Comp 3 LA b

Question 1

Financial records

Answer 1

Documents that give an accurate record of all trading.

Question 2

Start-up costs

Answer 2

Spend on items before enterprise can start trading.

Question 3

Running costs

Answer 3

Day to day costs to run the enterprise.

Question 4

Fixed costs

Answer 4

Costs that have to be paid even if no goods are sold.

Question 5

Variable costs

Answer 5

Costs directly related to number of items sold.

Question 6

Turnover

Answer 6

Total revenue received in a financial period.

Question 7

Cost of sales

Answer 7

Direct costs to make the products sold.

Question 8

Expenses

Answer 8

Indirect cost to run the enterprise eg: rent.

Question 9

Assets

Answer 9

Something the enterprise owns.

Question 10

Liabilities

Answer 10

Something the enterprise owes.

Question 11

Capital

Answer 11

Finance used to start or grow the business.

Question 12

Statement of comprehensive income

Answer 12

Shows how an enterprise has performed financially over a period of time.

Question 13

Statement of financial position

Answer 13

Shows the finance that has been invested in the enterprise and where it has been spent over a period of time.

Question 14

Pofitability

Answer 14

Enterprise’s ability to turn revenue into profit.

Question 15

Liquidity

Answer 15

Ability of the enterprise to pay its debts.

Question 16

Creditor

Answer 16

Someone who is owed money.

Question 17

Debtor

Answer 17

Someone who owes money.

Question 18

Trade credit

Answer 18

Purchase made and payment made later eg: next month.

Question 19

Retained profit

Answer 19

Profit earned and kept from previous financial year.

Question 20

Insolvency

Answer 20

Unable to pay debt so cease trading.

Question 21

Revenue

Answer 21

sales x selling price per unit

Question 22

Total variable costs

Answer 22

sales x variable cost per unit

Question 23

Total costs

Answer 23

fixed costs + total variable costs

Question 24

Profit

Answer 24

total revenue – total costs

Question 25

Gross profit

Answer 25

Turnover – cost of sales

Question 26

Net profit

Answer 26

gross profit - expenses

Question 27

Net current assets

Answer 27

current assets – current liabilities

Question 28

Gross profit margin %

Answer 28

= (gross profit ÷ turnover) x 100

Question 29

Net profit margin %

Answer 29

= (net profit ÷ turnover) x 100

Question 30

Current ratio

Answer 30

= current assets ÷ current liabilities : 1

Question 31

Liquid capital ratio

Answer 31

(current assets – inventories) ÷ current liabilities : 1

Question 32

Working capital

Answer 32

net current assets

Question 33

Purchase order

Answer 33

List types, quantities and agreed prices.

A legal offer to buy goods/services.

Question 34

Delivery note

Answer 34

States what has or hasn’t been delivered.

Question 35

Goods received note

Answer 35

Confirms which goods have been received.

Question 36

Credit note

Answer 36

Goods returned and customer gets refund.

Question 37

Invoice

Answer 37

Amount owed and date to be paid.

Question 38

Receipt

Answer 38

Proof of purchase.

Question 39

Statement of account

Answer 39

Summary of recent transactions.

Question 40

Cash

Answer 40

Was the most traditional form of payment for small items.

Question 41

Credit cards

Answer 41

Agreed sum of credit paid off monthly with interest added.

Question 42

Surcharge

Answer 42

Cost to a business if accept credit card payments.

Question 43

Debit card

Answer 43

Payment taken from your bank account – PIN/contactless.

Question 44

Direct debit

Answer 44

Transfer of money on agreed date to a business.

Question 45

Payment technologies

Answer 45

Paypal, online checkouts.

Question 46

Fixed assets

Answer 46

Does not change in the short term.

Eg: retail store, machinery, factory, fixtures and fittings.

Question 47

Current assets

Answer 47

Will change with every transaction and can be changed into cash quickly.

Question 48

Current liabilities

Answer 48

Short term debts that must be paid back within a year.

Question 49

Long term liabilities

Answer 49

Long term debts that will take longer than a year to pay back.