chapter 18-22 finance Flashcards
(21 cards)
a budget
a financial plan of action describing the expected revenue and costs
zero budgeting
managers aren’t allocated with a budget amount and can spend how they want, but must request and justify expenditure
variance
an unplanned change from the budgeted amount
favourable variance
when expenditure is less than expected, or revenue is higher than expected
adverse variance
when expenditure is more than expected or revenue is less than expected
sale of assets
when a business sells their fixed assets
owners capital
money invested into a business from their own savings
share capital
money raised from the sale of shares
cashflow forecast
a historical document of cash during a trading period
inflows
Money received by a business
Outflows
Money paid out by a business to pay for expenses
Opening balance
The amount of money a business starts with at the beginning of the period.
Liquid assets
Things a business owns that can quickly be used
Trading, profit & loss account
A financial document showing a historic view of all the business’s trading income and expenditure over a year
Cost of sales
The direct costs of purchasing the stock that is used in sales.
Opening stock
The value of inventory (stock) held by a business at the beginning of the trading period
Gross profit
revenue - cost of sales
Net profit
Gross profit - Expenses
Dividends
The share of the profits that is paid to shareholders
Gross profit margin equation
(Gross profit /sales revenue)x 100
Net profit margin equation
(net profit / sales revenue) x 100
