definitions check up

Question 1

Define Dividends

Answer 1

a portion of the profits of a firmdistributed to shareholders

Question 2

Define Shareholder

Answer 2

part-owners in a business who can vote at AGM and receive dividends.

Question 3

Define incorporation

Answer 3

The legal registration of a business with Companies house so it can benefit from limited liability

Question 4

Define unincorporated

Answer 4

A business that is not registered with companies house so has unlimited liability eg. sole trader

Question 5

Define limited liability

Answer 5

shareholders can only lose money invested in the company instead of their entire personal wealth if the business collapses due to debt.

Question 6

Define unlimited liability

Answer 6

Shareholders are responsible for finances if they are struggling. So they can lose personal assets.

Question 7

Define profit & its formula

Answer 7

difference in a firms revenues from its trading activities and its total costs.
Also a reward for risk and a return on invested capital
T revenue - T costs

Question 8

Define corporate tax

Answer 8

Tax paid by incorporated companies on top of profits

Question 9

Define company

Answer 9

A legal entity owned by shareholders

Question 10

Define a business

Answer 10

Organisation that exists to provide goods or services on a commercial basis to customers

Question 11

Define start-up

Answer 11

A new business enterprise, formed by one or more entrepreneurs

Question 12

Define mutuals

Answer 12

Organisations owned by and run for benefits of future and current members like sport clubs

Question 13

Define share

Answer 13

a certificate that indicates part-ownership of a company. Entitles to dividends and AGM vote.

Question 14

define capital

Answer 14

money used to run and build a business

Question 15

define capital growth

Answer 15

increase of value of business shares (bought - sold)

Question 16

Define stakeholders

Answer 16

Anyone with interest in a business

Question 17

Define collateral

Answer 17

Assets a business uses to secure a loan.

Question 18

define objectives

Answer 18

short-term specific measurable target.
eg. 1m sales in next month

Question 19

define mission

Answer 19

the main purpose of the organisation

Question 20

define variable costs

Answer 20

costs that change directly with output. They will increase by a set amount each time a new unit is made.

Question 21

define ethical

Answer 21

morally correct behaviour

Question 22

define fair trade

Answer 22

buying raw materials at a price that allows a reasonable standard of living for the suppliers.
Often above the regular market price.

Question 23

define company growth

Answer 23

increase over time of revenues within a business.
economic growth regards an increase in size of the whole economy.

Question 24

define market capitalisation & formula

Answer 24

the value of a company as a measure by the stock market
number of shares x share price

Question 25

define non-profit organisations

Answer 25

an incorporated organisation that exists for interest of members or as a charity.

Question 26

define private limited company

Answer 26

a limited liability business where shares are not freely available for sale, decisions made by owners.

Question 27

define the private sector

Answer 27

any organisation that is not government run or owned

Question 28

define revenue & its formula

Answer 28

Income generated by sales of a product
price x quantity sold.

Question 29

define public sector organisations

Answer 29

governmentally owned

Question 30

define sole trader

Answer 30

an individual running a business, operating under unlimited liability so are personally responsible for business debts.

Question 31

define public limited companies

Answer 31

large firm whose shares can be bought and sold by public on stock exchange. Owners appoint managers to run business.

Question 32

Define the transformation process

Answer 32

describes what happens inside the business. Where the value is added to inputs to create outputs.

Question 33

what does CELL stand for (the transformation process)

Answer 33

capital, enterprise, land, labour

Question 34

define fixed costs

Answer 34

costs that do not change directly with output levels

Question 35

what does SMART stand for? (objectives)

Answer 35

specific, measurable, achievable, relevant, time bound.

Question 36

what is profitability?

Answer 36

efficiency of a business at generating profit in relation to the size of the business.