1.3 Gcse Business

Question 1

What is an overdraft?

Answer 1

It is when you spend more money than In your bank account. Payed back when you earn enough money to cover the cost. (Some have charges)

Question 2

What is trade credit?

Answer 2

When buying stock from supplier. Is laid later. Which has not got interest

Question 3

What is personal savings?

Answer 3

Money owner has kept saved for themselves

Question 4

What is retained profit?

Answer 4

Money set aside / saved by bussines

Question 5

What is share capital?

Answer 5

{long term finance}

Money raised by selling shares of ownership to shareholders (permanent capital) (pay no dividends) however business is vulnerable to takeover and loses control of business)

Question 6

What is venture capital?

Answer 6

Specialist investors willing to take risk in finding new business. Provide skill and experience

Question 7

What is loan?

Answer 7

Money lent to individual with a charged interest(fixed) provides regular payments and large sums of money

Question 8

What is crowd funding?

Answer 8

Money from public raised due to interest or new creative idea from bussines. Funding finance

Question 9

What is the difference between fixed costs and variable costs?

Answer 9

Fixed costs don’t change whilst variable costs do change on number stock sold.

Question 10

What is the formula for total costs

Answer 10

Total cost=variable cost+fixed cost

Question 11

What is the avarage rate of return?

Answer 11

Average yearly profit / cost of investment x100

Question 12

What are aims?

Answer 12

A business’s broad ,overall goals

Question 13

What are objectives?

Answer 13

More specific statements the business wants to achieve
(clear objectives helps business to achieve its aims and make key decisions)

Question 14

List some business financial objectives?

Answer 14

-survival: ensures business operates

-profit: increase revenue(customers satisfaction)

-be the best in the market

-growth: enter new market. Improve cooperate image

-financial security

Question 15

What is the equation for market share?

Answer 15

Company’s total sale
______________________(divide)

Industry total market sales

Question 16

What are some non financial business objectives for small bussisinnes?

Answer 16

-reduce carbon footprint: minimize environmental impact

-personal satisfaction(building business)

-independence

-more control(sole trader)

-greater challenge

-customers are happy

Question 17

What is meant by the term ‘break even’

Answer 17

Enough money is earns to cover all expenditures (costs)

Meaning the business doesn’t make profit or lose money

This is the first step of an successful business

Question 18

What is the calculation to determine break even point is reached?

Answer 18

Fixed cost/ (selling price-variable costs)

Question 19

What is the margin of safety?

Answer 19

The difference between break even point and predicted sales

If it is high
The bussines is lower risk, meaning they can sell fewer products than expected to break even and make a profit

Question 20

What happens when a business becomes insolvent?

Answer 20

The business does not have enough funds to pay its bills for there working capital

Question 21

What is cash?

Answer 21

The money a company can spend immediately

Question 22

What is profit?

Answer 22

Amount of money company earns after cost taken into account

Question 23

What is cash flow

Answer 23

Money that flows into and out of business
(Cash inflow or outflow)
[met cash flow =cash inflow-cash ouflow

Question 24

What are credit terms?

Answer 24

Tells you how long after agreeing to buy product a customer has to pay