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EMS Grade 7 Graham > Accounting and Budgeting > Flashcards

Accounting and Budgeting Flashcards

1
Q

What are assets?

A

What the business owns

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2
Q

What are liabilities?

A

What the business owes

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3
Q

What is capital?

A

All the money, goods and property a business can use to make an income

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4
Q

What are the five main types of capital?

A 
Fixed or physical capital
Financial capital
Share capital
Working or operating capital
Start-up capital
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5
Q

What is fixed capital?

A

Goods used to produce other goods or services. Machines, tools, factory buildings, trucks

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6
Q

What is financial capital?

A

The source of funds for a business. E.g. a loan

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7
Q

What is share capital?

A

The money invested by the owners of a business. Usually used to buy fixed capital

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8
Q

What is working capital?

A

The money needed to run a business from day to day.

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9
Q

What is start-up capital?

A

The money needed to start a new business

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10
Q

What are the two types of assets?

A

Non-current assets and current assets

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11
Q

What are current assets?

A

Assets that can be converted into cash within the next year. E.g. inventories, debtors, cash in the bank

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12
Q

What are non-current assets?

A

Assets that can not be converted into cash within the next year. E.g. land and buildings, vehicles, equipment, investments

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13
Q

Give examples of liabilities.

A

Bank loans and share equity

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14
Q

What are the two types of liabilities?

A

Non-current liabilities and current liabilities

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15
Q

What are current liabilities?

A

Debts that have to be paid within the next year. E.g. creditors, overdraft

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16
Q

What are non-current liabilities?

A

Long-term loans, such as mortgages and bonds

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17
Q

What is a profit?

A

When a business has more income than expenses

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18
Q

How is a business operating if its expenses are greater than its income?

A

It is operating at a loss

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19
Q

What is an expense?

A

A payment for services or consumable goods that the business buys to keep running.

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20
Q

Is an expense an asset?

A

No

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21
Q

What are fixed expenses?

A

They are costs you have to pay each month no matter how much you produce or sell.
They are a noose around your neck!

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22
Q

What is another name for fixed expenses?

A

Overheads (or a noose around your neck)

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23
Q

Give examples of fixed expenses.

A 
Rent
Telephone accounts
Water and electricity
Monthly wages
A noose around your neck
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24
Q

What are variable expenses?

A

Expenses related to the goods and services produced by a business

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25
Q

What happens to variable expenses if sales increase?

A

Variable expenses increase

26
Q

Is packaging a fixed expense?

A

No, it is variable. It increases as sales increase

27
Q

What is the aim of a business?

A

To make a profit

28
Q

What is a loss?

A

A decrease in financial value caused by expenses being greater than income in a certain period

29
Q

What does it mean to break even?

A

To make no profit or loss

30
Q

What is a budget?

A

A budget is a written plan on how spend income

31
Q

What does a budget show?

A

Estimated income and expenses for a business or person for a specific period or time

32
Q

What is the advantage to a family of having a budget?

A

You can ensure that you don’t spend more than you earn

33
Q

Which expenses in a budget should ideally be paid first?

A

Essential expenses such as rent, electricity, school fees, food

34
Q

What do governments budget for?

A

Tax income and expenditure

35
Q

Once you’ve made a budget, do you leave it alone?

A

No, you check and update it regularly

36
Q

When is budget information used in a business?

A

Throughout the management process.

37
Q

What is saving?

A

Putting money aside for future use

38
Q

When can you save?

A

If you don’t spend all your income

39
Q

What forms can saving take?

A

Bank account
Spending less on electricity
etc

40
Q

Why do people save?

A

To pay for future expenses such as education and retirement

To pay for emergencies such as accidents and unemployment

41
Q

List some ideas for how to save.

A 
Never spend more than you earn
Buy what you need first
Pay off debt
Always have cash to buy the things you need
Keep an emergency fund
Learn from the past
Make long term goals
42
Q

What is interest?

A

Money earned on the money you save in a bank (or money charged on a loan from the bank)

43
Q

What is credit?

A

When you buy now and pay later

A noose around your neck

44
Q

What are a business’s suppliers?

A

Business from which the business buys goods and services

45
Q

What is a loan?

A

Money borrowed from a bank or financial institution

46
Q

What is income?

A

Money earned by a business

47
Q

What does it mean to deposit?

A

Put money into a bank account

48
Q

What does it mean to withdraw?

A

Remove money from a bank account

49
Q

What is a current account?

A

A bank account used for daily transactions, sometimes known as a cheque account

50
Q

What is a transaction?

A

A business deal

51
Q

What is a source document?

A

A record of a transaction - eg. a receipt

52
Q

What does per annum mean?

A

per year

53
Q

What is an interest rate?

A

The percentage of interest you earn on your savings per year

54
Q

What is a tenant?

A

Someone who rents a building, house or flat

55
Q

What is property?

A

buildings, homes, offices or land

56
Q

What is insurance?

A

When a company agrees to pay for your future loss of (or damage to) your property in exchange for a monthly fee (called a premium)

57
Q

What is a statement of net worth?

A

a list of assets and liabilities

58
Q

What is investing?

A

taking money you have saved and doing something with it to make more money

59
Q

What is a deficit?

A

When your expenses exceed your income

60
Q

What is expenditure?

A

The money you spend

EMS Grade 7 Graham (9 decks)

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