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Business > Finance > Flashcards

Finance Flashcards

1
Q

Name a short-term source of finance

A

Over draft, Trade Credit, Factoring

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2
Q

What is the formula for revenue?

A 
Revenue= Quantity Sold x Selling Price
Revenue= Quantity x Price
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3
Q

What is Insolvency?

A

If a business runs out of cash and can not pay its suppliers or workers it is insolvent.

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4
Q

Name 2 types of variable costs

A

Raw Materials, Packaging, Fuel, Employee Wages

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5
Q

What are Indirect costs?

A

Indirect costs have no connection with the product made.

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6
Q

At what point is a business not making a profit or a loss?

A

The Break-Even Point

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7
Q

Why does a business need finance?

A

A business needs finance to start-up, to run the business and to expand the business.

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8
Q

Name 4 examples of long-term sources of finance

A

Bank Loans, Debentures, Mortgage, Owners Savings, Hire Purchase

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9
Q

What is a debenture?

A

It is a loan that is repayable on a fixed date and has a fixed amount of interest to be repaid.

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10
Q

What do lenders ask for?

A

Lenders ask for collateral as a guarantee that a loan is repaid.

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11
Q

What is the formula to work out total costs?

A

Variable Costs+ Fixed Costs= total Costs

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12
Q

Name 3 Internal sources of finance?

A

Sales of Assets, Retained Profits from previous years, Family and Friends

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13
Q

What is the formula for the break-even point?

A

(Selling Price- Variable Costs per Unit/ Selling Price)

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14
Q

What is an external source of finance?

A

External sources of finance are finances that are found outside of the business.

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15
Q

Name 3 External sources of finance?

A

Bank Loan, Overdraft, Government or Charitable Grants

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16
Q

What is a fixed cost?

A

A fixed cost is a cost that never changes.

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17
Q

What is the formula for profit?

A

Total Revenue- Total Cost= Total Profit

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18
Q

What is expenditure?

A

Money spent on buying stock is expenditure.

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19
Q

What are costs?

A

Costs are expenses paid out to run the business.

20
Q

What is the formula for net cash flow?

A

Receipts- Total Payments= Net Cash Flow

21
Q

What is the key action needed to make a business survive?

A

A business must make a profit.

22
Q

What is hire purchase?

A

Hire purchase is where an item is hired and rented but never owned.

23
Q

What is an internal loan?

A

A loan that is received from family or friends

24
Q

What is an external loan?

A

A loan that is received from a bank or venture capitalist.

25
Q

what is a cash flow forecast?

A

a cash flow forecast is a prediction that may happen in the future for the inflows and outflows of a business.

26
Q

How can cash flow be improved?

A

Improve Planning, Better Market Research, Improve Decision Making

27
Q

What are short-term sources of finance?

A

Short-term sources of finance are types of finance that last for less than a year.

28
Q

What is a creditor?

A

A creditor lends funds to a business.

29
Q

What are indirect costs?

A

Indirect costs have no direct connection with a product.

30
Q

FC + VC = ?

A

TC

31
Q

What are the benefits of making a profit within a business?

A

Business owners are able to invest in business expansion, save for future losses or downfalls and increase wages for personal benefits.

32
Q

What is the point of a break-even chart?

A

A break-even chart establishes a point where the business is making a profit rather than a lost. It plans ahead and shows levels of production it needs to be profitable.

33
Q

When is a business solvent?

A

A business is solvent when it is able to meet short-term debts when they are due to be repaid.

34
Q

Why does a business need adequate working capital?

A

To pay staff wages, To pay off debts, To pay business costs and bills.

35
Q

What is the formula for closing balance?

A

Net Cash Flow + Opening Balance = Closing Balance

36
Q

Direct Costs + Indirect Costs =

A

Total Costs

37
Q

How do business earn most of their revenue/Income?

A

Businesses earn most of their income from selling their products to customers. They then receive revenue.

38
Q

Closing balance - net cash flow =

A

Opening Balance

39
Q

Name 3 examples of Fixed costs

A

Rent, Management Salaries, Insurance, Advertising

40
Q

As output changes variable costs…

A

CHANGE

41
Q

As output changes fixed costs…

A

DO NOT CHANGE

42
Q

What is a long-term source of finance?

A

A source of finance that is repaid over a long period of time.

43
Q

What is a balance sheet?

A

It is a sheet created to see if a business can afford to pay back debts with assets. It records where the business got its money from and what it spent it on.

44
Q

Name 4 examples of current assets

A

Debtors, Value of Stock, Computer Peripherals, Short-term Investments

45
Q

Name 4 examples of Non-current/ Fixed assets?

A

Fixtures and Fitting, Heating and Lighting, Machinery and Long-term Investments

46
Q

What are current liabilities?

A

Money that the business owes owes.

Business (5 decks)

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