component 1 defintions business oportunities Flashcards
unlimited liability
situation where the owners of a business are personally resposible for all the debts and liablities of the business and if the business cant pay its debts the owners personal assets may be used to cover the debts
limited liability
where owners or shareholders of a company arent personally responsible for the companys debts and liabilities therefore personal belongings will not get repossesed if debts cant be paid
cooperatives
organisations that are owned and operated by a group of indivduals who come together to meet a common need or goal.
societies
a group of people who come together to start a club/ gorup sharing the same interests and not for benefits or profits
fixed costs
costs that do not vary with output no matter how much is sold fixed costs have to be paid for example rent, insurance tax
variable costs
vary in direct proportion to output, as output increases variable costs increase and vise versa for example raw materials and labour
semi variable costs
costs that contain both fixed and variable elements
direct costs
costs that arrise specifically from the produvtion of s product or provision of a service for example rent on a shop, materials, direct labour
overhead costs/ indirect costs
costs not directly related to the production of a specific product or service- rent, utliities
break even
point where a business makes neither a profit or incures a loss where total revenue = total costs
contribution
the difference between the selling price per unit and the variable cost per unit
margin of safety
difference between output level and break even output when output is above break even, thee amount by which demand can fall before a business incures losses.
demand
quantity off a good or service consumers are willing and able to purchace at a given price within a specific period of time
supply
quantity of a good or service that a producer is willing and able to supply at a given price during a given period of time
working capital
money needed to finance the day to say running of a business, allows stock to be bought and wages and bills to be paid.