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Business > Chapter 3: Business Finance > Flashcards

Chapter 3: Business Finance Flashcards

1
Q

instalment

A

a series of regular payments made until all the money owed has been repayed

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2
Q

short term finance

A

money borrowed for one year or less

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3
Q

long term finance

A

money borrowed for more than a year

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4
Q

capital

A

finance provided by the owners of a business

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5
Q

internal finance

A

finance generated by the business from its own means

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6
Q

retained profit

A

profit held by a business rather than returning it ti the owners and which may be used in the future

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7
Q

assets

A

resources used or owned by a business

such as: cash.stock,machinery,tools and equipment

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8
Q

external finance

A

finance obtained from outside the business

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9
Q

bank overdraft

A

agreement with a bank where a business spends more money than it has in its account

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10
Q

trade payable

A

buying resources from suppliers, such as raw materials and components and paying for them at a later date

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11
Q

repossess

A

to take back

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12
Q

debenture

A

long term security yielding a fixed rate of interest, issued by a company and secured against assets

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13
Q

hire purchase

A

buying specific goods with a loan, often provided by a finance house

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14
Q

rights issue

A

sale of new shares to existing shareholders

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15
Q

venture capitalists

A

specialist investors who provide money for business purposes (often to new businesses)

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16
Q

crowd funding

A

where a large number of individuals (a crowd) invest in a business venture using an online platform
(avoids using a bank)

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17
Q

cashflow

A

flow of money into and out of a business

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18
Q

liquid asset

A

asset that can easily be changed into cash

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19
Q

overheads

A

money spent regularly

example; on rent,insurance,electricity

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20
Q

insolvent

A

inability to meet debts

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21
Q

cash flow forecast

A

prediction of all expected receipts and expenses of a business over a future time period (shows the expected cash balance at the end of each month )

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22
Q

cash inflow

A

flow of money into a business

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23
Q

cash outflow

A

flow of money out of a business

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24
Q

drawings

A

money taken out of the business by the owner for personal use

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25
Q

closing cash balance

A

amount of cash that the business expects to have at the end of each month

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26
Q

costs

A

expenses that must be met when setting up and running a business

27
Q

fixed costs

A

costs that do nit vary with the level of output

28
Q

variable costs

A

costs that change when output levels change

29
Q

total costs

A

fixed costs and variable costs added together

30
Q

total revenue

A

money generated from the sale of output

price times quantity

31
Q

Amortization

A

is a cost associated with the falling in value of certain types of assets

32
Q

break - even point

A

level of output where total costs and total revenue are the exactly the same (neither a profit or a loss)

33
Q

break - even chart

A

graph that shows total cost and revenue; the break even point is where the business makes profit

34
Q

bulk buying

A

buying goods in large quantities (which is usually cheaper)

35
Q

stockpile

A

large supply of goods that are being kept for possible use in the future

36
Q

statement of comprehensive income

A

financial document showing a firms income and expenditure in a particular time period

37
Q

profit

A

money left after all costs have been subtracted from the revenue

38
Q

distributed profit

A

profit that is returned ti the owners of a business

39
Q

retained profit

A

profit held by a business rather than returning it to the owners (may be used in the future)

40
Q

dividend

A

share of the profit paid to shareholders in a company

41
Q

finance cost

A

interest paid on loans

42
Q

finance income

A

interest received by the business on deposit accounts

43
Q

normal profit

A

minimum profit a business needs to make to retain the interest of the owners

44
Q

adjustments

A

profits made outside of the businesses main source of income

45
Q

statement of financial position

A

summary at a point of time of business assess, liabilities and capital

46
Q

assets

A

resources used or owned by a business (such as cash stock,machinery,tools and equipment )

47
Q

liabilities

A

debts of the business which provide a source of funds

48
Q

capital

A

finance provided by the owners of the business

49
Q

non current asset

A

assets that lasts for more then a year

50
Q

current assets

A

assets that are likely to be changed into cash within a year

51
Q

liquidity

A

ease in which assets can be sold for cash

52
Q

trade receivables

A

amounts of money that are owed to a company by its customers

53
Q

current liabilities

A

debts that have to be repaid within a year

54
Q

net current assests

A

current assets minus current liabilities (also known as working capital)

55
Q

non current liabilities

A

debts that are payable after 12 months

56
Q

net assests

A

value of all assets without the value of all liabilities

the total of the bottom part of the balance sheet

57
Q

goodwill

A

value that a company has because it has a good relationship with its customers and suppliers

58
Q

external finance

A

finance obtained from outside the business

59
Q

bank overdraft

A

agreement with a bank

60
Q

profitability ratios

A

measure the performance of the business and focus on profit, revenue and the amount of money invested

61
Q

liquidity ratios

A

measure how easily a business can pay its short term debts (such as wages or suppliers)

62
Q

quantitative information

A

information expressed in numbers

63
Q

excise duties

A

taxes on selected goods (such as petrol and tobacco)

64
Q

auditing

A

accounting procedure that checks thoroughly the accuracy of a company’s accounts

Business (5 decks)

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