BTEC Level 3 National in Business

BTEC Level 3 National in Business First teaching September 2016 Sample Marked Learner Work External Assessment Unit 3: Personal and Business Finance

In preparation for the first teaching from September 2016 and as a part of the on-going support that we offer to our centres, we have been developing support materials to help you better understand the application of Nationals BTEC Level 3 qualification. What is Sample Marked Learner Work (SMLW)? The following learner work has been prepared as guidance for centres and learners. It can be used as a helpful tool when teaching and preparing for external units. Each question explores two responses; one good response, followed by a poor response. These responses demonstrate how marks can be both attained and lost. The SMLW includes examples of real learners work, accompanied with examiner tips and comments based on the responses of how learners performed. Below displays the format this booklet follows. Each question will show a learner response, followed by comments on the command verbs and the content of the question. Tips may be offered where possible. The appendix has attached a mark scheme showing all the possible responses that perhaps were not explored in the SMLW, but can still be attained. The red box comments on the command verbs used in the question. Command typically means; to instruct or order for something to be done. Likewise, in assessments, learners are required to answer questions, with the help of a command verb which gives them a sense of direction when answering a question. This box may choose to highlight the command verb used and comments if the learner has successfully done this, or not. The green box comments on the content words and phrases. Content makes reference to subject knowledge that originates from the specification. Learners are required to use subject specific knowledge to answer the questions in order to gain maximum marks. The comments may include: Any key words/phrases used in the learner s answer. Why has the learner gained x amount of marks? And why/how have they not gained any further marks? Any suggestions/ ideas regarding the structure of the answer. If the answer meets full marks- why it is a strong answer? What part of the content has been mentioned to gain these marks? Tips offer helpful hints that the learner may find useful. For example: Recommended length of the answer Reference to the amount of marks awarded General advice for the learner when answering questions

Question 1: Give two features of a premium current account. [Total marks for Q1 2 marks] 2 The command verb in this question is give. This is similar to list and requires a simple identification, in this instance, of a feature of a premium current account. Good response: The learner has correctly identified two features that a premium account customer might expect to receive. Good response: The learner has stated two features that could be expected from a premium current account. This is from section A3 bullet point 2 of the specification which requires knowledge of the different types, features, advantages and disadvantages, and services offered of packaged and premium accounts. 1 Poor response: In this second response, the learner has identified one correct feature that the account holder has to pay a monthly fee. No mark has been awarded for the first response about withdrawal and instant access (two attempts at an answer), as these are also features of ordinary current accounts.

Be aware this is a simple question requiring two responses with one mark available of each response.

Question 2: Describe the role of the Financial Ombudsman Service. [Total marks for Q2 2 marks] 2 Escribe the The command verb in this question is describe, which requires a detailed account of what is being questioned, in this case the role of the Financial Ombudsman Service. The question requires a short open response that can include an example. Good response: The learner has identified that the role is there to resolve disputes of a financial nature, between consumers and financial institutions, an example of which has been provided i.e. building societies or insurance companies. Both marks can therefore be awarded. Good response: The question is taken from section B3 of the specification, bullet point 2, role of the FSO. The response provided has a description of the role, with two examples of financial institutions that the FSO would negotiate/be involved with. This is sufficient for the award of both marks. The response could have been improved by stating that the FOS acts as an independent assessor, and/or that it is a role set up by parliament. 1 Poor response: In this second example, the learner has stated that the role is to resolve disputes, but have not shown the understanding that these disputes occur between consumer and financial institutions. Consequently only one mark can be awarded. This question required only one response. The marks can be achieved by giving a detailed description or by a more basic description with appropriate examples that demonstrate sufficient understanding.

Question 3: Explain two benefits of pre-paid credit cards of the type used when on holiday. [Total marks for Q3 4 marks] 3 The command verb Explain requires learners work to show clear details of the benefits of using pre-paid credit cards. The explanation also needs to provide reasons and/or evidence to support the view that they are a benefit. The question needs two benefits which the learner has attempted to provide. Good response: The question comes from section A2 of the specification about the different ways to pay. The mark scheme allocates 1 mark for the identification of a feature/benefit of pre-paid credit cards and the second mark for stating why they are useful on holiday. Without this context to the use of the prepayment card on holidays, the second mark cannot be awarded. In the example above, one mark has been awarded for the first response, but the second mark has not been awarded as the comment on exchange has not been developed. The second response has context and therefore achieves both marks giving a total mark for the question of 3 marks. 2

Poor response: In this second example, the learner has identified two features but has failed to provide a context for either response and has therefore been limited to 2 marks. Learners need to be taught to read the question fully. If context is provided then this should be used in the response to ensure full marks can be awarded.

Question 4: Discuss why it is important for Shekemi to avoid getting into unmanageable debt. [Total marks for Q4 6 marks] 4 The question is taken from section A1 of the specification about planning to avoid debt. The command verb is Discuss. Here, learners need to consider different aspects of the topic, in this instance debt. The response should demonstrate clear understanding of a range of issues linked to the question, and explain why this might be a problem. A conclusion is not required. Good response: In this response, the learner has provided two developed points that address the issue of debt. This is a levels of response mark scheme where learners have to demonstrate accurate knowledge and understanding with logical reasoning and clarity in order to achieve marks in the middle band. Good response: The learner has provided a logical and relatively accurate response to the question. They have discussed the fact that that when money is borrowed, the longer the repayment term, the higher the cost of repayment. A second point about an individual s credit rating would be affected by getting into debt is made. Both of these points are shown in the indicative content section of the mark scheme. Both of the issues are developed to identify that in the long term this could cause problems when trying to obtain further credit. The first part of the response suggests that interest rates could change during the repayment period. This is not always the case i.e. with fixed rate loans, but the development has been credited. This response is further developed by identifying that failure to pay back the debt will incur further charges.. Whilst the argument is not well constructed, the learner has demonstrated accurate understanding and has used the context of the question, whilst showing logical reasoning. The response has been awarded 4 marks, top of band 2.

2 Poor response: In the second response, the learner has identified that unmanageable debt could lead to bankruptcy and can lead to stress on the individual. The first response has some limited development but is insufficient to move this out of mark band 1, and is therefore awarded 2 marks. Learners should be encouraged to use the PEEL approach to answering questions of this type. They should state a point, refer to evidence either from the stimulus material or from their own examples, and then evaluate the impact of the point before clonking this back to the question.

Question 5: Assess the use of Premium Bonds as a method of saving. [Total marks for Q5 10 marks] 6 The question uses the command verb Assess. This requires learners to provide a careful and considered response using a number of points/issues that are linked to the specific context. Both sides of the issue will be considered such as the advantages and disadvantages associated with premium bonds as a form of saving, and a conclusion will be present if the learner is to score higher marks. Good response: In this response the learner has made strong points in favour of the use of premium bonds, but the argument against their use is not as strong or well developed. This has limited the marks awarded to mark band 2.

Good response: This is a reasonable response to a question from section A4 of the specification that looks at the features, advantages and disadvantages of different types of saving and investment. The learner has correctly identified that there is an opportunity to win a monthly prize and has identified the value of the prize. They have also correctly identified that funds can be deposited and withdrawn at will and that if a prize is won, the return on the investment will be greater than the interest that could have been achieved by other forms of saving/investment. The alternate view is not as well developed, but the learner does state that premium bonds do not attract interest that could be expected from other types of account. No formal conclusion has been drawn, but the learner has provided a response that shows accurate knowledge with some imbalance, but with appropriate context. The response has therefore been awarded 6 marks which is the top of band 2. To achieve band 3, both sides of the discussion should have been developed and a conclusion would be present. 2 Poor response: In this second response, the learner has made some simple points about premium bonds being backed by the government and that this makes them safe. There is also a point made that there is a chance to win a prize. There is an incorrect statement that the value of the investment will not go down, which it does, when inflation is taken into account. The work has not been developed and is therefore capped at mark band 1, achieving 2 marks. To achieve the top mark band in this type of question, both sides of the argument/discussion must be equally developed and a conclusion should be present.

Question 6: Evaluate which student current account would be most suitable for Nick. [Total marks for Q6-12 marks] 8

The question is from section A3 of the specification different types of account. The command verb used is Evaluate. This requires learners to draw from the varied data provided in the stimulus and consider aspects such as the advantages and disadvantages of the theme or concept, and to consider the relevance in light of the context provided. In this instance, learners should consider the different student accounts, comparing advantages and disadvantages which are relevant to the actual individual in the stimulus. Good response: The response provided in this example has compared a number of features and suggested why they might be beneficial to the student in the stimulus. They have also come to a reasoned conclusion as to the best account. Good response: The response considers factors such as some of the banks will pay interest on credit balances in the current account, and that Santander offers the highest interest of 3%. The response also details that all four providers offer a 0% free overdraft, with one offering 3,000. Other content that is/could be include is the 8% interest he would have to pay with Lloyds and that three providers charge high fees for an unauthorised overdraft. The response is well considered with a range of points discussed both positive and negative. Each of these is developed in the context of the young person in the stimulus. There is balance in the response and the context is used throughout. The work lacks a little clarity in places and the data provided could have been discussed in a little more detail. A supported conclusion is present. The response is therefore awarded 8 marks which is the middle of mark band 3.

Poor response: The second response is capped at the top of mark band 1 and scores 3 marks. The learner has shown some isolated knowledge and understanding of relevant parts of the information provided. However there are some gaps and a number of errors. There is a little evidence of application linked to the question, and the conclusion is unsupported by the preceding argument. 3

Question 7: Identify two types of intangible non-current assets. [Total marks for Q7 2 marks] 2 The command verb Identify requires learners to list or state two types of intangible assets. Good response: The learner has identified two of the intangible assets identified in section C3 of the specification. Good response: The learner has provided two correct responses, Brand Name and Goodwill. Patents and Trade marks would also have been a correct response. There is no requirement for the response to be written in sentence form and this would have wasted time. 0 Poor response: In this second response, the learner has correctly identified that an intangible asset is one that cannot be touched i.e. it is not a physical asset. However, the two examples provided are both incorrect and thus achieve no marks. In this question, learners need to know what an intangible asset is, if they are to correctly give examples. Learners should ensure they know both definitions of key terms and can give examples of them.

Question 8: Outline what is meant by capital income. [Total marks for Q8 2 marks] 2 The command verb Outline requires a short summary or brief description to demonstrate understanding of the term Capital Income Good response: The learner has briefly described what this is, and has developed the response by identifying correctly, the financial statement where this type of income is found. Types of Capital Income are identified in section C2 of the specification. Good response: In this response, the learner has correctly identified that capital income is money invested in the business. They have developed the response by showing understanding of which financial statement shows capital income. Other correct responses would have included loans, mortgages, owner s capital and debentures. 1 Poor response: In this second response, the learner has identified that capital income comes into the business from selling shares. The response ends there and achieves only 1 mark. To gain the development mark, the learner could have commented that this is provided by investors, or that this is different to the day to day capital gained by selling goods or services.

Question 9a: Calculate Connor s new gross profit figure. [Total marks for Q9a 3 marks] 3 The command verb used in this question is calculate and requires the learner to work out a new Gross Profit level from a given set of data where one set of data has been changed. The learner is required to recall the correct formula for gross profit and then carry out the calculation accurately. Learners are asked to show working out so that process marks can be awarded if the final answer is not correct. There are different ways in which the learner could achieve full marks. The quickest method would be to calculate the difference between the closing stock figures, 308, and then add this to the gross profit given in the question. Good response: In the response above, the learner has carried out the calculation from first principles, first working out the new cost of sales before subtracting this from the revenue to reach the new gross profit figure of 614,151. The completion, calculation or amendment of a gross profit figure is identified in section F1 of the specification.

1 Poor response: In this second response, the learner has attempted to carry out the required calculation but has made a number of errors. The learner has made an error in transposing both closing inventory figures and the final answer is incorrect when allowing for own figure rule. One mark has been awarded for showing an understanding of the formula old gross profit - old closing inventory + new closing inventory. Calculation questions usually ask learners to show working out. Learners should always do this so an examiner can award process marks if the final answer is incorrect as shown in the example above. If a calculation from one part of a question is carried over to another part of the question the learner won t be penalised twice. The original error loses the mark; the carry forward of this incorrect figure is not penalised so long as learner uses this own original figure.

Question 9b: Calculate the inventory turnover. [Total marks for Q9b 4 marks] 4 This question also uses Calculate as the command verb. Learners have to calculate the inventory turnover using the data given in question 9a. This question is based on measuring efficiency from section F5 of the specification. In this question, learners could have calculated inventory turnover in numbers of days, or used the alternative formula (cost of sales/average stock), to give the response as a number of time per year. Good response: The response above was awarded full marks. The learner has shown both formula (inventory turnover and average stock), which would have achieves marks had no further work been provided. The learner has calculated the average stock, then calculated the cost of goods sold before using both of these results to calculate the inventory turnover in numbers of days. The result of the calculation has then been transposed on to the answer line in the working box. 1 Poor response: The response above gains 1 mark for stating the correct formula for inventory turnover in numbers of days.

Check the specification. This will advise which formulas, if any, that will be given in the exam. Where formulas are not given, learners will need to recall these and they should be well practiced in carrying out the calculations. Where alternative formulas or terms exist, learners should be able to recall all forms.

Question 9c: Using your gross profit figure from part (a), calculate Connor s profit or loss for this year. [Total marks for Q9c 8 marks] 8 In this question the learner is asked to calculate profit for the year, using the gross profit figure they calculated in question 9a and other data provided in the question. They have also been given a cumulative depreciation figure for a van and have to calculate this year s depreciation, using the reducing balance method, so an overall profit for the year figure can be determined. The completion of the comprehensive income statement including making adjustments for prepayments accruals and depreciation is in section F1 of the specification. Good response: The learner s response is awarded full marks. The answer is well laid out showing first the gross profit figure from question 9a, before making the prepayment adjustment to wages, the accruals adjustment to electricity, and the calculation of depreciation for the year. The learner has then calculated the total expenses and deducted this value from the gross profit to finish with the correct profit for the year figure of 377,522.

5 Poor response: In this second response the learner has used an incorrect value for gross profit carried forward from question 9a, but is not penalised for this. Marks have been awarded for the correct calculation of the new wages and electricity values, but no marks have been awarded for the depreciation calculation which is in error. Finally, marks have been awarded for the correct use of the other expenses value, for the correct formula for profit for the year, and for the calculation of the final profit where own figure rule has been applied so that the learner is not penalised twice for the two errors (depreciation and GP from question 9a. The learner has therefore been awarded 5 marks. Try to get learners to use formulae to show their working out and use labels where necessary it makes it easier to award process marks. Learner must use the correct separator when writing down values. 377,522 and 377522 are both acceptable responses to this question. 377.522 and 372.522 are not acceptable representations of values in a finance paper and marks could not be awarded for this response, but process marks would be awarded.

Question 9d: Calculate the new net book value for the motor vehicle. [Total marks for Q9d 3 marks] 3 Once again learners are asked to perform a calculation and to show their working out of the net book value of non-current assets in the statement of financial position (section F2 of the specification). This question requires recall and the ability of the learner to select the right data and to accurately perform the calculation. Good response: In this response, the correct data and formula have been identified. The learner has calculated the balance from the previous year and then adjusted this for the current year s depreciation to arrive at the new net book value of 5950. 0 Poor response: In this second response, the learner has attempted to write a formula but has left this incomplete. As there is no further work provided, this response scores zero marks. Had the learner completed the formula i.e. net book value asset cost depreciation, 1 mark could have been awarded. Remember to write down all formulae when answering calculation questions.

Question 10a: Calculate the margin of safety. [Total marks for Q10a 4 marks] 4 Another calculate command verb. Here the learner needs to be able to calculate the break-even point and then use this to calculate the margin of safety specification section E2 Break-even analysis. Good response: The learner in this example has provided an almost exemplary response. They have quoted the formula for both break even and margin of safety. They have then used the data provided in the question stimulus to find the unit variable cost and then used this to establish the break-even quantity of 66,000 cheeses. The learner has then converted the monthly production to an annual production and subtracted the break-even quantity to arrive at the margin of safety. In two parts of the response the learner has omitted one zero from the actual production figure (quoting 24000 rather than 240000), but has corrected this error when completing the calculation and writing the answer in the answer box. The answer box has a sign already printed on the exam paper, but this is an error as the MOS should be a quantity not a value.

1 Poor response: In this second response, the learner has achieved one mark for quoting the break-even formulae. They have then input the actual figures into this formula but this does not warrant the award of a further mark. Finally, the learner correctly calculates the break-even point and achieves a second mark. No other evidence is provided leaving the question incomplete and giving the learner 2 marks overall for this response. It is better to attempt every question even if they are left incomplete, rather than leave a question unanswered.

Question 10b: Calculate how many months it will take to reach the break-even point. [Total marks for Q10b 2 marks] 2 Another calculate command verb where the learner has to use the break-even point calculated as part of the last question to establish how many months it would take the business to reach the breakeven level of output - section E2 of the unit specification. Good response: In this response the learner has correctly taken the break-even point (66,000 units) from the previous working out, and divided this by the monthly output (20,000 unit) quoted in the question, to arrive at the correct answer of 3.3 months. 0

Poor response: In this second response the learner has again calculated the breakeven point (66,000 units) but no marks are allocated in the mark scheme in this question. The learner has failed to divide this value by the monthly production level. It is not possible to deduce from this response that the learner understands the process by which the number of months required to break even is calculated. They have stated an answer, 3 months, but this is incorrect and therefore no marks can be awarded.

Question 11: Discuss the benefits of crowd-funding to a business such as Connor s. [Total marks for Q11 6 marks] 6

6 The command verb for this question is discuss. This requires learners to consider different aspects of a theme or topic. The response should show how the topic or concept relates and is linked to the context. The importance of different factors should also be considered such as does the owner wish to keep full control or is he prepared to give up some equity. A conclusion is not required. Good response: The response above demonstrates accurate and thorough knowledge and understanding of crowd funding as an alternative source of finance for a business expansion. There are few gaps or omissions. The response is well developed. A point is made and this is then explained in context of the business. There is balance with both negative and positive sides of crowd funding discussed. This demonstrate a good grasp of the competing arguments, and alternative approaches which are fully in context are offered. There is logical reasoning evident throughout the response which is clear and uses specialist technical language consistently. The response therefore achieves full marks, top of mark band 3.

3 Poor response: The second response achieves 3 marks, bottom of mark band 2. There is some demonstration of knowledge and understanding of crowd funding as an alternative source of finance for a business expansion. The response is not well developed and is more of a list of points in places. There is no balance with only the positive sides of crowd funding discussed. There is a small amount of context with the reference to the new product but this should have been developed further. There is some use of specialist technical language. To improve this response, the learner should develop each of the points made and there should be some use of negative consequences to add balance to the discussion Remember that the discuss command verb requires a balance (two sided) argument. This skill should be practiced to ensure marks are not lost on the extended writing questions.

Question 12: Analyse the effect of a negative bank balance on a business such as Connor s. [Total marks for Q12 8 marks] 6 The command verb used in this question is analyse which requires learners to present a detailed and logical examination of the topic in this instance the effect a negative bank balance would have on a business. There needs to be an interpretation of any data provided in the question and the relationship between the data and the question must be clearly explained. In order to achieve the highest grades, there needs to be accuracy in the work, showing thorough knowledge and understanding of the key issues and the response should be balanced. This question is taken from section E1 of the specification -Prepare, complete, analyse, revise and evaluate cash flow. Good response: The response has scored 6 marks which is top of mark band 2. The learner has demonstrated understanding that a cash flow problem could lead to an increase in overdraft and that the implications are the business would struggle to pay suppliers and meet deadlines. This is developed to show that suppliers may therefore refuse the business credit which in turn could lead to the business not being able to obtain stock. This response could have been improved further had this point been further developed to show that failing to obtain stock or failing to pay suppliers would hamper the ability to sell further goods and could have meant the firm had legal proceedings instigated to recover any outstanding debts and this would have cause further cash problems. The learner then suggests that if the overdraft grows this will incur more interest which will worsen the cash position and possibly prevent the business obtaining further loans, thus restricting expansion. The response shows understanding, is logical and makes the linkages required. It is however unbalanced, focusing only on the negative points. For example the problem could be caused by the rapid growth of the business and may be a short term problem linked to timing. As a consequence, the response does not get into mark band 3.

3 Poor response: The response has scored 3 marks which is top of mark band 1. The learner has demonstrated some understanding of the issues of an increasing overdraft but this has taken the form of a list with no development of any of the points made. Even though five valid points have been made, the answer is capped to mark band 1 and the learner scores only 3 marks. Learners should have lots of opportunity to practice extended writing questions as well as focussing on the more numeric questions linked to finance. Learners should not response to extended writing questions in list form unless they are about to run out of time. Responses that are not developed will not get out of mark band 1.

Question 13: Assess the use of early payment discounting and debt factoring in improving Connor s cash flow. [Total marks for Q13 10 marks] 8 The question comes from section D1 of the specification (sources of finance) and is clearly linked to the previous question on cash flow problems. The question uses the command verb Assess, and this requires learners to provide a careful and considered response using a number of points/issues that are linked to the specific context. Both sides of the issue will be considered such as which of the two methods of improving cash flow may be more beneficial to Connor s business. Both forms of finance must be considered in any response and a conclusion will be normally be present if the learner is to score higher marks. To achieve the highest marks, learners responses will have be logical, wellreasoned, balanced, have clear links to the context and use specialist technical language. Good response: The response shown above has scored 8 marks top of mark band 2. The work first considered early payment discounting shown in the specification as invoice discounting. There is a definition followed by an explanation of how this would encourage customers who bought on credit to make early payments and therefore minimise the overdraft. This could have been developed further to explain how this would prevent the cash flow problems identified in the previous question. The down side of this method the reduction in unit profit and reduced sales is also considered. This is starting to show balance. The response then considers debt factoring and the answer shows good understanding and knowledge. Effectively the development for this part of the response is very similar to that of the previous part, but the comments are accurate and factual. There is no conclusion present but the response is balanced considering both methods and looking at the positives and negatives, of each method, in equal proportion.

2 Poor response: This second response has scored 2 marks middle of mark band 1. The work at first is unfocused. The learner does not make explicit until half way through the answer that they discussing early payment discounts/ invoice discounting. There is also a lack of clear understanding shown, but then the learner makes some valid points with limited development. There is no content on the second source of finance, debt factoring and thus there is no balance and limited knowledge demonstrated. If a question has two options that a business might choose, the learners answer must consider both if they are to score higher than mark band 1.

Question 14: Evaluate Connor s financial position using the data in the table of financial ratios. [Total marks for Q14 12 marks] 9 The final question is from section F3 to F5 of the specification different ratios and measures of profitability and efficiency. The command verb used is Evaluate. This requires learners to draw from the varied data provided in the stimulus and consider aspects such as whether the efficiency and profitability f the business is improving or decreasing year on year. The learners must use the data and comment upon it, not simply requote the figures. Learners need to consider the relevant importance of the ration or the changes that have taken place. Some may be more important than others. The learners then have to provide a conclusion based on the prior analysis and interpretation of the data to say what these data show about the business performance.

Good response: In this learner s response, they have divided their answer into the three separate sections from the specification; F3- profitability, F4-Liquidity and F5- efficiency. The learner makes a point about gross profit and overall profit margin increasing. They develop this by suggesting why the change may have taken place cheaper suppliers, and demonstrated clear understanding of what an increase in margin means for the business i.e. they are now keeping 12 pence in the pound as profit. In the second paragraph, the learner comments on the change in the current ratio and demonstrates knowledge of what this means. This is developed by suggesting that whist the ratio has fallen, it is still within expected guidelines of 1.5:1 to 2:1 and that the business should not be too concerned. There is a lack of clarity where the learner states the business has enough profit to pay bills. What they should have said is that the business has enough assets to pay its liabilities. In the final paragraph, the learner identifies that trade receivables are taking longer to come in from customers which is bad, and that this is made worse by trade payables being paid to suppliers sooner than the previous year. There is further development that if trade receivables are extended, then it would be reasonable to expect trade payables to be extended but this has not happened. The work demonstrates accurate knowledge and understanding of relevant ratios and the information presented. There is evidence of application demonstrating linkages and interrelationships between the ratios. There is however no final conclusion that would limit the mark awarded. The response displays a balanced between the three parts of the specification. There is a logical organisation to the work and appropriate specialist technical language. The mark awarded was 9, bottom of level 3.

2 Poor response: In this second response, the learner has identified that the gross profit has increased by 12% and made a comment that as a result the firm s financial situation improved. The learner has also stated the fall in current ratio, but then said this is a good thing which is not correct. The final conclusion that the business is doing well and so could attract another investor if required is unsupported by the previous discussion. The response therefore achieves two marks for using two pieces of data from that supplied and making simple comparisons. For questions such as the one above where data is provided, learners are expected to use the data in some way, not simply requote figures otherwise marks will be capped at mark band 1.

Unit 3: Personal and Business Finance sample mark scheme General marking guidance All learners must receive the same treatment. Examiners must mark the first learner in exactly the same way as they mark the last. Mark schemes should be applied positively. Learners must be rewarded for what they have shown they can do, rather than be penalised for omissions. Examiners should mark according to the mark scheme, not according to their perception of where the grade boundaries may lie. All marks on the mark scheme should be used appropriately. All the marks on the mark scheme are designed to be awarded. Examiners should always award full marks if deserved, i.e. if the answer matches the mark scheme. Examiners should also be prepared to award zero marks if the learner s response is not worthy of credit according to the mark scheme. Where some judgement is required, mark schemes will provide the principles by which marks will be awarded and exemplification may be limited. When examiners are in doubt regarding the application of the mark scheme to a learner s response, the team leader must be consulted. Crossed-out work should be marked UNLESS the learner has replaced it with an alternative response. Specific marking guidance for levels-based mark schemes Levels-based mark schemes (LBMS) have been designed to assess learner work holistically. They consist of two parts: indicative content and levels-based descriptors. Indicative content reflects specific content-related points that a learner might make. Levels-based descriptors articulate the skills that a learner is likely to demonstrate in relation to the assessment outcomes being targeted by the question. Different rows within the levels represent the progression of these skills. When using a levels-based mark scheme, the best fit approach should be used. Examiners should first make a holistic judgement on which band most closely matches the learner s response and place it within that band. Learners will be placed in the band that best describes their answer. The mark awarded within the band will be decided based on the quality of the answer in response to the assessment focus/objective and will be modified according to how securely all bullet points are displayed at that band. Marks will be awarded towards the top or bottom of that band depending on how they have evidenced each of the descriptor bullet points.

Section A Personal Finance Question Answer number 1 1 mark for each feature identified, up to a maximum of 2 marks: pay a monthly fee (1) Mark phone insurance (1) travel insurance (1) membership discount (1) breakdown cover (1) cinema tickets (1) free overdraft (1). Accept any other reasonable answer. (2) Question Answer number 2 Up to 2 marks for a description of the role of the ombudsman: acts as an independent assessor (1) when dealing with complaints between consumers and financial service providers (1) Mark set up by Parliament (1) to sort out individual complaints between consumers and financial service providers that they can t solve themselves (1). Accept any other correct answer. (2) Question Answer number 3 1 mark for identification of a feature of pre-paid credit cards and 1 mark for a reason why they are useful on holiday: it allows you to take money on holiday in a safe and secure way (1) because if the pre paid credit card is stolen it cannot be used without the PIN (1) Mark it will allow you to control spending (1) as the card will be up to a fixed amount (1) can act as a budget (1) and money not spent can be returned (1). Accept any other correct answer. (4)

Question Indicative Content number 4 Points candidates may use: because debt could be very expensive due to interest payments and bank charges Mark could cause stress could give a bad credit rating which may mean it will be more difficult to borrow money in the future as the normal high street providers might not lend so your choice of product may be limited might have to go to other more expensive providers may not be able to get the best deals as seen as a risk could lead to bankruptcy. (6) Level Mark Award up to 6 marks. Refer to the guidance on the cover of this document for how to apply levels based mark schemes 0 No rewardable material. 1 1 2 Demonstrates isolated knowledge and understanding of relevant information; there may be major gaps or omissions. Provides little evidence of weighing up of competing arguments/pros and cons in context; discussion likely to consist of basic description of information. Meaning may be conveyed but in a non-specialist way; response lacks clarity and fails to provide an adequate answer to the question. 2 3 4 Demonstrates accurate knowledge and understanding of relevant information with a few gaps or omissions. Discussion is partially developed, but will be imbalanced. Evidences the weighing up of competing arguments/pros and cons in context. Demonstrates the use of logical reasoning, clarity, and appropriate specialist technical language. 3 5 6 Demonstrates accurate and thorough knowledge and understanding of relevant information; any gaps or omissions are minor. Displays a well-developed and balanced discussion, demonstrating a thorough grasp of competing arguments/pros and cons in context. Logical reasoning evidenced throughout response which is clear and uses specialist technical language consistently. 3

Question Indicative content number 5 Points candidates may use are: Advantages: premium bonds are a tax free method of saving Mark don t lose initial investment no risk withdraw money at any time entered into a monthly lottery to win cash prizes ranging from 25 to 1 million can invest 100 up to 40,000 buy these online or through the Post Office. Disadvantages: not guaranteed to win no interest paid initial investment loses value with inflation no updates/regular statements may mean the owner forgets about them. (10) Level Mark Award up to 10 marks. Refer to the guidance on the cover of this document for how to apply levels based mark schemes 0 No rewardable material. 1 1 3 Demonstrates isolated knowledge and understanding of relevant information; there may be major gaps or omissions. Provides little evidence of weighing up of competing arguments/pros and cons in context; discussion likely to consist of basic description of information. Meaning may be conveyed but in a non-specialist way; response lacks clarity and fails to provide an adequate answer to the question. 2 4 6 Demonstrates accurate knowledge and understanding of relevant information with a few gaps or omissions. Discussion is partially developed, but will be imbalanced. Evidences the weighing up of competing arguments/pros and cons in context. Demonstrates the use of logical reasoning, clarity, and appropriate specialist technical language. 3 7 10 Demonstrates accurate and thorough knowledge and understanding of relevant information; any gaps or omissions

are minor. Displays a well-developed and balanced discussion, demonstrating a thorough grasp of competing arguments/pros and cons in context. Logical reasoning evidenced throughout response which is clear and uses specialist technical language consistently.

Question Indicative content number 6 Lloyds and Santander will pay interest on credit balances in the current account. Mark Santander offers the highest interest of 3% and up to the highest amount. He might not have that amount of money but he will be getting some reward. All four providers offer a 0% free overdraft, with HSBC offering the largest at 3,000. This is good because Nick won't have to pay interest, but he might not like this as it might encourage him to spend more than he needs. Only one provider, Lloyds, allows him to extend his overdraft. This would give Nick flexibility if he needs it, but he would have to pay 8% interest. Three providers charge high fees for an unauthorised overdraft. All four providers give offers, but probably the best offer may be the railcard with Santander as it will help him save money travelling to and from university. Level Mark Award up to 12 marks. Refer to the guidance on the cover of this document for how to apply levels based mark schemes 0 No rewardable material. (12) 1 1 3 Demonstrates isolated knowledge and understanding of relevant information; there may be major gaps or omissions. Provides little evidence of application and links between relevant information. Evaluation likely to consist of basic description of information. Conclusions may be presented, but are likely to be generic assertions rather than supported by evidence. Meaning may be conveyed but in a non-specialist way; response lacks clarity and fails to provide an adequate answer to the question. 2 4 6 Demonstrates accurate knowledge and understanding of relevant information with a few omissions. Evidence of application demonstrating some linkages and interrelationships between factors leading to a judgement/judgements being made. Evaluation is presented leading to conclusions but some may be lacking support. Demonstrates the use of logical reasoning, clarity, and appropriate specialist technical language.

3 7 9 Demonstrates accurate knowledge and understanding of relevant information with a few minor omissions. Evidence of application demonstrating linkages and interrelationships between factors leading to a supported judgement/judgements being made. Displays a balanced evaluation demonstrating an awareness of competing arguments, leading to conclusions. Demonstrates the use of logical reasoning, clarity, and appropriate specialist technical language. 4 10 12 Demonstrates accurate and thorough knowledge and understanding of relevant information; any gaps or omissions are minor. Evidences thorough application leading to balanced evaluation drawing on linkages and interrelationships between factors. Displays a well-developed, balanced and coherent evaluation, demonstrating a thorough grasp of competing arguments, leading to supported conclusions. Logical reasoning evidenced throughout response which is clear and uses specialist technical language consistently and fluently.

Section B Business Finance Question Answer number 7 1 mark for each type identified, up to a maximum of 2 marks: goodwill (1) Mark patents (1) trademarks (1) brand names (1). Accept any other reasonable answer. (2) Question Answer number 8 1 mark for each correct meaning, up to a maximum of 2 marks: capital income is the amount of money invested in the business(1) and appears on the statement of financial position (1) Mark capital income is income which comes from wealth itself (1) and not the day to day running of the business (1) capital income is income generated by an asset over time (1) and will not directly affect profit (1). Accept any other reasonable answer. (2)

Question number Answer 9(a) difference in closing stock: 49,102 48,794 = 308 (1) Mark new gross profit: 613,843 + 308 (1) = 614,151 (1) ofr = own figure rule If a calculation from one part of a question is carried over to another part of the question the learner won t be penalised twice. The original error loses mark; the carry forward of it doesn t so long as learner uses own original figure. OR 613,843 48,798(1) + 49,102 (1) = 614,151 (1) (3) Question number Answer 9(b) (average stock/cost of sales ) 365 (1) Mark average stock = (36,325 + 49,102)/2 = 42,713.5 (1) cost of sales = (36,325 + 348,973 49,102 = 336,196 (1) (42,713.5/336,196) 365 = 46.37 days cost of sales/average stock (1) average stock = (36,325 + 49,102)/2 (1) cost of sales = (36,325+348,973 49,102 = 336,196 (1) = 336,196/42,713.5 = 7.87 (1) (4) Question number 9(c) Answer Gross profit 614,151 Less expenses Working Mark Electricity 44,130 43,272 + 858 2 marks for CAO (correct answer only) Maximum 1 mark for use of incorrect function Wages 83,116 84,327 1,211 2 marks for CAO Maximum 1 mark for use of incorrect function Depreciation 1,050 (18,000 11,000) 15% 2 marks for CAO Maximum 1 mark for use of incorrect function Other expenses 108,333 (1) Profit 377,352 (1ofr) (8)

Question number Answer Mark 9(d) 5,950 (3) OR 18,000 11,000 (1) 1,050 (1ofr) = 5,950 (1ofr) (3)

Question number Answer 10(a) Maximum 4 marks for CAO = 174,000 Mark Workings: break-even: fixed cost/contribution per unit (1) OR break-even point = 132,000/3.50 1.50 (1) break-even point = 66,000 cheeses (1) annual production = 20,000 12 = 240,000 cheeses (1) MOS = 240,000 66,000 = 174,000 cheeses (1ofr) (4) Question number Answer Mark 10(b) Maximum 2 marks for CAO = 3.3 Workings: 66,000/20,000 (1) = 3.3 months (1ofr) (2)

Question Indicative content number 11 Crowd-funding raising external finance from a number of people or organisations normally via the internet. Mark Connor could use it as a reward by paying interest to investors. It can be more expensive, but they may be more supportive to a business like Connor's. Connor could pay them in products rather than a financial reward which could help with his cash flow. Connor could also use it as an equity-based/dragons Den solution where they become part owner of the business. Level Mark Award up to 6 marks. Refer to the guidance on the cover of this document for how to apply levels based mark schemes 0 No rewardable material. 1 1 2 Demonstrates isolated knowledge and understanding of relevant information; there may be major gaps or omissions. Provides little evidence of weighing up of competing arguments/pros and cons in context; discussion likely to consist of basic description of information. Meaning may be conveyed but in a non-specialist way; response lacks clarity and fails to provide an adequate answer to the question. 2 3 4 Demonstrates accurate knowledge and understanding of relevant information with a few gaps or omissions. (6) Discussion is partially developed, but will be imbalanced. Evidences the weighing up of competing arguments/pros and cons in context. Demonstrates the use of logical reasoning, clarity, and appropriate specialist technical language. 3 5 6 Demonstrates accurate and thorough knowledge and understanding of relevant information; any gaps or omissions are minor. Displays a well-developed and balanced discussion, demonstrating a thorough grasp of competing arguments/pros and cons in context. Logical reasoning evidenced throughout response which is clear and uses specialist technical language consistently.