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Business > Accounting for Market Day > Flashcards

Accounting for Market Day Flashcards

1
Q

What is Finance?

A

Finance refers to the financial resources needed to operate a business.

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2
Q

What are the two Sources of Finance?

A

Internal Finance and External Finance

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3
Q

What is Internal Finance?

A

Internal Finance is generated within the business and includes contribution from the existing owners.

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4
Q

What is External Finance?

A

External Finance is sourced from outside of the business, such as backs or finance companies. External finance must be repaid and interest is usually charged.

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5
Q

Examples of Internal Finance

A

Owner’s investment, Sale of Items

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6
Q

Examples of External Finance

A

Bank loans, Mortgage, Government grants, overdraft, loans from family

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7
Q

What are the different costs for a business when making their products?

A

Fixed Cost and Variable Cost

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8
Q

What is a Fixed Cost?

A

A fixed cost is the cost that remain constant regardless of the production level. This means they don’t change with the number of units produced or sold.

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9
Q

What is a Variable Cost?

A

A variable cost is the cost that changes based on the production level. Producing more products will increase these types of costs. Producing less products will decrease these types of costs.

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10
Q

Examples of a fixed cost

A

Rent, advertising, salary, insurance, registration fee

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11
Q

Examples of a variable cost

A

Ingredients, electricity bills, materials

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12
Q

What is the Total Cost of Production?

A

The total cost of production refers to the total of all expenses incurred to produce a specific quantity of goods.

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13
Q

What is the formula of finding the Total Cost of Production?

A

Total Variable Cost+Total Fixed Cost=Total Cost of Production

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14
Q

Examples of a Fixed Cost

A

Rent, Advertising, Salary, Insurance

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15
Q

Examples of a Variable Cost

A

Ingredients, packaging

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16
Q

How to set a Selling Price?

A

A selling price should be higher than the cost of production to ‘make profit’.

17
Q

How to set a Selling Price?

A

Total Cost of Production+profit Margin=Selling Price

18
Q

What is the Break-even point?

A

Breaking even must be the minimum goal for any business.

19
Q

How to calculate a Break-eve Point?

A

Total Cost of Production÷Selling Price=Break even unit.

20
Q

What is a Budgeted Income Statement?

A

Budgeted Income Statement is a financial statement that estimates the business’ future profits and losses.

21
Q

What are the different scenarios?

A

Best case scenario, Base case scenario and Worst case scenario.

22
Q

What is the Best Case Scenario?

A

The best case scenario is where all of their products are sold.

23
Q

What is the Base Case Scenario/

A

The base case scenario is when 75% of their products are sold.

24
Q

What is the Worst Case Scenario?

A

The worst case scenario is where only 40% of their products are sold.

Business (4 decks)

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