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Business > Chapters 25-32 > Flashcards

Chapters 25-32 Flashcards

1
Q

Statement of comprehensive income

A

Financial document showing a firm’s income and expenditure in a particular time period.

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2
Q

Profit

A

Money left over after all costs have been subtracted from revenue

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3
Q

Gross profit

A

Sales revenue minus cost of sales

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4
Q

Operating profit

A

Gross profit minus expenses

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5
Q

Distributed profit

A

Profit that is returned to the owners of a business

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6
Q

Retained profit

A

Profit held by a business rather than returning it to the owners and which may be used in the future.

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7
Q

Dividend

A

Share of the profit paid to shareholders in a company

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8
Q

Finance cost

A

Interest paid on loans

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9
Q

Finance income

A

Interest received by the business on deposit accounts

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10
Q

Normal profit

A

Minimum profit a business needs to make to retain the interest of the owners.

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11
Q

Adjustments

A

Includes adjustments for the profits made on the disposal of assets

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12
Q

Statement of financial position (balance sheet)

A

Summary at a point in time of business assets, liabilities and capital.

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13
Q

Assets

A

Resources used or owned by a business, such as cash, stock, machinery, tools and equipment.

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14
Q

Liabilities

A

Debts of the business, which provide a source of funds.

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15
Q

Capital

A

Finance provided by the owners of the business.

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16
Q

Non-current assets

A

Assets that last for more than a year

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17
Q

Current assets

A

Assets likely to be changed into cash within a year

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18
Q

Liquidity

A

Ease or speed with which assets can be sold for cash

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19
Q

Trade receivables

A

Amounts of money that are owed to a company by its customers.

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20
Q

Current liabilities

A

Debts that have to be repaid within a year

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21
Q

Net current assets (working capital)

A

Current assets minus current liabilities

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22
Q

Non-current liabilities

A

Debts that are payable after 12 months

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23
Q

Net assets

A

Value of all assets minus the value of all liabilities; total at the bottom of the first art of the balance sheet.

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24
Q

Goodwill

A

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

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25
Q

Ratio analysis

A

Mathematical approach to investigating accounts by comparing two related figures

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26
Q

Gross profit margin (mark-up)

A

Gross profit expressed as a percentage of turnover

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27
Q

Operating profit margin

A

Operating profit expressed as a percentage of turnover

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28
Q

Current ratio

A

Assesses the firm’s liquidity by dividing current liabilities into current assets

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29
Q

Acid test ratio (quick ratio)

A

Similar to the current ratio but excludes stocks from current assets

30
Q

Return on capital employed (ROCE)

A

Profit of a business as a percentage of the original amount of money used to generate it.

31
Q

Instalment

A

One of a series of regular payments made until all the money owed has been repaid.

32
Q

Short-term finance

A

Money borrowed for one year or less.

33
Q

Long-term finance

A

Money borrowed for more than one year.

34
Q

Capital

A

Finance provided by the owners of a business.

35
Q

Internal finance

A

Finance generated by the business from its own means.

36
Q

Retained profit

A

Profit held by a business rather than returning it to the owners and which may be used in the future.

37
Q

Assets

A

Resources used or owned by a business, such as cash, stock, machinery tools and equipment.

38
Q

External finance

A

Finance obtained from outside the business.

39
Q

Bank overdraft

A

Agreement with a bank where a business spends more money than it has in its account (up to an agreed limit).

40
Q

Trade payables

A

Buying resources from suppliers, such as raw materials and components, and paying for them at a later date (sometimes called trade credit).

41
Q

Mortgage

A

Long-term loan secured with property.

42
Q

Repossess

A

To take back cars, furniture, or property from people who had arrange to pay for them over a long time, but cannot now continue to pay for them.

43
Q

Debenture

A

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

44
Q

Hire purchase

A

Buying specific goods with a loan, often provided by a finance house.

45
Q

Rights issue

A

Sale of new shares to existing shareholders at a discount.

46
Q

Venture capitalists

A

Specialist investors (individuals or companies) who provide money for business purposes, often to new businesses.

47
Q

Crowd funding

A

Where a large number of individuals (the crowd) invest in a business venture using an online platform and therefore avoiding using a bank.

48
Q

Cash flow

A

Flow of money into and out of a business.

49
Q

Liquid

A

Asset that is easily changed into cash.

50
Q

Overheads

A

Money spent regularly on rent, insurance, electricity and other things that are needed to keep a business operating.

51
Q

Insolvent

A

Inability to meet debts.

52
Q

Cash flow forecast

A

Prediction of all expected receipts and expenses of a business over a future time period, which shows the expected cash balance at the end of each month.

53
Q

Cash inflow

A

Flow of money into a business.

54
Q

Cash outflow

A

Flow of money out of a business.

55
Q

Drawings

A

Money taken out of the business by the owner for personal use.

56
Q

Closing cash balance

A

Amount of cash that the business expects to have at the end of each month (takes into account the cash inflows and cash outflows).

57
Q

Costs

A

Expenses that must be met when setting up and running a business.

58
Q

Fixed costs

A

Costs that do not vary with the level of output.

59
Q

Variable costs

A

Costs that change when output levels change.

60
Q

Total costs

A

Fixed cost and variable cost11

61
Q

Total revenue

A

Money generated from the sale of output. It is price multiplied by quantity.

62
Q

Amortization

A

Cost associated with the falling in value of certain types of asset.

63
Q

Break-even point

A

Level of output where total costs and total revenue are exactly the same: neither a profit nor a loss is made.

64
Q

Break-even chart

A

Graph that shows total cost and total revenue; break-even point is where total cost and total revenue intersect.

65
Q

Margin of safety

A

Amount of output available to be sold above the break-even point where the business makes a profit.

66
Q

Bulk buying

A

Buying goods in large quantities, which is usually cheaper than buying in small quantities.

67
Q

Stockpile

A

Large supply of goods ans so forth that are being kept for use or possible use in the future.

68
Q

Quantitative information

A

Information expressed in numbers.

69
Q

Excise duties

A

Taxes on selected goods such as those on petrol and tobacco in the UK.

70
Q

Auditing

A

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

Business (8 decks)

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