chapter 18-22

Question 1

budget

Answer 1

financial plan of action for a period,describing expected levels of revenue and expenditure

Question 2

zero budgeting

Answer 2

managers are not allocated with a budgeted amount that they are entitled to spend.the must request and justify all expenditure made

Question 3

variance

Answer 3

unplanned change from the budgeted amount

Question 4

favourable variance

Answer 4

expenditure is less than expected and revenues are higher than expected

Question 5

sale of assets

Answer 5

business sells fixed assets no longer need such as old factory site or unused machinery

Question 6

owners capital

Answer 6

money invested in a business by the owners from savings,voting rights and share of profits

Question 7

share capital

Answer 7

business sells shares to investors

Question 8

cashflow forecast

Answer 8

expected flows in and out of business during a trading period

Question 9

cashflow statement

Answer 9

cash in and out of business over a trading period

Question 10

inflows

Answer 10

money recieved by a business

Question 11

outflows

Answer 11

expenses of a business

Question 12

net cash flow

Answer 12

inflow minus outflows

Question 13

opening balance

Answer 13

amount of money business starts with at beginning of a period

Question 14

closing balance

Answer 14

money business has at end of period
opening balance+net cash flow

Question 15

liquid assets

Answer 15

business owns that can be quickly used or turned into cash-stock

Question 16

trading profit and loss account

Answer 16

document business trading income and expenditure over a year

Question 17

cost of sales

Answer 17

direct cost of purchasing stock used in sales

Question 18

cost of sales equation

Answer 18

opening stock+purchases-closing stock

Question 19

opening stock

Answer 19

value of stock held by business start of trading period

Question 20

purchases

Answer 20

value of stock purchased by business during trading period

Question 21

closing stock

Answer 21

value of stock at end of trading period

Question 22

gross profit

Answer 22

revenue-cost of sales

Question 23

net profit

Answer 23

gross profit-minus expenses
revenue- total costs
money left over after all costs been paid

Question 24

dividends

Answer 24

share of profit paid to shareholders

Question 25

gross profit margin equation

Answer 25

gross profit/sales revenue *100

Question 26

net profit margin

Answer 26

net profit/sales revenue *100