unit 1

Question 1

name short term sources of finance

Answer 1

= payback within a year

• overdraft
• trade credit
• factoring

Question 2

name long term sources of finance

Answer 2

=payback over a year

• loan
• share capital
• mortgage
• grants
• hire purchase / leasing
• debentures

Question 3

qualities needed to be an entrepreneur (enterprise)

Answer 3

decision maker
willingness to take risks
undergo new ventures
use initiative

Question 4

define franchise, franchisor, franchisee and franchising

Answer 4

-franchise
a business that sells branded products of another business under licence

-franchisor
business that SELLS franchise for royalty fee or money

-franchisee
buys into the business

-franchising
right given to another business too sell goods under its name

Question 5

positives and negatives with franchise

Answer 5

positives 
help / guidance / support
known brand
more likely to succeed
training

negatives
pay start fee
lack of freedom
buy from franchisor (high costs maybe)

Question 6

what is a sole trader

Answer 6

the single owner of an unlimited business

Question 7

what are variable costs and examples

Answer 7

costs that change with the output

• packaging
• advertisement
• ingredients

Question 8

what are fixed costs and examples

Answer 8

costs that do not change with output

• rent
• gas / heating / electricity
• commodities (raw materials)

Question 9

difference between limited and unlimited

Answer 9

unlimited = no distinction between what the business owns and what the owner owns

limited = shareholders are not liable for the debts of the company, the most they can loose is the value of their shares

Question 10

how do u increase profit

Answer 10

cut costs
increase prices
increase amount sold

Question 11

market segment

Answer 11

people with similar buying habbits in the same market

Question 12

product range

Answer 12

group of similar products made by a business

Question 13

whats the difference between creative thinking and lateral thinking

Answer 13

creative = coming up with new and unique ideas

lateral = thinking differently to try and find new / unexpected ideas

Question 14

patent

Answer 14

ownership of an invention

Question 15

copyright

Answer 15

ownership of material e.g. books

Question 16

trademarks

Answer 16

ownership of sign / product or business feature / symbol

Question 17

sales volume

Answer 17

number of output (goods/services) sold in a time frame

Question 18

loss

Answer 18

cost > revenues

Question 19

cumulative cash flow

Answer 19

cash flow in an amount of time

Question 20

trade credit

Answer 20

paying suppliers over time

Question 21

share

Answer 21

part owner ship in a business

Question 22

share capital

Answer 22

monetary value of a company that belongs to its shareholders

Question 23

share holders

Answer 23

owners of a company

Question 24

stake holders

Answer 24

person with interest or concerns in a business

Question 25

difference between overdraft and loan

Answer 25

overdraft = paying back money thatbyou have borrowed from a bank with interest. short term loan = borrowing a sum of money that as to be paid over a fixed amount of time (usually over a year). long term

Question 26

income tax

Answer 26

tax on income paid by WORKERS and SOLE TRADERS. sole traders pay it on net earnings

Question 27

national insurance contributions

Answer 27

tax on earnings of WORKERS

Question 28

co operation tax

Answer 28

tax on profit of LIMITED COMPANIES

Question 29

demand

Answer 29

the amount of product/service that customers are willing and able to buy at any given price

Question 30

supply

Answer 30

the amount of product suppliers are willing to or are able to sell for at any given price

Question 31

difference between surplus and shortage

Answer 31

``` surplus = supply > demand shortage = demand > supply ```

Question 32

interest rate

Answer 32

cost of borrowing | reward of saving

Question 33

exchange rate

Answer 33

value of currency expressed in another