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Flashcards in Business BTEC Finance Deck (54)
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1
Q

Example of start-up costs

A

painting, equipment and decoration

2
Q

Example of operating costs

A

stock, wages and utilities

3
Q

Definition of costs

A

money out of a business

4
Q

Definition of start-up costs

A

one off costs for items businesses need to start up

5
Q

Definition of operating costs

A

ongoing costs businesses have to pay on a day to day basis

6
Q

Definition of fixed costs

A

costs that do not change with output

7
Q

Definition of variable costs

A

costs that change with output

8
Q

Definition of direct costs

A

costs that are directly linked to the production of a product or service

9
Q

Definition of indirect costs

A

costs that aren’t directly linked to the production of a product or service

10
Q

Equation for total costs

A

fixed costs + variable costs

11
Q

Definition of revenue

A

money that is going into a business

12
Q

Equation for revenue

A

quantity sold x price per product

13
Q

Definition of expenditure

A

money that a business pays out

14
Q

Definition of overheads

A

everyday running costs

15
Q

Definition of profit

A

when revenue is greater than expenditure

16
Q

Definition of loss

A

when expenditure is greater than revenue

17
Q

Definition of break-even

A

when a business makes no profit and no loss and the revenue and costs are equal

18
Q

Definition of margin of safety

A

the difference between the break-even point and the actual units sold

19
Q

Definition of budget

A

a plan of inflows and outflows in an organisation

20
Q

Definition of revenue budget

A

a plan of expected inflows

21
Q

Definition of expenditure budget

A

a plan of expected outflows

22
Q

Definition of cash flow forecast

A

a prediction of inflows and outflows of money in an organisation

23
Q

Definition of opening balance

A

money carried from the previous months closing balance

24
Q

Definition of closing balance

A

the figure in the bank at the end of the month

25
Q

Definition of credit

A

the time allowed for someone to make a payment

26
Q

Definition of cost of sales

A

the costs needed to make a product or service

27
Q

Definition of gross profit

A

profit made on each item that is sold

28
Q

Equation for gross profit

A

revenue - cost of sales

29
Q

Definition of net profit

A

profit made after all costs are deducted

30
Q

Equation for net profit

A

revenue - total costs
or
gross profit - expenditure

31
Q

Definition of financial statements

A

documents that show a businesses financial performance

32
Q

Definition of income statement

A

something that shows the profit or loss of an organisation

33
Q

Definition of assets

A

something that a business owns

34
Q

Definition of current assets

A

items that can be turned into cash within the year

35
Q

Definition of fixed assets

A

items that take longer than a year to be turned into cash

36
Q

Definition of trade recievables

A

customers who have been given credit and owe the organisation

37
Q

Definition of liabilities

A

something a business owes

38
Q

Definition of current liabilities

A

owes and has to be paid within a year

39
Q

Definition of long term liabilities

A

paid in a period longer than one year

40
Q

Definition of an overdraft

A

short term bank loan that is usually expensive

41
Q

Definition of trade payables

A

people the organisation has to pay who has given it credit

42
Q

Definition of working capital

A

the money in the business on a day-to-day basis

43
Q

Equation for working capital

A

current assets - current liabilities

44
Q

Definition of retained profit

A

profit a business has kept from a previous year

45
Q

Definition of capital

A

money

46
Q

Examples of a fixed cost

A

rent

47
Q

Example of a variable cost

A

raw materials

48
Q

Definition of sales revenue

A

the money you make from selling a product

49
Q

Definition of added value

A

when you spend more of your money in order to get more money

50
Q

Examples of expenditure

A

fuel, loans, advertising and telephone bills

51
Q

Equation for break-even

A

Selling Price - Variable Costs

52
Q

Definition of budgeting

A

a plan of inflows and outflows in an organisation

53
Q

What is the purpose of budgeting?

A
  • to see the businesses performance
  • to make decisions about their performance
  • to identify areas of weakness
  • to plan future finance uses
54
Q

Equation for margin of safety

A

actual sales - break even