Key terms Flashcards
(11 cards)
What is a capital?
Money spent by the business on items which should last a long time (assets).
What is cost of sales?
The cost of producing a product.
What is gross profit?
The money made from selling the product (the sales revenue) after the cost of producing that product (cost of sales) have been deducted.
What is the formula for gross profit?
Gross profit = revenue - cost of sales
What is net profit?
The money made after selling a product after all costs (expenditure) have been deducted from the gross profit.
What is the formula for net profit?
Net profit = gross profit - expenditure
What is expenditure?
Money that a business spends.
What is overheads?
The everyday running costs of the business.
What is profit?
Occurs when revenue is more that expenditure.
What is loss?
Occurs when expenditure is more than revenue.
What are the other two words also used for sales?
Revenue and income.
