Business Term 2.3

Question 1

Profit

Answer 1

The surplus of revenue over costs (Total Revenue - Total Costs)

Question 2

Gross profit

Answer 2

Profit after cost of sales has been deducted and before expenses calculated as: sales revenue - cost of sales

Question 3

Operation profit

Answer 3

A firm’s profit after all other expenses have been deducted calculated as: gross profit - expenses

Question 4

Profit for the year (net profit)

Answer 4

Profit after tax has been deducted but before the payment of dividends calculated as: operating profit - interest and tax

Question 5

Balance sheet

Answer 5

A formal financial document that summarises the net worth of a business at a given point in time

Question 6

Liquidity

Answer 6

A measure of a firm short term survival I.e. it’s ability to meet short term debts and day to day expenses

Question 7

Working capital

Answer 7

Current assess - current liabilities

Question 8

External cause of business failure

Answer 8

Economic environment

Question 9

Internal cause of business failure

Answer 9

Badly organised