Unit 1 NF Flashcards
(33 cards)
what is a Business?
organisation that provides a good or service to a customer
An objective?
A goal the business wishes to achieve
Corporate objective - ?
The goals of the entire business ( usually seen in a businesses mission statement )
Functional objective - ?
Relate to specific sections of the business
Mission Statement - ?
purpose or intention of the business
SMART Objective - ?
Specific Measurable Achievable (or Agreed) Realistic (or Relevant) Time related
Possible business objectives?
Diversification meeting stakeholders needs survival improve reputation maximise profit social/ ethical objectives growth/ expansion
Why are costs important?
Drains profit
different between a good and bad business
main cause of cost flow problems for a small business
Fixed costs - ?
Costs that do not change when output changes
(e.g. rent/ mortgage/ legal fees/ advertising/ insurance/ I.T
Variable costs - ?
Costs that change as output changes
e.g. raw materials
Variable costs - ?
Costs that change as output changes
e.g. raw materials/ utilities/ wages/ salesman commission
Semi-variable costs - ?
it can be argued that these can fit into both categories
e.g. Wages
Total costs - ?
The overall amount a business has to pay out to produce a product or service
Total costs - ?
The overall amount a business has to pay out to produce a product or service
Total cost calculation - ?
Fixed Costs (FC) + Variable costs (VC) = Total costs (TC)
What is Revenue?
The income received by the business from providing a good or service (sales/ income/ turnover/ takings)
Total Revenue calculation?
Amount sold X price
How can Revenue increase?
Increase the amount or volume sold
Achieve a higher selling price
What is profit?
The financial reward from risk taken
Different between revenue and costs calculation? (PROFIT)
Total revenue - total costs
Why is profit important?
reward
motivation
measure success
more likely to be provided with a source of finance
retained profit investment
encourage employees to join the business
encourage suppliers to provide materials on credits
The main business structures?
Sole trader
partentership
Private limited companies
Public limited companies
What is a sole trader?
A business owned by one person
Sole trader advantages?
flexibility they like it quick and simple minimal paperwork keep all profit
