This page is really in two parts:

• What is available for business studies teachers and students from BBC Bitesize; and
• My view of the materials available: the good and the could do better!

The BBC is to be congratulated on its GCSE Bitesize sections: in addition to Business Studies, it has sections for

• Design and Technology
• English
• French
• Geography
• German
• History
• Information Technology
• Maths
• Physical Education
• Religious Education
• Science: Biology
• Science: Chemistry
• Science: Physics
• Spanish

The is here.

Business Studies contains the following sub section:

Business Studies	Business aims and organisation
	Business environment
	Finance
	Marketing
	People in business
	Production

I have chosen to have a look at the Finance part of the Business Studies Section: this sections looks like this:

Finance	Accounting principles
	Accounts
	Cash flow
	Profitability
	Solvency
	Sources of finance
	Trading efficiency

In turn, I then looked at cash flow:

Cash Flow	Budgeting
	Cash flow
	Case study
	Typical exam question

In summary, the trail I followed is as follows

Business Studies ...	Finance ...	Cash Flow ...	Budgeting
			Cash flow
			Case study
			Typical exam question

Every topic covered has a Revision section: sub topics with key points together with explanations: generally fine. Most sub topics then have a test for us to try: half a dozen or so questions that have true/false answers. Do the test and have it marked ...

I took two tests and scored 100% on the first test; but got only 5 out of 7 on the second test. I invetigated further!

I had no problem with the six questions in the Cash Flow test!

Here are the two questions that the inquisitor and I had a tiff over:

1. A trading account is the first part of a profit and loss account.
I said FALSE
5. A balance sheet shows how much profit a firm is making.
I said TRUE

1. BBC Answer
false Is incorrect.
Hard luck. A trading account records all the income and costs directly related to sales.

My Response
The trading account is a separate account from the profit and loss account: the very word account gives that away. Check the ledgers of any organisation to see that this is true. What the author might mean is that we tend to present the trading and profit and loss accounts together in the form of an income statement; but that's not the same. Take a look at Frank Wood's Accounting book 1, or similar text, for examples of what I have just said.

5. BBC Answer
true Is incorrect.
Hard luck. A balance sheet shows the assets and liabilities of the firm.

My Response
Well, now, a balance sheet CAN show how much profit a business is making. After all, where does the profit and loss account balance come from? What the author might have meant is that it doesn't show the gross profit or the net profit ... that's true unless there are absolutely no payments out of net profit, in which case the balance sheet will show the net profit the business has made.

Overall, GCSE Bitesize is good. It wouldn't take anyone too long to work through the cash flow section for example, and the author has worked systematically through budgeting and into cash flow budgeting. The cash flow case study is pitched at just the right level and there are some nice and friendly explanations of how the cash flow budget has been put together.

In addition, I strongly recommend that teachers direct their students to the BBC Working Lunch pages

• Lesson Seven:Cash Flow
• Keep the cash flowing 'Smoothlie'y

following their programme aired on 17 October (By the way, did you spot that I published my own cash flow pages only three days before the BBC Working Lunch programme of the same topic? What a coincidence!)

Nitpickery

Three points leapt out at me from the case study

• they talked about the cash flow budget for the last three months
• they said "... you have to add existing profits or deficits to the cash balance ..."
• they have a Wise-up words section and in there they define Working Capital as "The difference between a firm's cash and its short term debts: the money it has to play with"

1. Budgeting is a feedfoward device so to talk about historical cash budgets isn't especially helpful. In this context it would be better to talk about the cash account, the cash flow statement or something similar.
2. As we all know, profit does not necessarily equate to cash. So, to recommend adding profit to, or subtracting deficits from, cash balances is misleading. Let me guess that the author actually meant surplus rather than profit ... then it becomes OK.
3. Working capital is strictly defined as the difference between current assets less current liabilities. Current assets include stocks of raw materials and finished goods; and they include debtors, bank accounts and cash. Similarly, current liabilities includes trade creditors, expense creditors, bank overdrafts, accrued expenses ... Working capital relates to short term sources of finance/ability to pay and this is not to say that current assets comprise only cash items.

Overall, when they assign an editor to their Cash Flow page, it will be fine and I would recommend it. As it is, send your students to it AND this page at the same time and they'll be fine!

Other aspects of the Bitesize sections

Look down the left hand side of the Bitesize pages and you'll see these tabs:

• Home: the Bitesize home page
• Screech: a chat section that's currently being developed
• Ask a Teacher: potentially a very useful section currently suspended but see below
• Help: !
• Survival Kit: good tips for coping with exams that range from Top Revision Tips to, ahem, Your Revision Horoscope!

Ask a Teacher

Let me spend a bit of time on this supplementary section since it gives rise to some significant concerns.

This section is currently suspended, to return in the near future, but they have a list of 64 questions: these questions are to be found in the Business Studies: Economics area.

I looked at these questions and their answers, drawn more or less at random but concerning topics that I wouldn't have to check my own answers to

• 30 What is the difference between ordinary shares and debentures?
• 38 What is the difference between an acid test ratio and a current asset ratio?
• 40 What are the advantages of high stock turnover?
• 41 What is the difference between direct costs, indirect costs, variable costs and fixed costs?
• 46 What is cash flow?
• 60 What's the difference between gross and net profits please?
• 61 Can you tell me what a break even chart is?
• 64 What is Economies of Scale?

I like the idea behind the ask a teacher service: we never had this in my day! After all, it's a potentially very valuable resource and for the child who may be intimidated by talking to his teacher (yes, they exist!) the anonymity can be a vital aspect of such a service.

My Review of the Problems and the Solutions Offered: question by question

Question 30: the author says "If you hold ordinary shares in a company you are a part owner of the company and have voting rights. The holder of debentures is a creditor of the company, not an owner. This means that holders are entitled to an agreed fixed rate of return, but have no voting rights."

Sorry, that wouldn't earn many marks in an exam would it? Moreover, it's not helpful as a general comparison. He could at least have defined what a debenture is and why a debenture holder is effectively a creditor ... assuming that the questioner understands what a share is. I wonder what the student who asked the question felt like having received this answer?

Question 38: The answer given is pretty good until the author says, of the current ratio "An answer of 1.5 is ideal." and of the acid test ratio the author says "An answer of 1 to 1.2 is ideal." I seem to rant on about this at least two or three times a year. Ideals like this DO NOT EXIST. How do I know they don't exist? Well, go and get a copy of Tesco's Annual Report and Accounts and calculate their current and acid test ratios: they could both be negative, let alone anywhere near the ideals the author has in mind. Nevertheless, despite it being a mistake, such assertions are a good debating point for students when you show them why suggesting these ideals exist is a dangerous thing to do.

Question 40: a good answer, no problems

Question 41: discussion about direct, indirect, variable and fixed costs are a nightmare for many ... here we are again. This author's understanding of these terms is not advanced! It's best if I give you the correct definitions, rather than correct the author's text:
In a factory, direct costs relate directly to output of products and can be made up of materials, labour and overheads: they rarely include electricity costs, despite the author's assertions.
Indirect costs are FACTORY based costs that are not directly related to output and they can be made up of materials, labour and overheads: they do NOT include advertising costs, distribution costs as the author would have us believe.
variable costs vary directly with output: the author needs to give a convincing argument as to why he thinks "advertising costs, distribution costs, and utility bills such as gas, electricity and telephone" should be included here.
fixed costs are independent of output and the author's discussion here is OK.

An excellent starting point for question 41 is my discussion of the classification of costs.

Question 46: The author starts his discussion with "The money coming into the business (called revenue)" ... if only he hadn't added the called revenue thing given what he goes on to say. He lumps sales (revenues) with receipts from having disposed of assets: this makes it cash receipts rather than revenues. He makes the same mistake with payments. I don't like his definition of net cash flow either!

Question 60: the author has a problem here that seems to be related to his problems with question 41. Having just about got away with his definition of gross profit, the author then says "Net profit takes into account the firm's overheads, it can also be called operating profit. You can calculate it using the following formula:
NET PROFIT = GROSS PROFIT - OVERHEADS

The problem here relates to the author's definition of overheads: it is wrong! In fact, the word overhead has become wildly thrown about for years now and strictly speaking it is synonymous with Indirect Costs as in question 41.
In fact, Net Profit = Gross Profit - Expenses
Moreover, I can't see the link between the question and why the author says
Overhead costs are not directly affected by the production level of the firm, they include rent, heating, and lighting."

Question 61: if a picture paints a thousand words then why can't I paint thee? This sprang to mind as I read the author's 224 word attempt at answering this question. Not much wrong with what he said but given the resources of the BBC, I can't imagine why he didn't give the poor student a simple break even chart to look at. So, go to my introductory break even chart slides:

CVP 1: 1 of 2 Overview of CVP
CVP 2: 2 of 2 CVP Calculations
CVP 3: 1 of 2 CVP Stage 2
CVP 4: 2 of 2 CVP Stage 2 more calculations
and my brief page Cost Volume Profit Relationships

Question 64: no problems here, decent answer

Thanks to John Taylor from Shanghai for pointing out a spelling mistake that has resided on this pages since October 2001 ... not any more!