business unit 5 vocabulary Flashcards
start up capital
the finance needed by a new business to pay for essential fixed and current assets before it can begin trading
working capital
the finance needed by a business to pay its day to day costs
capital expenditure
money spent on fixed assets which will last for more than one year
revenue expenditure
money spent day today expenses which do not involve the purchase of a long term asset, for example wages or rent
internal finance
obtained from within the business itself
external finance
obtained finance sources outside of and separate from the business
micro finance
providing financial services - including small loans - to for people not served by traditional banks
cash flow
the cash inflows and outflows over a period of time
cash inflow
the sums of the money received by a business during a period of time
cash outflows
the sum of money paid out by a business during a period of time
cash flow cycle
shows the stages between paying out cash for labour, materials etc. and receiving cash from the sale of goods
profit
the surplus after total costs have been subtracted from sales revenue
cash flow forecast
an estimate of future cash inflows and outflows of a business, usually on a month by month basis. this then shows the expected cash balance at the end of each month
opening cash / bank balance
the amount of cash held by the business at the end of month. this becomes next month’s opening balance
accounts
the financial records of a firm’s transactions
accountants
the professional qualified people who have responsibility for keeping accurate accounts and for producing the final accounts
final accounts
they are produced at the end of each year and give details of the profit or loss and over the year and the worth of the business
income statement
a document that records the income of a business and all costs incurred to earn that income over a period of time (one year for example). its also known as profit and loss account
gross profit
its made when sales revenue if greater than the cost of goods sold
sales revenue
the income to a business during a period of time from the sale or goods or services
cost of goods sold
the cost o producing or buying in the goods actually sold by the business during a time period
trading account
it shows how the gross profit of a business is calculated
net profit
the profit made by a business after all costs have been deducted from the sales revenue. its calculated by subtracting overhead costs from gross profits
depreciation
the fall in the value of a fixed asset over time
