Unit 11 Final Accounts for Public Limited Companies Assessment Brief 2026

Unit 11 Final Accounts for Public Limited Companies Assessment Brief

Unit in Brief

Learners will understand the importance of completed and well- analysed financial statements for limited companies.

Unit introduction

In this unit, you will gain a thorough understanding of why financial statements are prepared in the way they are. You will cover end-of-year financial statements for limited companies, learn about the importance of the information contained in them, and how this can be used by interested stakeholders. You will also consider the importance of complying with accounting concepts and standards so that financial statements are prepared accurately and consistently.

You will learn how an analysis of a business’s cash flow statement can help to identify the amount of cash available from one accounting period to another, and enables users to understand why a large profit does not necessarily result in an abundance of cash. You will consider the importance of ratio analysis to help shareholders and potential investors make decisions about the likely future success of a limited company.

It will help you progress to an accounting apprenticeship or to one of the higher education routes in business and financial management.

Learning aims

In this unit you will:

A Examine the end- of- year financial statements for a public limited company
B Explore the cash flow statement of a public limited company
C Undertake shareholder ratio analysis for public limited company accounts.

Summary of Unit

Content

Learning aim A: Examine the end-of-year financial statements for a public limited company

A1 Accounting concepts

• Definition and application of the accounting concepts: materiality, realisation, going concern, business entity, duality, consistency, historical cost, accruals (matching), money measurement, prudence, to the end- of- year financial statements for limited companies.
• Importance of the accounting concepts listed above when preparing limited company accounts.
• Importance of accounting principles: relevance, reliability, comparability and understanding of the financial statements of limited companies.

A2 Accounting standards

• Definition and application of the following international accounting standards (IAS): IAS1 (presentation of financial statements), IAS2 (inventories), IAS3 (accounting policies, changes in accounting estimates and errors), IAS10 (events after reporting period), IAS 16 (property, plant and equipment), IAS 37 (provisions, contingent liabilities and contingent assets), IAS 38 (intangible assets), IFRS (fair value measurement).
• Importance of the standards listed above.

A3 Accounting adjustments

• Explanation and calculation of the following adjustments to limited company accounts: depreciation of non- current assets (straight- line and reducing balance method), revaluation of non- current assets, bad debts, accrued and prepaid expenses and revenues, provision for doubtful debts, loan and/or debenture interest, corporation tax, transfer to reserves, preference and/or ordinary share dividends.
• NOTE: Corporation tax and reserves will be given entries and not require calculation.
• Application and explanation of relevant accounting concepts and standards.

A4 End-of-year financial statements

• The calculation and preparation of a statement of comprehensive income (profit and loss account), appropriation account and a statement of financial position (balance sheet) for limited companies in accordance with the format for publication.
• The statements to include the adjustments in A3.
• Application and explanation of relevant accounting concepts and standards.

A5 Analysis and interpretation of end-of-year financial statements

• The differing requirements of information for user groups (stakeholders), including: shareholders, customers (debtors), suppliers (creditors), employees, directors, managers, potential investors, government, lenders, public and environmental groups.

Learning aim B: Explore the cash flow statement of a public limited company

B1 Purpose of cash flow statements

• Definition of a cash flow statement.
• Purpose of a cash flow statement, including: use of funds, analysis of liquidity, relationship to other financial statements, difference between cash and profit, sources of finance, comparison with previous accounting periods.

B2 Completion of cash flow statements

• The calculation and preparation of a cash flow statement in accordance with the format in IAS7.
• Reconciliation of operating profit to net cash flow from operating activities.
• Application and explanation of relevant accounting concepts and standards.

B3 Changes to cash flow

• Explanation and analysis of the changes in cash flow as shown in the cash flow statement from one accounting period to another.

Learning aim C: Undertake shareholder ratio analysis for public limited company accounts

C1 Definition and purpose of shareholder ratios

• Definition, formula and purpose of the following shareholder ratios: dividend per share, dividend yield, earnings per share, dividend cover, price/earnings ratio, gearing ratio.

C2 Calculation of shareholder ratios

• Workings and calculation of the shareholder ratios listed in C1 for two separate limited companies in the same industry.

C3 Merits and drawbacks of shareholder ratios

• Consideration of the merits of shareholder ratios using the calculations from C2, including: comparison to previous accounting periods, comparison to firms in same industry, comparison with alternative investment opportunities.
• Consideration of the drawbacks of shareholder ratios using the calculations from C2, including: historical data, time lags, external factors/shocks, basis of comparison, degree of risk in investment opportunities, importance of non- financial factors.

C4 Ratio analysis

• Comparison and analysis of the ratios calculated in C2 to ascertain the overall financial position of limited companies for existing and prospective shareholders.

Assessment criteria

Essential information for assignments

The recommended structure of assessment is shown in the unit summary along with suitable forms of evidence. Section 6 gives information on setting assignments and there is further information on our website.

There is a maximum number of one summative assignment for this unit. The relationship of the learning aims and criteria is:

Learning aims: A, B and C (A.P1, A.P2, A.P3, B.P4, B.P5, C.P6, C.P7, A.M1, B.M2, C.M3, C.M4, A.D1, B.D2, C.D3)

Further information for teachers and assessors

Resource requirements

For this unit, learners will need access to a range of current business information from websites and printed resources.

Essential information for assessment decisions

Learning aims A,B and C

For distinction standard, learners will conduct additional independent research and use information from the given scenario/case study to give a thorough and justified evaluation of the financial statement to the stakeholders of a limited company.

Learners will fully use their results and analysis at pass and merit standard to comprehensively evaluate the overall financial position of a limited company.

Learners will show consistent accuracy, individuality and independence in their selection and use of techniques for calculations and ratio analysis.

For merit standard, learners will use their own knowledge and research, together with calculations from their work at pass standard and the given scenario/case study, to fully assess the relevant accounting concepts and standards used in the completion of the financial statements.

Learners will use their own independent research and knowledge, together with calculations from the pass standard to discuss the merits and limitations of ratio analysis for a limited company. Learners will use their results of calculations at pass standard to conduct a ratio analysis for two limited companies in the same industry.

For pass standard, learners will use some independent research and knowledge as well as information from the given scenario/case study to explain and apply the accounting concepts and standards. Learners will produce accurate calculations of adjustments and end- of- year financial statements for a limited company.

Learners will use their own knowledge as well as information from the given scenario/case study to describe the purpose of the main shareholder ratios, together with calculations of shareholder ratios for two limited companies in the same industry.

Links to other units

This unit links to:

• Unit 3 Personal and Business Finance
• Unit 7 Business Decision Making
• Unit 10: Recording Financial Transaction
• Unit 12: Financial Statements for Specific Businesses.

Employer Involvement

This unit would benefit from employer involvement in the form of:

• guest speakers
• design/ideas to contribute to unit assignment/case study/project materials
• work experience
• business materials as exemplars
• support from local business staff as mentors.

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