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Personal and Business Finance > Key Terms > Flashcards

Key Terms Flashcards

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1
Q

interest rate

A

the cost of borrowing money or the reward for saving money

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2
Q

debt

A

money owed

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3
Q

credit rating

A

a score given to individuals on how likely they are to repay debts based upon their previous actions

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4
Q

bankrupt

A

when an individual or organisation legally states its inability to repay debts

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5
Q

solvent

A

the ability to meet day-to-day expenditure and repay debts

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6
Q

current account

A

an account with a bank of building society designed for frequent use, e.g. regular deposits and withdrawals

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7
Q

overdraft

A

the ability to withdraw money that you do not have from a current account

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8
Q

expenditure

A

the amount of money you need to cover all your expenses/outgoings, e.g. your mortgage and bills

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9
Q

shareholder

A

someone who has invested in a company in return for equity, i.e. a share of the business

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10
Q

saving

A

placing money in a secure place so that it grows in value and can be used in the future

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11
Q

investment

A

speculative commitment to a business venture in the hope that it generates a financial reward in the future

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12
Q

insurance

A

an agreement with a third party to provide compensation against financial loss in line with the conditions laid down in the policy agreement

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13
Q

premiums

A

regular payments made by an individual or company to an insurance provider in return for protection

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14
Q

financial transactions

A

actions by a business that involve money either going into or out of a business- for example, making a sale or paying a bill

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15
Q

hm revenue & customs (HMRC)

A

a british government department responsible for the collection of all types of taxes

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16
Q

fraud

A

when an individual acquires company money for personal gain, through illegal action

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17
Q

profit

A

surplus achieved when total revenue (income) from sales is higher than the total costs of a business

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18
Q

loss

A

shortfall suffered when total revenue from sales is lower than the total costs of a business

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19
Q

gross profit

A

sales revenue minus cost of goods sold (the cost of the actual materials used to produce the quantity of goods sold)

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20
Q

sales revenue

A

quantity sold multiplied by the selling price

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21
Q

net profit

A

gross profit minus other expenses, for example, rent and advertising

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22
Q

trade receivables

A

money owed to the business from sales made but not yet paid for

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23
Q

trade payable

A

money the business owes from supplies purchased but not yet paid for

24
Q

fixed assets

A

items of value owned by a business that are likely to stay in the business for more than one year- for example, machinery. also known as non-current assets

25
Q

asset

A

any item of value owned by an individual or firm

26
Q

commission

A

a commission is a fee paid to a salesperson in exchange for services in facilitating or completing a sales transaction. commission could be a flat fee or a percentage of the revenue, gross margin or profit generated by the sale. it could also be charged by brokers to assist in the sale of security, properties etc.

27
Q

capital items

A

assets bought from capital expenditure such as machinery and vehicles that will stay in the business for more than a year

28
Q

statement of financial situation

A

a financial document that shows the net worth of a business by balancing its assets against its liabilities. it is often called a balance sheet.

29
Q

depreciation

A

an accounting technique used to spread the cost of an asset over its useful life

30
Q

internal sources of finance

A

money available to fund expenditure from within the business

31
Q

cash flow forecast

A

a document that shows the predicted flow of cash into and out of a business over a given period of time, normally 12 months.

32
Q

opening balance

A

amount of cash available in a business at the start of a set time period, for example a month

33
Q

closing balance

A

amount of cash available in a business at the end of a set time period, for example a month

34
Q

credit period

A

the length of time given to customers to pay for goods and services recieved

35
Q

liquidity

A

measures a firm’s ability to meet short-term cash payments

36
Q

insolvent

A

when a firm is unable to meet short-term cash payments

37
Q

statement of comprehensive income

A

shows the trading position of the business which is used to calculate gross profit. it then takes into account all other expenses to calculate the profit or loss for the year

38
Q

statement of financial position

A

a snapshot of a business’s net worth at a particular moment in time, normally at the end of a financial year

39
Q

cost of goods sold

A

the actual value of inventory used to generate sales

40
Q

opening inventory

A

the value of inventory in a business at the start of a financial year

41
Q

closing inventory

A

the value of inventory at the end of a financial year

42
Q

historic cost

A

the cost on an asset when it was first purchased

43
Q

expected life

A

how long an asset is expected to be used within a business

44
Q

residual value

A

the value of an asset when it is disposed of by the business, for example, resale value

45
Q

current assets

A

items owned by the business that change value on a regular basis, such as stock

46
Q

capital employed

A

the total amount of capital tied up in a business at a point in time. it is calculated as owners’ or shareholders’ capital + retained profit - drawings

47
Q

interfirm

A

between different firms, for example, comparing the performance of two different house builders

48
Q

intrafirm

A

within the firm, for example, comparing this year’s results with last year’s, or the performance of the York branch with the Leicester branch of a retail store

49
Q

stakeholder

A

anyone with an interest in the activities of a business, whether directly or indirectly involved

50
Q

illiquid

A

not easily converted into cash

51
Q

business-to-business

A

B2B refers to when one business sells to another business- for example, a stationery business selling to a firm of accountants

52
Q

business-to-consumer

A

B2C refers to when one business sells to an individual- for example, a stationery business selling wedding stationery tp a bride and groom

53
Q

credit period

A

the number of days that a customer is allowed to wait before paying an invoice

54
Q

net cash flow

A

the difference between a company’s inflows and outflows in a given period

55
Q

closing balance

A

the amount of funds that a business has at the end of the month

Personal and Business Finance (13 decks)

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