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Business > Flash cards to date (23/10/23) > Flashcards

Flash cards to date (23/10/23)

1
Q

Define Limited Liability

A

When a business owner has a separate legal identity to their business so their personal assets are not at risk

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2
Q

Define Unlimited Liability

A

When a business owner has the same legal identity as their business so their personal assets are at risk

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3
Q

Define Sole Trader

A

Where a business is started and owned by one person who keeps all the profits,
but holds all the responsibilities

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4
Q

Define Partnership

A

Where a business is started and owned by more than one person, who then share the profits and the responsibilities

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5
Q

Define Shareholder

A

An owner of a company who receives a dividend as a return for their investment

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6
Q

Define Private Limited Company

A

A business with limited liability that sells shares to friends and family

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7
Q

Define Public limited company

A

A business with limited liability that sells shares on the stock exchange

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8
Q

Define Stock market

A

Where investors can buy and sell ownership of investible assets such as stocks or equities which represent fractional ownership in a company

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9
Q

Define Market growth

A

The percentage growth in the size of the market measured over a specific period

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10
Q

Define Market share

A

The percentage of total sales a business’ particular good or service has

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11
Q

Define percentage change

A

The relative difference between an old value and a new value

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12
Q

Define capital expenditure

A

Funds spent by a company to acquire or upgrade a long term asset

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13
Q

Investment capital

A

The expenditure of money to fund a company’s long term growth

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14
Q

Define working capital

A

The amount of money a business has for carrying out its day to day functions

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15
Q

Define Internal sources of finance

A

Sources of finance that come from within the business

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16
Q

Define external sources of finance

A

Sources of finance that come from outside of the business

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17
Q

Define short term sources of finance

A

business finance in the short term (typically less than a year)

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18
Q

Define long term sources of finance

A

Business finance in the long term (over a year)

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19
Q

Define owner’s capital

A

Money invested into the business by the owner

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20
Q

Define Retained profit

A

Money generated by the business that is kept in the business

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21
Q

Define sale of assets

A

when established businesses sell assets that are no longer required

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22
Q

Define overdraft

A

Source of finance for a business where it is allowed to take more money out of its account
than it has deposited

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23
Q

Define Trade credit

A

When a business orders and receives supplies, but pays for them at a later date

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24
Q

Define Debt factoring

A

When a business sells its unwanted debts to debt factoring business

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25
Q

Define bank loan

A

Source of finance for a business where they receive a fixed amount of money for a specified time,
which will need repayment with interest

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26
Q

Define Share capital

A

The money raised by a business from the sale of shares

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27
Q

Define venture capital

A

A source of finance normally for small businesses with good growth prospects, where the venture
capitalist normally takes a stake in the business

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28
Q

Define Hire purchase

A

when a business agrees a contract to acquire an asset by paying an initial instalment and repays the price of the asset plus interest over a period of time

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29
Q

Define Leasing

A

the business pays a regular amount over a period of time but the item belongs to the leasing company

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30
Q

Define commercial mortgage

A

a sum of money that is borrowed from the bank that is secured against a business property and payed back in instalments over a long period of time

31
Q

Define Government grant

A

a fixed amount of money awarded by the government or charitable organisations

32
Q

Define sale and leaseback

A

when a business sells an asset but leases the same asset back from its new owner

33
Q

Define revenue

A

the income from sales

34
Q

Define Fixed costs

A

Costs that do not vary with output

35
Q

Define variable costs

A

Costs that vary with output

36
Q

Define profit

A

The difference between revenue and costs

37
Q

Define cost per unit

A

the amount of money spent by a business when producing a single unit of a product

38
Q

Define semi variable cost

A

expenses that include both fixed and variable cost components

39
Q

Define direct costs

A

a cost that is directly tied to the production of a good or service

40
Q

Defne indirect costs

A

costs that do not relate to a specific good or service

41
Q

Define break even

A

Where total revenue is the same as total costs and no profit or loss is made

42
Q

Define contribution per unit

A

the difference between the sale price of a product and the variable costs incurred for it

43
Q

Define Total contribution

A

the difference between total sales revenue and total variable costs

44
Q

Define Margin of safety

A

The additional output that a business produces or expects to produce more than its breakeven output

45
Q

Define stakeholder

A

Anyone with interest in the business

46
Q

Define Trade receivables

A

customers who owe the business money

47
Q

Define trade payables

A

The money the business owes to suppliers

48
Q

Define Working capital cycle

A

the time it takes to convert the total net working capital into cash

49
Q

Define over trading

A

when a business expands too quickly and runs into cash flow problems

50
Q

Define equity

A

the ordinary share capital of a business

51
Q

Define Debt

A

when a business owes someone money

52
Q

Define Cash flow

A

a company’s sources and uses of cash over time

53
Q

Define cash flow forecast

A

the predicted movement of money in and out of a business over a period of time

54
Q

Define cash inflow

A

money coming into the business

55
Q

Define cash outflow

A

money going out of the business

56
Q

Define liquidity

A

when an asset is converted into cash

57
Q

Define Net cash flow

A

The difference between total inflows and outflows

58
Q

Define opening balance

A

The amount of money a business has at the start of the month

59
Q

Define closing balance

A

The amount of money a business has at the end of the month

60
Q

Define seasonal demand

A

fluctuations in output and sales related to the season of the year

61
Q

Define income statement

A

A statement that shows a company’s profit and loss over a period of time

62
Q

Define Cost of sales

A

the costs that go into providing a service or a product for a customer

63
Q

Define Gross profit

A

the difference between revenue and cost of sales

64
Q

Define net profit

A

the difference between gross profit and expenses

65
Q

Define expenses

A

a cost of operations that a company incurs to generate revenue

66
Q

Define gross profit margin

A

the percentage profit made on sales not taking into account expenses

67
Q

Define net profit margin

A

the percentage profit after all costs and expenses have been deducted

68
Q

Define Ratio analysis

A

the analysis of various pieces of financial information in the financial statements of a business

69
Q

Define Budget

A

an estimation of revenue and expenses over a specific period of time

70
Q

Define variance

A

the difference between actual and budgeted sales

71
Q

Define Favourable variance

A

when costs are lower than expected

72
Q

Define adverse variance

A

When costs are higher than expected

73
Q

Define subordinate

A

an employee who is not management level and responds to a group of managers

Business (3 decks)

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