2.3 Managing Finance Flashcards
What is the statement of comprehensive income?
A formal financial document that summaries a business trading activities and expenses to show whether a profit or loss is made.
What are three ways a business can increase profit?
Increase sales
Decrease variable costs
Decreased fixed costs
What is cash?
The physical existence of money within a business
What is profit?
The total revenue - total costs.
Exists in financial records
What is cash flow?
The amount of money flowing in and out of the business
Is cash more beneficial ST or LT?
Short term-
A business can survive a long time without making a profit
Is Profit more beneficial ST or LT?
Long term- cant borrow cash forever. Become self sufficient.
What is liquidity?
Ability for a business to pay its debts.
How much cash the business has and how many assets can be turned into cash.
What is the statement of comprehensive income?
Profit and loss account
What is the statement of financial position?
Shows the assets, liabilities and net worth of a business.
What is an asset?
All things that can benefit a business
What is liability ?
Include all debts that must be repaid at some time in the future.
What are non-current assets?
Assets the business will have for long duration
What are current assets?
Assets the business will have for a short period of time(inventory, cash, debtors)
What are current liabilities?
Debt the business needs to pay off within a year.
