Key Terms

Question 1

Bank Overdraft

Answer 1

borrowings from an account on a current account which are payable on demand

Question 2

Adviser

Answer 2

an external contact of a business that provides support and advice

Question 3

Bank Loan

Answer 3

a fixed amount loan from a bank which is generally used to finance long term assets

Question 4

Breakeven Point

Answer 4

The point where a business is neither making a profit or loss

Question 5

Cash Flow

Answer 5

the movement of cash- inflows and outflows

Question 6

Contribution

Answer 6

the difference between total sales and total variable costs

Question 7

Demographic

Answer 7

Defining a market in terms of social-economic factors such as segmentation age, income, class etc

Question 8

Psychographic

Answer 8

The study of personality, values, opinions, attitudes, interests, and lifestyles, this area of research focuses on interests, attitudes, and opinions

Question 9

Geographic

Answer 9

where a business divides it’s market depending on where they live

Question 10

Entrepreneur

Answer 10

an individual who sets up and runs a new business and takes on the risks associated with the business

Question 11

fixed costs

Answer 11

costs that do not vary in price no matter how often or how much you use them e.g. bills, wages

Question 12

Franchisor

Answer 12

when a business puts a store under the control of a person although that person can’t make independent decisions that could effect the business

Question 13

Limited Liability

Answer 13

Shareholders are only liable for the money they have invested - not for the overall debts and liabilities of their company

Question 14

Margin of Safety

Answer 14

The difference between the actual level of output and the break even output

Question 15

Market Segmentation

Answer 15

The process of dividing a market into smaller sections (segments) segmentation which contain customers with similar needs and wants

Question 16

Market share

Answer 16

the amount of the market a certain business holds in a sector

Question 17

Niche market

Answer 17

A smaller part of a larger market in which customers have more specific needs and wants.

Question 18

Profit

Answer 18

The difference between total sales and total costs

Question 19

Quantitative research

Answer 19

Market research concerned with collecting data that can be quantified - e.g. sales statistics

Question 20

Revenue

Answer 20

The income or sales that a business achieves in a period. Calculated by multiplying selling price per unit x units sold.

Question 21

Share Capital

Answer 21

The finance invested in a business (limited company) by the shareholders – part of the equity capital of a firm

Question 22

Sole Trader

Answer 22

A one-person business with unlimited liability for the debts of that business

Question 23

Supplier

Answer 23

A business that provides goods and services to other firms

Question 24

Total costs

Answer 24

variable costs + fixed costs

Question 25

Trade credit

Answer 25

Trade credit is the credit extended to you by suppliers who let you buy now and pay later. Any time you take delivery of materials, equipment or other valuables without paying cash on the spot, you're using trade credit.

Question 26

Unlimited Liability

Answer 26

Unlimited liability describes the potential risk that sole traders and partnerships face, they are liable for the debts of the business

Question 27

USP

Answer 27

Unique selling point - a feature of a product or service that makes it stand out compared with the competition

Question 28

Variable Costs

Answer 28

Costs that vary with how much you use of it e.g. petrol in a van or supplies

Question 29

Venture Capilalist

Answer 29

usually someone with a lot of money that invests in a business for a percentage of that business, they can also give advice to the owner of the business