Business Documents Flashcards
(30 cards)
What does a business send in order to order a product?
A Purchase Order.
What does E&EO stand for and what is its purpose?
E&EO stands for Errors and Omissions Excepted. Its purpose is to allow any errors to be corrected later in a document without any comeback.
What is VAT and what is its purpose?
VAT stands for Value Added Tax. It is, essentially, the government’s cut. The revenue raised goes to improving and maintaining community services.
Why is a trade discount used?
To encourage repeat business, bulk buys, or to encourage new custom.
What is an advantage of a computerised accounting system?
Documents can be produced and duplicated quicker, made to look more professional (thus giving a better customer impression), and that documents can be corrected at a later date.
What is a disadvantage of a computerised accounting system?
Training, hardware and software can be time-consuming and expensive, or viruses can cause lost data. Both can set back a business and can lose customers, especially small businesses.
What is a budget?
A financial plan prepared and approved for a defined period of time.
What is the benefits of a budget?
It will set a limit on spending, help prioritise spending, help plan ahead and make sound business decisions, and allows the business to compare their spending with their planned budget.
What is a break-even point?
The point at which Total Revenue is equal to Total Cost.
What is a fixed cost?
Fixed costs stay the same however much is sold or produced.
What is a variable cost?
Variable costs change with the amount produced or sold.
What is an advantage of using a spreadsheet?
Calculations can be performed easily using formulae, Changes can be made easily without rewriting the entire graph, What-if scenarios can be made, and graphs can be produced for an overview.
What is a disadvantage of using a spreadsheet?
The initial setup, training, hardware and software is time-consuming and expensive. Also, input can be inaccurate meaning that misleading graphs and figures can be produced, and viruses can result in lost data.
What is a disadvantage of a break-even analysis?
Figures are only a forecast, and circumstances may change, Fixed costs may rise, Costs are not linear, Fixed costs may be spread over a number of products, and Incorrect conclusions may be made if mistakes have been made.
What are the benefits of a break-even analysis?
It is easy to see graphically the point at which total revenues equate to total costs, how changes in costs and prices affect the break even point, and allows for identification of the margin of safety.
What is the gross profit?
The difference between sales revenue and costs of sales.
What is the net profit?
The net profit, minus any other expenses beyond sales.
How do you calculate gross profit?
Sales revenue - Cost of sales
How do you calculate net profit?
Gross Profit - Expenses
What are fixed assets?
Assets owned by a business for over a year.
What are current assets?
Assets owned by a business for less than a year.
What are current liabilities?
Liabilities owed by a business that must be paid back in less than a year.
What are debtors?
People/Businesses who owe money to the business.
What are creditors?
People/Businesses the business owes.
