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Flashcards in Key terms Deck (24):
1

Revenue

Income coming into the business from sales, through a grant, the leasing of premises or interest on money in the bank.

2

Direct costs

These are any costs that can be directly linked to the product. Examples are raw materials and labor (work hours) used to make it.

3

Indirect costs

(Overheads). These are costs needed for the business to operate but not directly.

4

start up costs

A cost which is only paid when the business begins and isn't paid out during the business's lifetime.

5

Operating/running costs

Costs which are continuously paid out during the business's lifetime.

6

Fixed costs

These are the costs that the business still has to pay no matter how much they sell (output).

7

Salary

This is paid to staff on a weekly or monthly basis. It is an equal amount divided up throughout the year.

8

Variable costs

These are costs that do change depending on output.

9

Sales of fixed assets

The sale of an asset that you no longer require.

10

Fixed asset

Anything you own for longer than 12 months.

11

Break even

Point when the business has made enough sales revenue to cover all the costs.

12

Profit

This is the money left over when you subtract your costs from your total revenue.

13

Total costs

This is anything the business spends money on, fixed or variable.

14

Budgeting

Is the process of setting a plan of how much money the business will gain from revenue (revenue budget) and then how much money the business plans to spend and what they will spend it on (expenditure budget).

15

Revenue budget

Minimum target for the desired revenue level over a period of time.

16

Expenditure budget

Sets a maximum target for costs. This is when you plan how much you want to spend.

17

Budgetary control

Is when you look back at your original budget after spending and see the difference in what you planned to spend and what you have actually spent.

18

Variance analysis

The difference between what you planned to spend and what you actually spend.

19

Favourable variance

If a business spends less on buying stock than they budgeted for.

20

Adverse variance

If a business over spends on a budget.

21

Net cash flow

All of your inflows take away the outflows.

22

Gross profit

Gross profit is the money left over when you subtract revenue from the cost of sales.

23

Net profit

Net profit is the money left over when you subtract gross profit from expenditure.

24

Creditors

People who you owe money to, for example, family.