Finance Flashcards

Question

Profit for the year…

Answer 1

The final profit figure which will be split for shareholders and investors

Answer 2

Gross profit -expenses

Answer 3

Sales revenue - cost of sales

Answer 4

can be turned into graphs and charts which can be used to convey financial information formulas can be used to reduce the chance of human error formulas will automatically update spreadsheets if work is amended or variables have been changed formulas make spreadsheets easier to fil out e.g. IF statements, autosum

Answer 5

Money is borrowed from the bank to purchase premises or property and paid with interest

Answer 6

Mortgage given for long period of time so doesn’t have to be paid back immediately Large amounts of finance can be raised quickly

Answer 7

Interest charged on top of loan Property can be lost to the mortgage lender if repayments are missed

Answer 8

Selling more shares to a new or existing shareholder. PLCs can sell theirs on the stock market

Answer 9

Finance raised doesn’t need to be paid back Large amounts of finance can be raised

Answer 10

Shareholders need to be pay paid a dividend each year Shareholders become part owners of the business

Answer 11

Money given to a business form the government. They must meet certain criteria e.g. business start up, offer employment in high deprivation area, etc.

Answer 12

Doesn’t need to be paid back

Answer 13

Business needs to meet certain criteria It is time consuming to apply for grants and to complete the paperwork

Answer 14

A small amount is donated by a large amount of people- usually set up using the internet

Answer 15

Access to large amount of investors Fast way to raise finance

Answer 16

A public request for investments rises your project being copied by competitors If the targeted amount isn’t reached the money is returned to investors and the business gets nothing

Answer 17

Seeking something that it no longer requires e.g. machinery that is idle

Answer 18

Doesn’t need to be repaid

Answer 19

May be difficult or may take time to sell assets

Answer 20

Finance when banks decide that loans are too risky

Answer 21

Available for more risky investments

Answer 22

Venture capitalist may want a share of business meaning some control is lost A larger return may be required due to the high risk nature of the product

Answer 23

Sold by companies to investors and they pay the holder a fixed anyone of money every year until it’s maturity date

Answer 24

Control of the business isn’t lost

Answer 25

Interest must be paid even if company makes a loss

Answer 26

Can be used to set targets for individual departments to achieve which allows the business to stay in the budget as predicted. Target also motivate employees. To make comparisons between predicted and actual figures that helps monitor the performance of org Highlights periods where expenses are high which allows action to be taken to control spending Aids decision making as it shows cash flow and information that decisions can be based on Shows where he the business will have a surplus which allows them to plan future purchases Shows whether the business will have a deficit which allows them to make adjustments to spending

Answer 27

Amount of cash available at the start of the month

Answer 28

Total cash received during the month

Answer 29

Total amount of cash spent during the month

Answer 30

Total amount of cash available at the end of the month

Answer 31

Opening balance + total receipts - total payments = closing balance

Answer 32

Expenditure is greater than income

Answer 33

Income is greater than expenditure

Answer 34

Planning Organising Commanding Coordinating Controlling Delegating Motivating

Answer 35

Management to plan ahead- identify when cash is spent, allows future ideas for short term finance

Answer 36

Managers to arrange resources to in the right place at the right time in the right quantities

Answer 37

Each department limits for spending and gives them a clear budget to work to

Answer 38

Coordinate financial aims. The senior management analyses an overview of finances

Answer 39

What has been planned against what has actually happened in the budget and investigates the differences

Answer 40

Giving responsibility for holding, recording and spending departmental budgets

Answer 41

Encouraging others to take responsibility for financial control via empowering departments to be financially responsible

Answer 42

To know the value of the business at a specific time Shows the equity of the org e.g. share value, reserves (how it is financed) Shows the liability of the org e.g. capital, creditors and bank loans The value of the org’s assets e.g. premises, machinery, bank account balances Investors and potential investors can use SOFP to determine whether they’ll get a good return on investment Suppliers and creditors can use it to determine the risk factor involved in lending or supplying to the business

Answer 43

Suppliers the business owes finance to

Answer 44

Customers that owe finance to the business

Answer 45

The current value of major purchases to help with running the business e.g. PCs, premises, vans Items owned for more than one year

Answer 46

Cash available to the business e.g. stock ready to sell, cash in the bank and money owed to them by debtors. Items owned for less than one year

Answer 47

Long-term loans such as long-term bank loans or debentures that do not need to be paid back within a year

Answer 48

Any debts of business owes that will need to be paid back within a year

Answer 49

The finance that a business can access immediately. A business needs adequate working equity to ensure it meets its short term debts on time Current assets - current liabilities

Answer 50

The value of the company once all liabilities are taken away from assets. Shows the overall worth of the business.

Answer 51

The finance invested by the owners and any profits kept by the business. This is retained profit

Answer 52

Lenders Employees Government Owners Shareholders Trade unions Competitors

Answer 53

Helps determine if a loan should be given. Checks liquidity and its ability to pay short term loans

Answer 54

Check to see whether they are being laid fairly- look at gross profit and PFTY to compare success

Answer 55

Check the correct amount of tax is being paid for inland revenue- HMRC (His Majesty’s Revenues and Customs)

Answer 56

Help to plan how to improve profitability by identifying where costs can be reduced

Answer 57

Help make decisions at AGM. allows them to decide whether they want to buy more shares or not

Answer 58

Assess whether members should be getting a pay rise

Answer 59

Compare their financial data to compare successes

Answer 60

Opening balance Total receipts Total payments Closing balance

Answer 61

Sales revenue Cost of sales Gross profit Expenses Profit for the year

Answer 62

Non current assets Current assets Current liabilities Non current liabilities Equity and reserves Net assets Working equity