Summary PSC Finance and Business Skills Exam Notes
2024 (Distinction)
Course
PSC Finance and Business Skills Notes
1. Financial Management Basics
Financial management involves planning, organizing, controlling, and monitoring
financial resources.
Key objectives: Profit maximization, wealth maximization, and liquidity management.
Functions: Budgeting, investment decisions, financing decisions, and risk management.
2. Accounting Principles & Financial Statements
Key principles: Accrual, consistency, materiality, and prudence.
Main financial statements:
o Balance Sheet (Assets = Liabilities + Equity)
o Income Statement (Revenue - Expenses = Profit)
o Cash Flow Statement (Operating, Investing, Financing activities)
3. Budgeting & Public Finance
Budgeting: Process of allocating financial resources.
Types: Zero-based, incremental, activity-based, and performance budgeting.
Public finance principles: Transparency, accountability, sustainability, and efficiency.
4. Costing & Cost Management
Types of costs: Fixed, variable, direct, indirect, sunk, and opportunity costs.
Costing methods: Absorption costing, marginal costing, and activity-based costing.
Break-even analysis: Determines the sales level at which total revenue equals total costs.
5. Procurement & Contract Management
Procurement cycle: Need identification → Supplier selection → Contracting → Delivery
→ Payment.
Key procurement principles: Value for money, fairness, transparency, and accountability.
Contract types: Fixed-price, cost-plus, time and materials.
6. Business Planning & Strategy
, Business plan components: Executive summary, market analysis, financial plan, and risk
assessment.
Strategic planning models: SWOT analysis, PESTEL, Porter’s Five Forces.
Competitive advantage: Cost leadership, differentiation, and niche strategies.
7. Taxation & Compliance
Types of taxes: Direct (Income tax, Corporate tax), Indirect (VAT, Excise duty).
Tax compliance: Filing returns, record-keeping, and payment deadlines.
Public revenue sources: Taxes, grants, loans, and service charges.
8. Risk Management in Finance & Business
Types of risks: Market risk, credit risk, operational risk, liquidity risk.
Risk mitigation strategies: Diversification, insurance, hedging, and contingency planning.
Enterprise Risk Management (ERM) framework for public and private organizations.
9. Business Ethics & Corporate Governance
Ethical principles: Integrity, fairness, accountability, transparency.
Corporate governance structures: Board of Directors, Committees, Internal and External
Auditors.
Importance of ethical business practices in preventing fraud and corruption.
10. Entrepreneurship & Financial Growth
Key entrepreneurship skills: Innovation, leadership, financial literacy, networking.
Business funding options: Bootstrapping, venture capital, angel investors, loans, grants.
Financial growth strategies: Expansion, diversification, strategic partnerships.
11. Working Capital Management
Definition: Managing short-term assets (cash, receivables, inventory) and liabilities
(payables, short-term debts).
Key components:
o Cash management: Ensuring liquidity for daily operations.
o Inventory management: Balancing stock levels to avoid overstocking or
shortages.
, o Accounts receivable & payable management: Ensuring timely collections and
payments.
12. Investment Analysis & Decision Making
Investment appraisal methods:
o Net Present Value (NPV) – Evaluates project profitability.
o Internal Rate of Return (IRR) – Measures return percentage on investments.
o Payback Period – Time taken to recover investment costs.
Risk-return tradeoff: Higher returns come with higher risks.
13. Sources of Business Finance
Internal sources: Retained earnings, owner’s capital, sale of assets.
External sources: Bank loans, bonds, equity financing, venture capital.
Short-term finance: Overdrafts, trade credit, factoring.
Long-term finance: Debentures, equity shares, term loans.
14. Microfinance & Financial Inclusion
Microfinance: Provides financial services (loans, savings, insurance) to low-income
individuals.
Importance: Supports small businesses, promotes economic growth.
Challenges: High-interest rates, repayment risks, lack of financial literacy.
15. Auditing & Internal Controls
Types of audits: Internal audit, external audit, forensic audit.
Internal controls: Policies to prevent fraud, ensure accuracy.
Fraud detection techniques: Forensic accounting, whistleblowing, monitoring financial
transactions.
16. Business Law & Regulatory Framework
Contract law: Essential elements of a contract (Offer, Acceptance, Consideration, Legal
Intent).
Company law: Types of businesses (Sole proprietorship, Partnership, Corporation).
Regulatory bodies: Tax authorities, financial regulators, consumer protection agencies.
2024 (Distinction)
Course
PSC Finance and Business Skills Notes
1. Financial Management Basics
Financial management involves planning, organizing, controlling, and monitoring
financial resources.
Key objectives: Profit maximization, wealth maximization, and liquidity management.
Functions: Budgeting, investment decisions, financing decisions, and risk management.
2. Accounting Principles & Financial Statements
Key principles: Accrual, consistency, materiality, and prudence.
Main financial statements:
o Balance Sheet (Assets = Liabilities + Equity)
o Income Statement (Revenue - Expenses = Profit)
o Cash Flow Statement (Operating, Investing, Financing activities)
3. Budgeting & Public Finance
Budgeting: Process of allocating financial resources.
Types: Zero-based, incremental, activity-based, and performance budgeting.
Public finance principles: Transparency, accountability, sustainability, and efficiency.
4. Costing & Cost Management
Types of costs: Fixed, variable, direct, indirect, sunk, and opportunity costs.
Costing methods: Absorption costing, marginal costing, and activity-based costing.
Break-even analysis: Determines the sales level at which total revenue equals total costs.
5. Procurement & Contract Management
Procurement cycle: Need identification → Supplier selection → Contracting → Delivery
→ Payment.
Key procurement principles: Value for money, fairness, transparency, and accountability.
Contract types: Fixed-price, cost-plus, time and materials.
6. Business Planning & Strategy
, Business plan components: Executive summary, market analysis, financial plan, and risk
assessment.
Strategic planning models: SWOT analysis, PESTEL, Porter’s Five Forces.
Competitive advantage: Cost leadership, differentiation, and niche strategies.
7. Taxation & Compliance
Types of taxes: Direct (Income tax, Corporate tax), Indirect (VAT, Excise duty).
Tax compliance: Filing returns, record-keeping, and payment deadlines.
Public revenue sources: Taxes, grants, loans, and service charges.
8. Risk Management in Finance & Business
Types of risks: Market risk, credit risk, operational risk, liquidity risk.
Risk mitigation strategies: Diversification, insurance, hedging, and contingency planning.
Enterprise Risk Management (ERM) framework for public and private organizations.
9. Business Ethics & Corporate Governance
Ethical principles: Integrity, fairness, accountability, transparency.
Corporate governance structures: Board of Directors, Committees, Internal and External
Auditors.
Importance of ethical business practices in preventing fraud and corruption.
10. Entrepreneurship & Financial Growth
Key entrepreneurship skills: Innovation, leadership, financial literacy, networking.
Business funding options: Bootstrapping, venture capital, angel investors, loans, grants.
Financial growth strategies: Expansion, diversification, strategic partnerships.
11. Working Capital Management
Definition: Managing short-term assets (cash, receivables, inventory) and liabilities
(payables, short-term debts).
Key components:
o Cash management: Ensuring liquidity for daily operations.
o Inventory management: Balancing stock levels to avoid overstocking or
shortages.
, o Accounts receivable & payable management: Ensuring timely collections and
payments.
12. Investment Analysis & Decision Making
Investment appraisal methods:
o Net Present Value (NPV) – Evaluates project profitability.
o Internal Rate of Return (IRR) – Measures return percentage on investments.
o Payback Period – Time taken to recover investment costs.
Risk-return tradeoff: Higher returns come with higher risks.
13. Sources of Business Finance
Internal sources: Retained earnings, owner’s capital, sale of assets.
External sources: Bank loans, bonds, equity financing, venture capital.
Short-term finance: Overdrafts, trade credit, factoring.
Long-term finance: Debentures, equity shares, term loans.
14. Microfinance & Financial Inclusion
Microfinance: Provides financial services (loans, savings, insurance) to low-income
individuals.
Importance: Supports small businesses, promotes economic growth.
Challenges: High-interest rates, repayment risks, lack of financial literacy.
15. Auditing & Internal Controls
Types of audits: Internal audit, external audit, forensic audit.
Internal controls: Policies to prevent fraud, ensure accuracy.
Fraud detection techniques: Forensic accounting, whistleblowing, monitoring financial
transactions.
16. Business Law & Regulatory Framework
Contract law: Essential elements of a contract (Offer, Acceptance, Consideration, Legal
Intent).
Company law: Types of businesses (Sole proprietorship, Partnership, Corporation).
Regulatory bodies: Tax authorities, financial regulators, consumer protection agencies.
