Business Finance

Question 1

accounting def

Answer 1

the recording of financial transactions to produce financial information.

Question 2

recording transactions

Answer 2

.business owner/bookkeeper records all money going in and out of the business
.if not then get in trouble with HRMC

Question 3

compliance

Answer 3

governed by laws to ensure any financial records give a fair and accurate picture of the business so stakeholders/investors are not misinformed

Question 4

4 ways of measuring performance

Answer 4

gross profit
net profit
value owed to business
value owed by business

Question 5

net profit

Answer 5

smaller amount of profit made after all other expenses are deducted from the gross profit

Question 6

value owed to business

Answer 6

this is the money owed to the business from sales that have not yet been paid for

Question 7

value owed by business

Answer 7

amount of money the business owes to others for goods or services purchased but not yet paid for

Question 8

trade receivables

Answer 8

the amount of money the business is owed from sale of goods

Question 9

trade payables

Answer 9

the amount the business owes

Question 10

capital income

Answer 10

.money invested by owners/investors

.usually used for medium/long term things e.g: premises, vehicles, equipment

Question 11

5 types of capital income

Answer 11

loan
debenture
owners capital
shares
mortgages

Question 12

revenue income

Answer 12

.money that comes into the business from selling goods/providing services

Question 13

5 types of revenue income (dircs)

Answer 13

discount received
interest received
rent received
commission received
sales

Question 14

loan

Answer 14

A borrowed amount of money to be paid back usually with interest

Question 15

debentures

Answer 15

.A loan agreement in writing between a borrower and lender

.Registered at Companies House

Question 16

owners capital

Answer 16

The money that owners/shareholders have invested into their business

Question 17

shares

Answer 17

The amount of a business a person owns. They can be bought/traded

Question 18

mortgage

Answer 18

Legal agreement in which financial institutions (bank/b.society etc) lends money at interest in exchange for taking title of the debtor’s property

Question 19

asset

Answer 19

An item of value owned by a company

Question 20

sales

Answer 20

The activity of selling products/services

Question 21

rent received

Answer 21

Money earned from the process of lending out assets

Question 22

commission received

Answer 22

A payment made to employees based on the amount of sales they make

Question 23

discount received

Answer 23

When a buyer of goods/services is granted a discount by the seller

Question 24

interest received

Answer 24

An amount received for the use of money that is to be repaid in full at a specified time or on demand

Question 25

expenditure def

Answer 25

.money spent by a business

.two categories: capital expenditure and revenue expenditure

Question 26

capital items

Answer 26

.assets that will stay in the business for a long period of time
.non- current and intangible assets

Question 27

non current assets

Answer 27

items owned by a business that will remain for a reasonable period of time
e.g land/premises, machinery/equipment and vehicles
tangible assets

Question 28

capital expenditure

Answer 28

used to purchase capital items

Question 29

revenue expenditure

Answer 29

short term expenses (typically less than 1 year)

Question 30

tangible assets

Answer 30

assets which can be touched

Question 31

intangible assets

Answer 31

assets which cannot be touched

Question 32

revenue expenditure 2 e.g

Answer 32

salaries

cost of stock

Question 33

capital expenditure 2 e.g

Answer 33

property
land
computers
furniture