Finance Flashcards
Economics
Branch of knowledge concerned with production, consumption, and trading of goods/services
Finance
Managing where the money goes and comes from. Influenced by interest rates and cost of services
Accounts
Financial statements tracking where the money flows
Policy and legislation
Making sure businesses behave
Capital expenditure
Spending on items that may be used over and over again. Includes purchased assets as well as maintenance of buildings and equipment
Revenue expenditure
Payments for goods and services which have either been consumed or will be very soon. Includes wages, raw materials, and maintenance of buildings and equipment
Retained profit
Profit after tax
Sale and lease back
When an asset is sold to a specialist company that leases the asset back to the seller
Capital
Wealth in the form of money or assets. Taken as a sign of financial strength and assumed to be available for development or investment. OR money introduced by the owners of the business
Assets
Something of monetary value that is owned by an organisation, purchased exclusively or primarily for business use. Assets = capital + liabilities
Debtors
Stakeholders who owe money to businesses. So someone that hasn’t paid for goods or services that they have been provided
Creditors
Stakeholders who are owed money by the business. So a supplier who has delivered raw materials but hasn’t been paid
Normal profit
The maximum reward an entrepreneur must receive in order to retain interest in the business
Abnormal profit
Total profit - normal profit
Loss
When expenses exceed sales revenue in a trading period
