Financial Analysis Performance Indicators (Principles)

Explain Forms of Financial Exchange (FI:058) (PQ)

Financial exchange refers to the methods used to transfer money between individuals and businesses. Common forms include cash, credit, debit, checks, and electronic funds transfers, each offering different advantages in terms of convenience, security, and accessibility.

Identify Types of Currency (FI:059) (PQ)

Currency represents a medium of exchange issued by a government or financial institution. Types of currency include paper money, coins, banknotes, government bonds, and treasury notes, all of which hold value and facilitate trade.

Describe Functions of Money (FI:060) (PQ)

Money serves three primary functions: it acts as a medium of exchange to facilitate transactions, a unit of measure to compare values of goods and services, and a store of value to preserve purchasing power over time.

Describe Sources of Income (FI:061) (PQ)

Income is the money individuals or businesses receive from various sources. Common sources include wages and salaries, interest from investments, rental income, dividends from stocks, and transfer payments such as social security or government aid.

Explain the Time Value of Money (FI:062) (CS)

The time value of money concept states that a dollar today is worth more than a dollar in the future due to its potential earning capacity. This principle underlies investment decisions, emphasizing the importance of saving and compounding interest over time.

Explain the Purposes and Importance of Credit (FI:002) (CS)

Credit allows individuals and businesses to borrow money for immediate use while promising repayment in the future. It enables economic growth, provides purchasing power, and builds financial reputation, but must be managed responsibly to avoid excessive debt.

Explain Legal Responsibilities Associated with Financial Exchanges (FI:063) (CS)

Financial exchanges are governed by legal regulations to ensure fair and secure transactions. Responsibilities include adhering to contract terms, disclosing fees and interest rates, preventing fraud, and complying with consumer protection laws.

Explain the Need to Save and Invest (FI:270) (CS)

Saving and investing allow individuals to build financial security and achieve long-term financial goals. Savings provide emergency funds and short-term liquidity, while investments generate wealth over time through appreciation and compounding returns.

Set Financial Goals (FI:065) (CS)

Financial goals provide a roadmap for managing money effectively. Goals can be short-term, such as building an emergency fund, or long-term, such as saving for retirement, and should be specific, measurable, and realistic.

Explain the Nature of Tax Liabilities (FI:067) (PQ)

Tax liabilities refer to the amount of money individuals or businesses owe to the government based on income, property, or transactions. Taxes fund public services and must be accurately calculated and paid to avoid penalties.

Interpret a Pay Stub (FI:068) (PQ)

A pay stub is a document that outlines an employee’s earnings, deductions, and net pay. It includes information such as gross wages, taxes withheld, retirement contributions, and employer-provided benefits.

Prepare Bank Account Documents (FI:560) (PQ)

Bank account documents include checks, deposit slips, withdrawal slips, and endorsements used to manage financial transactions. These documents ensure accurate record-keeping and secure transfers of funds.

Maintain Financial Records (FI:069) (PQ)

Maintaining financial records involves organizing and tracking income, expenses, assets, and liabilities. Proper record-keeping ensures financial stability, facilitates budgeting, and supports tax compliance.

Read and Reconcile Bank Statements (FI:070) (PQ)

Bank reconciliation involves comparing financial records to a bank statement to identify discrepancies, prevent fraud, and ensure accuracy in personal or business accounts.

Calculate the Cost of Credit (FI:782) (CS)

The cost of credit includes interest rates, fees, and repayment terms associated with borrowing money. It affects the total amount paid over time and should be carefully evaluated before taking on debt.

Demonstrate the Wise Use of Credit (FI:071) (CS)

Using credit wisely involves making timely payments, keeping balances low, and avoiding unnecessary debt. Responsible credit use builds a positive credit history and improves financial stability.

Validate Credit History (FI:072) (CS)

Validating credit history involves reviewing credit reports for accuracy and ensuring responsible past credit use. A strong credit history enhances financial opportunities and loan eligibility.

Make Responsible Financial Decisions (FI:783) (CS)

Responsible financial decision-making requires evaluating risks, setting priorities, and considering long-term impacts. Good decisions promote financial stability and minimize unnecessary expenses.

Protect Against Identity Theft (FI:073) (CS)

Identity theft occurs when personal financial information is stolen and misused. Protection strategies include monitoring accounts, securing sensitive data, and using fraud alerts.

Pay Bills (FI:565) (CS)

Paying bills on time ensures financial obligations are met and avoids late fees, penalties, and negative impacts on credit scores.

Apply for a Consumer Loan (FI:625) (SP)

Applying for a consumer loan involves submitting a request to a financial institution for borrowing money. Lenders evaluate creditworthiness, income, and repayment ability before approval.

Control Debt (FI:568) (CS)

Debt control involves managing borrowing to avoid excessive financial burdens. Strategies include budgeting, prioritizing repayments, and limiting unnecessary credit use.

Prepare Personal Income Tax Forms (FI:074) (CS)

Preparing personal income tax forms requires gathering income documents, calculating tax obligations, and submitting returns to the appropriate tax authority.

Discuss the Nature of Retirement Planning (FI:569) (CS)

Retirement planning involves setting financial goals and investing in pension plans, savings accounts, or other assets to ensure financial security in later years.

Explain the Nature of Estate Planning (FI:572) (CS)

Estate planning involves arranging the management and distribution of assets after death. It includes wills, trusts, and tax planning to protect beneficiaries and minimize legal complications.

Develop a Personal Budget (FI:066) (CS)

A personal budget is a financial plan that outlines income, expenses, and savings goals. It helps individuals manage money effectively and achieve financial stability.

Determine Personal Net Worth (FI:562) (CS)

Personal net worth is the difference between an individual’s total assets and liabilities. It serves as a measure of financial health and long-term wealth accumulation.

Describe Types of Financial-Services Providers (FI:075) (CS)

Financial-services providers include banks, credit unions, investment firms, insurance companies, and mortgage lenders. These institutions offer services such as savings accounts, loans, wealth management, and financial planning.

Discuss Considerations in Selecting a Financial-Services Provider (FI:076) (CS)

When selecting a financial-services provider, individuals and businesses should consider factors such as fees, interest rates, customer service, accessibility, security, and the range of services offered to meet financial needs.

Explain Types of Investments (FI:077) (CS)

Investments are financial assets purchased with the expectation of future growth or income. Common types include stocks, bonds, mutual funds, real estate, and retirement accounts, each carrying varying levels of risk and return.

Describe the Concept of Insurance (FI:081) (CS)

Insurance is a financial product that provides protection against financial loss due to unforeseen events. Common types include health, life, auto, and property insurance, helping individuals and businesses manage risk.

Describe the Need for Financial Information (FI:579) (CS)

Financial information is essential for making informed business and personal financial decisions. It helps track income, expenses, profitability, and investment performance to ensure financial stability.

Explain the Concept of Accounting (FI:085) (CS)

Accounting is the systematic recording, analyzing, and reporting of financial transactions. It provides critical financial insights to businesses and individuals for decision-making and regulatory compliance.

Discuss the Role of Ethics in Accounting (FI:351) (SP)

Ethics in accounting ensures transparency, honesty, and accuracy in financial reporting. Ethical practices help maintain trust among stakeholders and prevent fraud or misrepresentation.

Explain the Use of Technology in Accounting (FI:352) (SP)

Technology enhances accounting efficiency through software and digital tools that automate financial transactions, track expenses, generate reports, and ensure compliance with financial regulations.

Explain Legal Considerations for Accounting (FI:353) (SP)

Legal considerations in accounting include adhering to financial regulations, tax laws, and reporting requirements. Businesses must follow generally accepted accounting principles (GAAP) or international financial reporting standards (IFRS) to ensure accuracy and compliance.

Describe the Nature of Cash Flow Statements (FI:091) (SP)

A cash flow statement outlines the movement of cash in and out of a business over a specific period. It helps businesses monitor liquidity, manage expenses, and ensure they have enough cash to cover obligations.

Explain the Nature of Balance Sheets (FI:093) (SP)

A balance sheet is a financial statement that provides a snapshot of a business’s financial position by listing assets, liabilities, and equity. It helps assess financial health and overall stability.

Describe the Nature of Income Statements (FI:094) (SP)

An income statement summarizes a business’s revenues, expenses, and profits over a specific period. It helps stakeholders evaluate profitability and financial performance.

Explain the Role of Finance in Business (FI:354) (CS)

Finance plays a crucial role in managing a business’s money, investments, and financial planning. It ensures sufficient funding for operations, growth, and risk management.

Discuss the Role of Ethics in Finance (FI:355) (SP)

Ethics in finance involves honesty, transparency, and responsibility in handling money, investments, and financial reporting. Ethical financial practices build trust with investors, customers, and regulators.

Explain Legal Considerations for Finance (FI:356) (SP)

Legal considerations in finance include compliance with financial regulations, tax laws, investment policies, and consumer protection laws. Businesses must operate within legal frameworks to avoid penalties and fraud allegations.

Describe the Nature of Budgets (FI:106) (SP)

A budget is a financial plan outlining expected income and expenses for a specific period. It helps individuals and businesses allocate resources efficiently, control spending, and achieve financial goals.