Business Finance Key Terms

Question 1

What are costs

Answer 1

Money that goes out of a business

Question 2

Define start up costs

Answer 2

The initial expenses a business pays when starting a business

Question 3

Define operating costs

Answer 3

Day to day expenses needed to keep the business running

Question 4

What is Direct costs

Answer 4

A cost linked to the production of the product or service.

Question 5

What is indirect costs

Answer 5

Cost that is not linked to a product or service

Question 6

What is revenue

Answer 6

Money going into a business

Question 7

Formula for total costs

Answer 7

FIXED COSTS + VARIABLE COSTS

Question 8

How do you calculate revenue

Answer 8

Quantity sold x price per unit

Question 9

What is expenditure

Answer 9

Money a business pays out

Question 10

Define overheads

Answer 10

Everyday running costs of the business

Question 11

Profit

Answer 11

When revenue is greater than expenditure

Question 12

Loss

Answer 12

When expenditure is greater than revenue

Question 13

Break even

Answer 13

When you make no profit or loss

Revenue and costs are equal

Question 14

Budget

Answer 14

A Plan of inflows and outflows in an organisation

Question 15

Revenue budget

Answer 15

A financial plan that shows how much money is going to come in roughly a year

Question 16

Expenditure budget

Answer 16

A plan of expected outflows within the business

Question 17

Budgetary control

Answer 17

A process of checking the planned budget of a business

Question 18

Cashflow forecast

Answer 18

The prediction of inflows and outflows within a business

Question 19

Net monthly

Answer 19

The difference between the predicted inflows and outflows for each month

Question 20

Opening balance

Question 21

Closing balance

Question 22

Credit

Answer 22

Borrowing money and paying it back later

Question 23

Cost of sales

Answer 23

The cost To make a product or service

Question 24

Formula for gross profit

Answer 24

REVENUE- COST OF SALES

Question 25

What is gross profit

Answer 25

The profit that is made on each item that is sold

Question 26

Formula for Net profit

Answer 26

REVENUE- TOTAL COSTS

Question 27

What is a financial statement

Answer 27

A document that shows how the business is doing financially

Question 28

What is an income statement

Answer 28

A document that shows the profit and loss of a business

Question 29

Statement of financial position

Answer 29

Document that shows the assets and liabilities of a business and where the money has come from

Question 30

Assets

Answer 30

Something a business owns