Chapter 3 Flashcards
Planning
Planning is the process of formulating objectives and determining how to achieve them
Resource
A resource is any person or product that will help in the production of a good or service
Human resources
Are the employees who provide their time, energy, skills and effort
Physical resources
Refer to equipment such as a computer, cash register, machinery, motor vehicle, office equipment and stock
Asset
Is any item of value owned by the business
Establishment costs
Establishment costs include those costs involved in setting up the business
Operating costs
Operating costs include those costs involved in the ordinary day-to-day running of the business
Equity
Is the funds contributed by the owner(s) of a business to commence and build the business
Debt
Is the funds provided by sources outside the business, which must be paid back over time, with interest
Working capital
Is the funds available for the short-term financial commitments of a business
Bank overdraft
With a bank overdraft, the bank allows a business or individual to overdraw their account up to an agreed limit for a specified time, to help overcome a temporary cash shortfall
Bank bills
Are basically short-term securities issued by a business and brought by a bank. They are a type of exchange and are given for larger amounts for a period of 90-180 days
Trade credit
When a supplier provides products to a business with an agreement to charge for the goods or services later
Mortgage
A mortgage is a loan secured by the property of the borrower (the business)
Leasing
Is a way of financing the purchase of assets without a large initial capital outlay