be able to:4.24.3Ratios to assessprofitabilityRatios to assessLiquiditya)Understand the terms: ratio, turnover,working capital, total borrowings,stockturna)Calculate a gross profit percentageb)Calculate a rate of stock turnover perannum, in weeks and in daysc)Calculate a net profit percentaged)Calculate an expense ratioe)Calculate a percentage return oncapital investedf)Interpret ratios to assess profitabilitya)Calculate a working capital (current)ratiob)Calculate an acid test ratio (quick assetratio, liquid capital ratio)c)Calculate a borrowing (gearing) ratiod)Calculate an average credit grantedratioe)Calculate an average credit taken ratiof)Interpret ratios to assess liquidity12

5Investment appraisal5.1TerminologyCandidates must be able to:6a)Understand the terms: opportunity cost,depreciation, investment project5.2Paybacka)Calculate, using the payback methodof investment appraisal5.3Average rate of returna)Calculate, using the average rate ofreturn method of investment appraisal5.4Net present valuea)Calculate, using the net present valuemethod of investment appraisal5.5Internal rate of returna)Calculate, using the internal rate ofreturn method of investment appraisal5.6Appraisala)Interpret calculations of investmentappraisalb)Make a judgement on alternativeinvestment projectsBankruptcy6.1TerminologyCandidates must be able to:6.2Assets and liabilitiesa)Understand the terms: assets andliabilities, secured and unsecuredcreditors, rate of dividend, insolvency,winding up expensesa)Calculate the liabilities and assets ofan insolvent businessb)Express the assets as:(i)(ii)a fraction of the liabilitiesa percentage of the liabilitiesc)Calculate the net assets of aninsolvent businessd)Calculate the value of assets, giventhe rate of dividend, expenses ofwinding up the business and anyliabilities13

6.36.47Secured and unsecuredcreditorsDividenda)Calculate the sum owing to securedcreditorsb)Calculate the sum available forunsecured creditorsa)Calculate the dividend available forunsecured creditorsb)Calculate the sum payable to anunsecured creditorc)Calculate the amount owed to anunsecured creditor who receives a statedpaymentDepreciation of business assets7.1TerminologyCandidates must be able to:7.27.3Equal instalment methodDiminishing balancemethoda)Understand the terms: asset,depreciation, book value, residual (scrap)value, working life, depreciation schedulea)Calculate total depreciation over aperiod of years after allowing for anyresidual (scrap) valueb)Calculate annual depreciationc)Calculate the book value of an assetafter deduction of depreciationd)Prepare a depreciation schedule to showannual depreciation, accumulateddepreciation and book value at the yearenda)Calculate annual depreciationb)Calculate the book value of an assetafter deduction of depreciationc)Prepare a depreciation schedule to showannual depreciation, accumulateddepreciation and book value at the yearend14

8Index numbers8.1TerminologyCandidates must be able to:a)Understand the terms: base year, currentyear, price index, quantity index,composite (or general) index, weighted8.2Price index numbera)Calculate a price relative8.3Quantity index numberb)Calculate a quantity relative8.4Composite (or general)index numberc)Calculate a weighted average indexnumber8.5Change of base yeara)Calculate a change of base year for agiven index numberb)Calculate a chain base indexNote: Candidates will not be expected to useLaspeyre, Marshall-Edgeworth, Fisher orPaasche indices.15

EDIInternational HouseSiskin Parkway EastMiddlemarch Business ParkCoventry CV3 4PEUKTel. 44 (0) 8707 202909Fax. 44 (0) 2476 516505Email. [email protected] Education Development International Plc 2008.All rights reserved. This publication in its entirety isthe copyright of Education DevelopmentInternational Plc. Reproduction either in whole orin part is forbidden without the written permissionfrom Education Development International Plc.

L3PearsonLCCI Level 3 Certificatein Accounting (VRQ)(ASE20104)SPECIFICATIONFirst teaching from October 2015

PearsonLCCI Level 3 Certificatein Accounting (VRQ)(ASE20104)SpecificationFirst teaching from October 2015

Edexcel, BTEC and LCCI qualificationsEdexcel, BTEC and LCCI qualifications are awarded by Pearson, the UK’s largestawarding body offering academic and vocational qualifications that are globallyrecognised and benchmarked. For further information, please visit our qualificationwebsites at www.edexcel.com, www.btec.co.uk or www.lcci.org.uk. Alternatively,you can get in touch with us using the details on our contact us page atqualifications.pearson.com/contactusAbout PearsonPearson is the world's leading learning company, with 40,000 employees in morethan 70 countries working to help people of all ages to make measurable progressin their lives through learning. We put the learner at the centre of everything wedo, because wherever learning flourishes, so do people. Find out more about howwe can help you and your learners at qualifications.pearson.comAcknowledgementsThis specification has been produced by Pearson on the basis of consultation withteachers, examiners, consultants and other interested parties. Pearson would like tothank all those who contributed their time and expertise to the specification’sdevelopment.References to third party material made in this specification are made in good faith.Pearson does not endorse, approve or accept responsibility for the content ofmaterials, which may be subject to change, or any opinions expressed therein.(Material may include textbooks, journals, magazines and other publications andwebsites.)All information in this specification is correct at time of publication.ISBN 978 1 446 92950 6All the material in this publication is copyright Pearson Education Limited 2015

IntroductionLCCI qualificationsLCCI qualifications are widely regarded by employers to prepare learners for keyfunctions of modern international business. The qualifications are recognisedworldwide by employers, universities and professional bodies, such as theAssociation of Chartered Certified Accountants (ACCA).This new and engaging range of qualifications has been developed in collaborationwith professional bodies, employers and customers. We have conducted in-depth,independent consultation to ensure that the qualifications develop the breadth anddepth of knowledge, skills and understanding that students need to be effectiveemployees, and that the qualifications support progression pathways.LCCI offers a wide range of qualifications that are available at levels 1 to 4 acrossthe following subject areas: English Language Marketing and Customer Service Business, Administration and IT Financial and Quantitative.This specification is part

www.lcci.org.uk LCCI International Qualifications Syllabus Effective from 2001 Level 3 Certificate in Advanced Business Calculations . 1 . 2 INTRODUCTION EDI is a leading international award