Accounting And Finance Flashcards

1
Q

Accounting concepts

A

Financial -profit, levels of cash
Management - concentrates on internal financial accounts

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2
Q

Sources of finance

A

Retained profit
Bank loan
Bank overdraft
Trade credit

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3
Q

Break even

A

Point were costs and income are equal and is no profit or loss

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4
Q

Direct costs

A

Also known as variable costs (raw materials)

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5
Q

Indirect costs

A

Fixed costs

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6
Q

Difference between fixed and variable costs

A

Costs don’t vary (rent) whereas variable is cost of making product (raw materials)

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7
Q

Margin of safety

A

Number of units that business is over the break even point

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8
Q

Budget

A

Plan of future concerning the revenues

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9
Q

Variance

A

Difference between actual result and budget

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10
Q

Investment appraisals

A

Analysis to consider the profitability of an investment

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11
Q

Payback period

A

Time taken for project to repay its initial investment

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12
Q

Net present value

A

how much investment is worth throughout lifetime, discounted to todays value

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13
Q

Overhead costs

A

not directly related to the production of goods or services

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14
Q

Stepped fixed cost

A

cost that doesn’t change within certain high and low thresholds of activity, will change if threshold is breached

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15
Q

Average rate of return

A

average profit from investment

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16
Q

Cash flow

A

measurement of amount of cash that comes into and out of business in particular period of time

17
Q

Difference between cash flow and profit

A

cash flow, flows in and out of business within a period of time. profit is what remains from your revenue after costs are deducted

18
Q

Working capital

A

money available to meet current or short term obligations

19
Q

Income statement

A

shows company revenue, expenses and profitability

20
Q

Depreciation

A

estimated reduction in value of a fixed assets

21
Q

Statement of financial position

A

used to assess the position of a business in terms of financial stability

22
Q

Liquidity ratio

A

use to work out if a company can repay creditors from the total cash they have available.

23
Q

Gross profit margin

A

what business made after paying for direct cost of doing business

24
Q

Return on equity

A

measure of company’s financial performance shows relationship between company’s profit and investor’s return

25
Return on capital employed
financial ratio can be used to assess company's profitability and capital efficiency
26
Gearing
relationship or ratio of companies debt to equity