Keywords

Question 1

Start -up costs

Answer 1

The amount of money spent setting up a business before it starts trading

Question 2

Operating costs

Answer 2

Money spent on a regular basis to keep a business running.

Question 3

Income

Answer 3

Money which is paid into a business

Question 4

Fixed costs ( indirect costs)

Answer 4

Expenditure on items which does not change with the number of items sold or produced

Question 5

Variable costs (direct costs)

Answer 5

The costs which vary according to the number of items sold or produced.

Question 6

Total costs

Answer 6

The total amount of money spent running a business overs a certain period of time e.g. a month

Question 7

Revenue

Answer 7

Money received by a business

Question 8

Expenditure

Answer 8

Money that a business spends

Question 9

Overheads

Answer 9

the everyday running costs of a business

Question 10

Profit

Answer 10

Occurs when revenue is more than expenditure

Question 11

Loss

Answer 11

Occurs when expenditure is more than revenue

Question 12

Breakeven

Answer 12

Occurs when a business has made enough money through sales to cover the cost of sales. there is no profit or loss at this moment

Question 13

Budgeting

Answer 13

Planning the future expenditure and revenue targets with the aim of ensuring a profit is made.

Question 14

Budgetary Control

Answer 14

The process of checking what is actually happening comparing this with the plan and taking action is things are not correct.

Question 15

Cash inflows

Answer 15

The amount of money entering a business’s bank account

Question 16

Cash outflows

Answer 16

The amount of money leaving a business’s bank account

Question 17

Net cash flow

Answer 17

Difference between the cash inflow and outflow figures over a particular period

Question 18

Cash balance

Answer 18

The amount of money forecast to be in the bank account after the net cash flow figure has been added or subtracted from the existing bank balance

Question 19

Overdraft

Answer 19

This occurs if a business pays more out of its bank account than it has in credit. the bank may allow this but will make an extra charge.

Question 20

Capital

Answer 20

Money spent by a business on items which should last a long time.

Question 21

Cost of sales

Answer 21

The cost of producing a product.

Question 22

Gross Profit

Answer 22

The money made from selling a product after the cost of producing the product has been deducted. Also known as margin.

Question 23

Net profit

Answer 23

The money made from selling a product after all the costs (expenditure) have been deducted from the gross profit.

Question 24

Financial statements

Answer 24

Summary of the financial activities of a business

Question 25

Income statement ( profit and loss account)

Answer 25

outlines income from sales and cost of sales as gross profit and the expenses and overheads leaving net profit.

Question 26

Trading account

Answer 26

The first section of the income statement. Details income from sales and cost of sales as gross profit.

Question 27

Financial year

Answer 27

The trading period over which a business collects information for their annual income statement

Question 28

Assets

Answer 28

Items that the business buys that normally last a long time, such as a van or computer, or money it is owed. Anything the business owns which is value

Question 29

Debtors (or trade receivables)

Answer 29

People who owe money to the business for goods and services that they have received.

Question 30

Trade payables

Answer 30

Traders whom the business owes money because they have supplied goods or services

Question 31

Liabilities

Answer 31

Amounts of money which a business owes, think of this as the opposite of assets.

Question 32

Fixed assets

Answer 32

items that the business must keep to be able to trade e.g. a van or a computer

Question 33

Current assets

Answer 33

items which change with every transaction, such as stock debtors and cash in the bank. These can be turned into cash quickly if needed.

Question 34

Current liabilities

Answer 34

Money that must be paid back within a year, such as money owed to suppliers or bank overdraft.

Question 35

Long-term liabilities

Answer 35

Bank loans which must be repaid over a longer period

Question 36

Share capital

Answer 36

Money invested by the owner, or shareholders.

Question 37

Retained profits

Answer 37

Profit kept from the previous year.

Question 38

Statement of financial position( balance sheet)

Answer 38

Shows how much the money is invested in the business and what it has been spent on.

Question 39

Working capital ( net current assets)

Answer 39

Money the business can raise quickly

Question 40

Reserves

Answer 40

Money that has been saved from a previous profitable year