Illustrate and understand the basic lay-out of financial statements

Illustrate and understand the basic lay-out of financial statements

     

  • PURPOSE OF PROGRAMME

    A learner achieving this unit standard will be able to define and illustrate the gross margin statement, income statement, balance sheet and cash flow budget as well as the different cost aspects that one can find in a business.

    In addition, learner will be well positioned to extend their learning and practice into other areas of costing and basic financial statements or, to strive towards professional standards and practices at higher levels.

    Competent learners will know if the business is making a profit or a loss, and how to generate basic but effective managerial information from it.

  • COURSE OUTLINE

    SPECIFIC OUTCOME 1

    Define and understand the gross margin statement and distinguish between direct and indirect costs, as well as fixed and variable costs


    OUTCOME RANGE
    All direct costs that forms part of the production costs not limited to material, labour, overheads, stock and production costs, direct and indirect cost. All income generated by the specific enterprise should be identified and quantified

     

    ASSESSMENT CRTTERIA
    • The ability is demonstrated to explain and define fixed and variable costs.
    • The ability is demonstrated to identify and quantify the fixed and variable costs.
    • The ability is demonstrated to identify and explain the various income sources.
    • The ability is demonstrated to list and quantify the various income sources.
    • Material cost, labour cost and overhead costs are defined and explained.
    • All possible material costs, labour, direct and indirect costs for a specific agri-business are listed.
    • An understanding of the gross margin concept and its application within agriculture is demonstrated.
    • The ability to complete a template, show and calculate the production costs and gross margin is demonstrated.

    SPECIFIC OUTCOME 2

    Define and understand the income statement.

     

    OUTCOME RANGE
    The income statement refers to income, production costs, net farming income, foreign factor costs, farming profit/loss

     

    ASSESSMENT CRITERIA
    • An ability is demonstrated to understand, distinguish between and quantify all possible fixed and variable costs such as marketing, personnel and admin costs, as well as foreign factors costs.
    • The ability to provide inputs to an income statement, which reflects production costs, income, foreign cost and profits or losses, is demonstrated.
    • The ability to generate managerial information from the income statement is demonstrated.

     

    SPECIFIC OUTCOME 3

    Define and understand the balance sheet.

     

    OUTCOME RANGE
    Short term, medium term and long-term assets and liabilities and owner's equity.

     

    ASSESSMENT CRITERIA
    • Identify and quantify the components of short-term assets.
    • Identify and quantify the components of short-term liabilities.
    • Identify and quantify the components of medium term assets.
    • Identify and quantify the components of medium term liabilities.
    • Identify and quantify the components of long-term assets.
    • Identify and quantify the components of long-term liabilities.
    • Understanding of owner's equity and what it consists of is demonstrated.
    • The ability to complete a balance sheet when the template is given is demonstrated.

    SPECIFIC OUTCOME 4

    Define and understand the structure of a cash-flow budget and statement.

     

    OUTCOME RANGE
    This includes cash, credit, income, other income, costs, etc. over a period of twelve months.

     

    ASSESSMENT CRITERIA
    • The ability to source various financial data for the cash-flow budget and statement is demonstrated.
    • The ability to fill in the template of a cash flow budget and/or statement is demonstrated.
    • An understanding of the need for a twelve-month budget is demonstrated.
    • An understanding of the various components of a cash flow budget and statement is demonstrated.
    • The ability to transfer the month-end balance to the next month's opening balance is demonstrated.
    • An understanding of the influence interest rates on the budget and statement is demonstrated.
    • The ability to interpret basic results of the budget and statement is demonstrated.
    • An understanding of how the cash-flow budget/statement links up with the income statement is demonstrated.
    • An understanding and ability to use the cash-flow budget in a cash-flow statement is demonstrated.

     

    SPECIFIC OUTCOME 5

    Demonstrate an understanding of the legal responsibilities of an agri-business owner.

     

    OUTCOME RANGE
    This includes but is not limited to tax, VAT, PAYE, workman's compensation, RSC, and skills levy payments.

     

    ASSESSMENT CRITERIA
    • An understanding of the legal environment in which the agribusiness operate is demonstrated.
    • An understanding of what income tax is and why it should be incorporated within the planning process is demonstrated.
    • An understanding of what value-added tax is and why it should be incorporated within the planning process is demonstrated.
    • An understanding of what workman's compensation is and why it should be incorporated within the planning process is demonstrated.
    • An understanding of what skills levy payments is and why it should be incorporated within the planning process is demonstrated.

     

    SPECIFIC OUTCOMES

    • Define and understand the gross margin statement and distinguish between direct and indirect cost as well as fixed and variable costs.
    • Define and Understand the Income Statement
    • Define and understand the balance sheet
    • Define and understand the structure of a cash-flow budget and statement
    • Demonstrate an understanding of the legal responsibilities of an agri-business owner

     

    COURSE TYPE:

    Correspondence

     

    DURATION OF THE COURSE:

    3 months

     

    NQF LEVEL:

    Level 2