bssssssssssssssssssssss Flashcards
(152 cards)
1
Q
Value of capital employed
A
The total capital invested into the business.
2
Q
Limitations of checking size through value emploted:
A
-Some companies might employ a very little amount of capital but might have a large number of employees.
3
Q
Wage
A
payment for work, usually paid weekly.
4
Q
Brand image
A
an image or identity given to a product which gives it a personality of its own and distinguishes it from its competitors’ brands.
5
Q
Average cost per unit
A
the total cost of production divided by the total output.
6
Q
Current liabilities
A
short-term debts owed by the business.
7
Q
Business
A
An organisation which produces goods and services.
8
Q
Need
A
a good or service essential for living.
9
Q
Want
A
a good or service which people would like to have, but which is not essential for living. People’s wants are unlimited.
10
Q
Economic problem
A
There exist unlimited wants but limited resources to produce the goods and services to satisfy those wants, this creates scarcity.
11
Q
Scarcity
A
the lack of sufficient products to fulfil the total wants of the population.
12
Q
Factors of production
A
those resources needed to produce goods or services. There are four factors of production and they are in limited supply.
13
Q
Franchise
A
a business based upon the use of the brand names, promotional logos and trading methods of an existing successful business. The franchisee buys the license to operate this business from the franchisor.
14
Q
Department
A
Areas within the business that are responsible for one important part of the work of the organisation.
15
Q
Delegation
A
To give authority to a subordinate to preform a task, however the manager is still responsible for the task
16
Q
Sender
A
the person starting off the process by sending the message.
17
Q
Distribution channel
A
the means by which a product is passed from the place of production to the customer or retailer.
18
Q
Exchange rate depreciation
A
the fall in the value of a currency compared with other currencies.
19
Q
(factor of production) Land
A
all of the natural resources provided by nature, including fields, forests, oil, gas, metals and other resources.
20
Q
(factor of production) Labour
A
the number of people available to make products.
21
Q
(factor of production) Capital
A
the finance, machinery and equipment needed for the manufacture of goods.
22
Q
(factor of production) Enterprise
A
the skill, and risk-taking ability of the person who brings the factors of production together to produce a good or service. For example, the owner of a business. These people are called entrepreneurs.
23
Q
Opportunity cost
A
the next best alternative given up by choosing another item.
24
Q
Specialisation
A
when people and businesses concentrate on what they are best at.
25
Why specialisation is common
*Specialized machinery and technology are widely available
*Increasing competition means businesses have to have low cost
*Higher living standards can result from being specialized
26
Division of labour
when the production process is split up into different tasks and each worker performs one of these tasks. It is a form of specialisation.
27
Advantages of division of labour and job specialization
*Workers are trained in one task and specialize in this-Increases efficiency
*Less time is wasted moving from one workbench to another
*Employment increases
*Lower costs
*Increased production
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Disadvantages of division of labour and job specialization
*Workers can become bored doing just one job-efficiency might fall
*If a worker is absent no one else can do the job- production might be stopped
*Products become standardized
*Small businesses can't compete
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30
Added value
the difference between the selling price of a product and the cost of bought in materials and components.
31
Primary sector
extracts and uses the natural resources of the earth to produce raw materials used by other businesses
32
Secondary sector
manufactures goods using raw materials provided by the primary sector.
33
Tertiary sector
provides services to consumers and the other sectors of industry.
34
De-industrialisation
when there is a decline in the importance of the secondary, manufacturing sector of industry in a country.
35
Business plan
a document containing the business objectives and important details about the operations, finance and owners of the new business.
36
Mixed economy
An economy that has both a private sector and a public sector.
37
Private sector
Businesses not owned by the government. Goods and services are charged and paid for by the customer
38
Public sector
Government owned and controlled businesses and organisations. Services provided are free and are paid for by taxes.
39
Privatisation
When governments sell public sector businesses to private sector businesses
40
Entrepreneur
a person who organises, operates and takes the risk for a new business venture.
41
Internal growth
when a business expands its existing operations, e.g creating a new product or expanding to another market(location)
42
External growth
when a business takes over or merges with another business.
43
Integration
when one firm is integrated into another one.
44
Merger
when the owners of two businesses agree to join their firms together to make one business.
45
Takeover
when one business buys out the owners of another business.
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Horizontal integration
when one firm merges with or takes over another one in the same industry at the same stage of production.
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Vertical integration
when one firm merges with or takes over another one in the same industry but at a different stage of production, it can be forward (higher stage of production) or backward (lower stage of production).
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Conglomerate integration
when one firm merges with or takes over a firm in a completely different industry, this is also known as diversification.
49
Sole trader
a business owned by one person.
50
Liability
The state of being responsible for something, especially by law.
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Limited liability
the liability of shareholders in a company is only limited to the amount they invested.
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Unlimited liability
the owners of a business can be held responsible for the debts of the business they own. Their liability is not limited to the investment they made in the business.
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Partnership
a form of business in which two or more people agree to jointly own a business.
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Partnership agreement
the written and legal agreement between business partners. Not essential to have it but always recommended.
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Unincorporated business
a business that does not have a separate legal identity. Sole traders and partnerships are unincorporated businesses.
56
Incorporated business
companies that have separate legal status from their owners.
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Shareholders
the owners of a limited company. They buy shares which represent part ownership of a company.
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Annual general meeting (AGM)
An 'AGM' is a legal requirement for all companies. Shareholders may attend and vote on who they want to be on the Board of Directors for the coming year.
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Dividends
payments made to shareholders from the profits (after tax) of a company. They are the return to shareholders for investing in the company.
60
Joint venture
when two or more businesses agree to start a new project together, sharing the capital, the risks and the profits.
61
Public corporations
businesses that are fully owned by the government. But they are managed by a board of directors who are made clear what the purpose of the business is.
62
Business objectives
the aims or targets that a business works towards. SMART- specific, measurable, agreed upon, realistic, time-oriented.
63
Social Enterprise
A social enterprise has social objectives as well as an aim to make a profit to reinvest back into the business.
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Market share
the proportion of total market sales achieved by one business.
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Stakeholder
any person or group with a direct interest in the performance and activities of a business.
66
Variable costs
costs which vary directly with the number of items sold or produced.
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Total costs
fixed and variable costs combined.
68
Economies of scale
the factors that lead to a reduction in average costs as a business increases in size.
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Diseconomies of scale
the factors that lead to an increase in average costs as a business grows beyond a certain size.
70
Break-even level of output
the quantity that must be produced/sold for total revenue to equal total costs.
71
Break-even charts
graphs which show how costs and revenues of a business change with sales. They show the level of sales the business must make in order to break even.
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Revenue
the income during a period of time from the sale of goods or services.
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Break-even point
the level of sales at which total costs equal total revenue.
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Contribution
selling price - variable cost.
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Quality
to produce a good or a service which meets customer expectations.
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Quality control
the checking for quality at the end of the production process, whether it is the production of a product or service.
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Total quality management (TQM)
the continuous improvement of products and processes by focusing on quality at each stage of production.
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Location
the place where a firm decides to site its operations. Location decisions can have a big impact on costs and revenues. A business needs to decide on the best location taking into account some factors.
79
Start-up capital
the finance needed by a new business to pay for essential fixed and current assets before it can begin trading.
80
Working capital
the finance needed by a business to pay its day-to-day costs.
81
Capital expenditure
money spent on fixed assets which will last for more than one year.
82
Revenue expenditure
money spent on day-to-day expenses which do not involve the purchase of a long-term asset, for example wages or rent.
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Internal finance
funds obtained from within the business itself.
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External finance
funds obtained from sources outside of and separate from the business.
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Micro finance
providing financial services (including small loans) to poor people not served by traditional banks.
86
Cash flow
the cash inflows and outflows over a period of time.
87
Cash inflows
the sums of money received by a business during a period of time.
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Cash outflows
the sums of money paid out by a business during a period of time.
89
Cash flow cycle
the stages between paying out cash for labour, materials, etc. and receiving cash from the sale of goods.
90
Profit
the surplus after total costs have been subtracted from sales revenue.
91
Cash flow forecast
an estimate of future cash inflows and outflows of a business, usually on a month-by-month basis. This then shows the expected cash balance at the end of each month.
92
Opening cash (or bank) balance
the amount of cash held by the business at the start of the month.
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Net cash flow
the difference, each month, between inflows and outflows.
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Closing cash (or bank) balance
the amount of cash held by the business at the end of each month. This becomes next month's opening cash balance.
95
Working capital
the capital available to a business in the short-term to pay for day-to-day expenses.
96
Accounts
the financial records of a firm's transactions.
97
Accountants
the professionally qualified people who have responsibility for keeping accurate accounts and for producing the final accounts.
98
Final accounts
are produced at the end of the financial year and give details of the profit or loss made over the year and the worth of the business.
99
Income statement
a document that records the income of a business and all costs incurred to earn that income over a period of time (for example one year). It is also known as profit and loss account.
100
Gross profit
made when sales revenue is greater than the cost of goods sold.
101
Sales revenue
the income to a business during a period of time from the sale of goods or services.
102
Cost of goods sold
the cost of producing or buying in the goods actually sold by the business during a time period.
103
Trading account
a document that shows how the gross profit of a business is calculated.
104
Net profit
the profit made by a business after all costs have been deducted from sales revenue. It is calculated by subtracting overhead costs from gross profits.
105
Depreciation
the fall in the value of a fixed asset over time.
106
Retained profit
the net profit reinvested back into a company, after deducting tax and payments to owners, such as dividends.
107
Balance sheet
a document that shows the value of a business's assets and liabilities at a particular time.
108
Assets
those items of value which are owned by the business. They may be fixed (non-current) assets or short-term (current) assets.
109
Liabilities
the debts owed by the business.
110
Non-current assets
items owned by the business for more than one year.
111
Current assets
owned by a business and used within one year.
112
Non-current liabilities
long-term debts owed by the business.
113
Liquidity
the ability of a business to pay back its short-term debts.
114
Capital employed
The long-term and permanent capital invested in a business. It is calculated as: Shareholders' equity plus non-current liabilities
115
Illiquid
this means that assets are not easily convertible into cash.
116
Inflation
the increase in the average price level of goods and services over time.
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Unemployment
when people who are willing and able to work cannot find a job.
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Economic growth
when a country's gross domestic product increases - more goods and services are produced than in the previous year.
119
Balance of payments
the difference between a country's exports and imports.
120
Real income
the value of income which falls when prices rise faster than money income.
121
Gross Domestic Product (GDP)
the total value of output of goods and services in a country in one year.
122
Recession
a period of falling GDP.
123
Exports
goods and services sold from one country to other countries.
124
Imports
goods and services bought in by one country from other countries.
125
Exchange rate
126
Fiscal policy
any change by the government in tax rates or public-spending.
127
Direct taxes
taxes paid directly from incomes.
128
Indirect taxes
taxes are added to the prices of goods and taxpayers pay the tax as they purchase the goods.
129
Disposable income
the level of income a taxpayer has after paying income tax.
130
Import tariff
a tax on an imported product.
131
Import quota
a physical limit to the quantity of a product that can be imported.
132
Monetary policy
policy concerning a change in interest rates by the government or central bank.
133
Exchange rate appreciation
the rise in the value of a currency compared to other currencies.
134
Social responsibility
when a business decision benefits stakeholders other than shareholders.
135
Environment
our natural world.
136
Private costs
the costs paid for by the business of a specific activity.
137
Private benefits
the gains to a business. of a specific activity.
138
External costs
costs paid for by the rest for society, other than the business, resulting from business activity.
139
External benefits
the gains to the rest of society, other than the business, resulting from business activity.
140
Social costs
private costs + external costs
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Social benefits
private benefits + external benefits
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Sustainable development
development which does not put at risk the living standard of future generations.
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Sustainable production methods
production methods that do minimum damage to the environment.
144
Pressure group
a group of people who want to change business (or government) decisions and they take action such as organizing consumer boycotts.
145
Consumer boycott
when consumers decide not to buy products from businesses that do not act in a socially responsible way.
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Ethical decisions
decisions are based on a moral code.
147
Globalisation
the term widely used to describe increases in worldwide trade and movement of people and capital between countries.
148
Free trade agreements
agreements that exist when countries agree to trade imports/exports with no barriers such as tariffs and quotas.
149
Protectionism
when a government protects domestic firms from foreign competition using tariffs and quotas.
150
Multinational businesses
businesses that have factories, production or service operations in more than one country.
151
Currency appreciation
when the value of a currency rises - it buys more of another currency than before.
152
Currency depreciation
when the value of a currency falls - it buys less of another currency
