2.3

Question 1

Cash

Answer 1

Amount of money in the bank in coins and notes

Question 2

Cost of Sales

Answer 2

Cost of inventory bought or produced

Question 3

Profit

Answer 3

Money left after taking away total costs from revenue

Question 4

Profitability

Question 5

Statement of comprehensive income

Answer 5

A document to show income and expenditure of a business over financial year

Question 6

Tax

Answer 6

A charge made by government on activities , earnings, and income of individuals and businesses

Question 7

Assets

Answer 7

Valuable things a business can use

Question 8

Capital

Answer 8

Cash put into a business by the owner

Question 9

Current Assets

Answer 9

Assets that can be converted into cash within 12 months

Question 10

Current Liabilities

Answer 10

Debts owed by a business that must be repaid within one year

Question 11

Liabilities

Answer 11

Debts owed by a business to lenders and suppliers

Question 12

Liquidity

Question 13

Non current Assets

Answer 13

Long term assets that will be used by business for longer than a year e.g property , equipment

Question 14

Non current liabilities

Answer 14

Debts owed by the business for more than one year e.g loan

Question 15

Shareholder equity

Answer 15

The value of shareholders investment in business

Question 16

Statement of financial position

Answer 16

A summary at a particular point in time of the value of a firms assets , liabilities and equity

Question 17

Working capital

Answer 17

Amount of cash available to pay for the day to day trading of a business that gives some indication of the liquidity level within the business

Question 18

External causes for business failure

Answer 18

Factors outside control of the business which might cause it to fail e.g competition , legislation

Question 19

Financial Factors for business failure

Answer 19

Factors which might contribute to a business running out of cash e.g late payments , inability to borrow

Question 20

Internal causes of business failure

Answer 20

Factors which a business can control e.g poor decision making , loss of key staff

Question 21

Non financial factors of business failure

Answer 21

Can come from inside or outside of business e.g poor management or external shocks

Question 22

Overtrading

Answer 22

The situation where a business does not have enough cash to support its production ans sales , usually because it is growing too fast