1.3 Putting a Business Idea Into Practice

Question 1

What do business aims and objectives provide?

Answer 1

A general sense of direction & Specific targets to aim for

Question 2

What do business aims and objectives help?

Answer 2

Ensure that everyone is pulling in the same direction

Question 3

Financial aims and objectives include:

Answer 3

• Survival
• Profit
• Sales
• Market share
• Financial security

Question 4

Non financial aims and objectives include:

Answer 4

• Social objectives
• Personal satisfaction
• Challenge
• Independence
• Control

Question 5

What is the profit equation?

Answer 5

Profit = revenue - costs

Question 6

Costs can be ………….. or ……………?

Answer 6

Fixed or Variable

Question 7

Break-even occurs when a business makes neither ………… nor …………?

Answer 7

Profit nor Loss

Question 8

What do break even charts show?

Answer 8

A businesses financial situation

Question 9

In a business why is cash needed?

Answer 9

To prevent insolvency and to pay suppliers, employees and overheads

Question 10

What does a cash show forecast show:

Answer 10

• Opening balance
• Cash inflows
• Cash outflows
• Net cash flow
• Closing balance month by month

Question 11

Cash and profit are different why?

Answer 11

Mainly due to the use of credit by businesses when buying or selling

Question 12

Long term sources of finance for a business include:

Answer 12

• Personal savings
• Share capital
• Loans
• Venture capital
• Retained profit
• Crowd funding

Question 13

Short term sources of finance include:

Answer 13

• Bank overdrafts

- Trade credit