1(a) Business Environment
- Describe the role and importance of business in the Hong Kong economy
- Analyze recent developments and characteristics of the Hong Kong economy
- Evaluate how economic, technological, cultural, physical, social, political, and legal factors affect business decisions
- Distinguish between the major forms of business ownership: sole proprietorship, partnership, and limited company
- Evaluate the pros and cons of different forms of business ownership
- Describe the characteristics of multinational corporations in Hong Kong
- Explain why and how a business should be ethically responsible to various stakeholders
- Describe how business ethics and social responsibilities affect business decisions
1(b) Basics of Management
- Explain the importance of management
- Demonstrate a basic understanding of management functions for organizations: planning, organizing, leading, and controlling
- Apply principles of effective management: division of work, unity of command, unity of direction, as well as balancing authority and responsibility
- Describe the role and importance of key business functions: human resources management, financial management, operations management, marketing management, information management, and risk management
- Describe the characteristics of SMEs
- Explain the importance of SMEs to the Hong Kong economy
- Explain the importance of entrepreneurship in business development
1(d) Basics of Personal Financial Management
- Explain the concepts of compounding, discounting, present value, and future value
- Apply the concepts of present value and future value to compute net present value
- Distinguish between nominal and effective rate of return
- Compare different types of consumer credit
- Explain the importance of maintaining a good personal credit record
- Identify the basic characteristics and the relationship between risk and return of investments: savings/term deposits, bonds/debentures, and stocks
- Explain the importance of personal financial planning at different life stages
- Describe the rights and responsibilities of employees and self-employed persons under Mandatory Provident Fund (MPF) scheme
- Describe the rights and responsibilities of individual investors and consumers of financial services
- Explain the factors affecting share prices
- Describe the platforms of stock trading in Hong Kong: Main Board and GEM
- Describe the importance of Hang Seng Index (HSI)
2(a) Financial Accounting
- Explain the importance of accounting and its relevance to decision-making
- Describe the functions of accounting
- Describe the flow of the accounting cycle
- Explain the accounting equation and demonstrate how transactions affect it
- Apply the principles of double entry to the recording of business transactions in ledger
- Explain the functions of books of original entry and ledgers
- Record transactions in books of original entry and post to ledger accounts
- Identify the major types of ledgers
- Explain the functions and limitations of a trial balance
- Balance off the accounts and prepare a trial balance
- Differentiate between cash accounting and accrual accounting
- Distinguish between bad debts and allowance for doubtful accounts
- State the meaning and objectives of providing depreciation in accounting
- Distinguish between capital expenditures and revenue expenditures
- Compare the commonly used methods of depreciation: straight-line, reducing-balance and depreciation based on usage; and explain the effect of depreciation charge (including disposal) on profits
- Apply the following to determine the value of inventory
- lower of cost and net realisable value
- sale or return
- weighted average cost
- Prepare adjusting entries at the close of accounting period and show their effect on income statement and statement of financial position
- Explain how information in financial statements can assist decision-making
- Explain the uses and limitations of financial statements
- Prepare income statement and statement of financial position for sole proprietorship, partnership and limited company
- Prepare appropriation account and current accounts for partnership
- Define goodwill and explain the factors affecting its valuation
- Prepare the necessary adjustments to capital and/or net assets arising from changes in profit-sharing ratio, admission and retirement of partner(s) at the beginning or end of a financial period
- Explain the nature of share capital (preference shares and ordinary shares), loan capital (debentures), reserve and provision
- Prepare journal and ledger entries relating to the issue of ordinary shares and debentures fully paid on application
- Prepare appropriation account and calculate the balance of retained profits for limited company
- Explain the functions of a bank reconciliation statement
- Identify reasons for discrepancies between cash book and bank statement balances and prepare a bank reconciliation statement
- Identify the types of accounting errors and their effects on accounting records
- Prepare correcting entries and, where appropriate, a suspense account
- Determine profits or losses from statement of affairs
- Calculate the cash and inventory value from incomplete record
- Prepare income statement and statement of financial position from incomplete records
- Explain the meaning, importance and shortcomings of the following principles and conventions: business entity, going concern, historical cost, consistency, accrual, matching, realisation, prudence, materiality and money measurement
- Apply the relevant accounting principles and conventions in accounting situations
- Calculate ratios and comment on a company’s profitability, liquidity, solvency, management efficiency and return on investment: mark-up, gross profit ratio, net profit ratio, return on capital employed, working capital/current ratio, quick/liquid/acid test ratio, inventory turnover, average trade receivables collection period, average trade payables repayment period, trade receivables turnover, trade payables turnover, earnings per share, total assets turnover, gearing ratio, dividend cover and price-earnings ratio
- Explain the functions and limitations of accounting ratios in financial analysis
2(b) Cost Accounting: Cost Classification, Concepts, and Terminology:
- Explain the general nature of cost accounting and its importance for financial decision-making.
- Distinguish between direct and indirect costs, fixed and variable costs, and factory and administrative overheads.
- Marginal and Absorption Costing:
- Prepare an income statement under marginal and absorption costing.
- Compare the advantages and disadvantages of adopting marginal and absorption costing.
- Cost Accounting for Decision-making:
- Identify the nature of various cost items and their relevance to decision-making: sunk costs, incremental costs, and opportunity costs.
- Apply costing concepts and techniques in business decisions, e.g. ‘hire, make or buy’ , ‘accept or reject an order at a special price’, ‘retain or replace equipment’, ‘sell or process further’, and ‘eliminate or retain an unprofitable segment’.
- Conduct cost-volume-profit analysis to assess the effects of changes in costs, selling price, and units sold on the breakeven point and target profit.
1(a) Business Environment
- Role and importance of business in the Hong Kong economy
- Recent developments and characteristics of the Hong Kong economy
- Factors affecting business decisions
- Forms of Business Ownership:
- Major forms of business ownership: sole proprietorship, partnership, and limited company
- Pros and cons of different forms of business ownership
- Characteristics of multinational corporations in Hong Kong
- Business Ethics and Social Responsibilities:
- Importance of business ethics and social responsibilities to various stakeholders
- How business ethics and social responsibilities affect business decisions
1(c) Basics of Accounting
- Importance and relevance of accounting to decision-making
- Functions and flow of the accounting cycle
- Double entry system, trial balance, financial statements
- Uses and limitations of financial statements
- Accounting assumptions, principles, and conventions
1(d) Basics of Personal Financial Management
- Time value of money, net present value, nominal and effective rate of return
- Types of consumer credit and importance of maintaining good personal credit record
- Personal financial planning and investment, Mandatory Provident Fund (MPF) scheme, rights and responsibilities of investors and consumers
- Stock trading as an investment, factors affecting share prices, platforms of stock trading in Hong Kong, importance of Hang Seng Index (HSI)
3(a) Introduction to Management
- Management functions: planning, organizing, leading, controlling
- Principles of effective management
- Key business functions and their interrelationship
- Characteristics of SMEs, importance of entrepreneurship in business development
3(b) Financial Management
- Financial Analysis
- Explain the role of financial management in running an organisation.
- State the general functions of accounting ratios.
- Assess business performance from a range of accounting ratios in terms of profitability, liquidity, solvency and management efficiency.
- Explain the limitations of accounting ratios in financial analysis
- Explain the purposes of budgeting.
- Describe the usefulness and limitations of budgetary control.
- Identify the causes of budgeting variance and propose remedial action.
- Capital Investment Appraisal
- Evaluate financial and non-financial factors affecting capital investment decisions.
- Apply the basic capital investment appraisal methods to evaluate capital projects: payback period, net present value (NPV), internal rate of return (IRR) and accounting rate of return (ARR).
- Compare the usefulness and limitations of different capital investment appraisal methods.
- Risk Management
- Identify different types of risks faced by business firms and analyze their impact on business activities.
- Demonstrate an understanding of various types of insurance protection available to business.
- Explain the following risk management strategies: risk avoidance, risk assumption, risk reduction and risk transfer.
- Sources of Financing
- Compare different sources of financing: debt and equity financing, short-term and long-term financing, and internal and external financing.
- Apply the basic principles for selecting financing methods.
- Working Capital Management
- Explain the importance of working capital management.
- Describe the basic principles of cash management and the relevance of cash budgeting.
- Analyze the factors affecting the formulation of accounts receivable and accounts payable policies.
- Explain the objectives of inventory management and apply simple inventory control techniques: Economic Order Quantity (EOQ) and re-order level methods.
3(c) Human Resources Management
- Manpower planning
- Importance of manpower planning
- Manpower planning process
- Recruitment process
- Comparison of different recruitment methods
- Performance appraisal
- Objectives of performance appraisal
- Basic steps in performance appraisal
- Reward management
- Characteristics and advantages of monetary and non-monetary rewards
- Comparison of different forms of compensation
- Purposes of benefits
- Training and development
- Objectives of training and development
- Evaluation of different modes of training
- Development of a Quality Workforce
- Application of motivation theories
- Suggestion of appropriate ways of internal communication
3(d) Marketing Management
- Role of Marketing
- Marketing concept
- Importance of marketing as a business function
- Planning, organizing, implementing and controlling marketing activities
- Objectives, strategies and resources of the marketing process
- Marketing Research
- Importance and major objectives of marketing research
- Basic principles for designing marketing research
- Customer Behaviour
- Customer decision-making process
- Factors affecting customer decisions
- Major business customers: producers, resellers, governments and institutions
- Differences between business and consumer markets
- Marketing Strategies for Goods and Services
- Target markets
- Different types of market segmentation methods
- Factors affecting the determination of target market: market niche and positioning
- Marketing mix
- Concept of marketing mix
- Illustration of different pricing, promotion, product and place strategies for goods
- Application of various marketing mix strategies to different stages of the product life cycle
- Characteristics of services and their effect on marketing mix design
- Comparison of differences between traditional marketing strategies and e-marketing strategies
- Customer relationship management (CRM)
- Importance of CRM to the marketing process
- Factors affecting customer loyalty and development of marketing strategies to enhance customer loyalty
- Target markets