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Finance C10 i think *G11 Flashcards

1
Q

Income statement is now know as

A

Statement of comprehensive income

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2
Q

Balance sheet is now known as

A

Statement of financial position

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3
Q

What are the five financial concepts in a business environment

A

Income
Expenses
Owners equity
Assets
Liability

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4
Q

What is income

A

Money the business receives when goods are sold/services are rendered

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5
Q

Examples of income *4

A

*current (from services rendered)
*sales (when goods are sold)
*rent income
*interest income (money saved from the bank)

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6
Q

What’s expenses

A

What the business has to pay for a service rendered to the business

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7
Q

Examples of expenses *6

A

*water and electricity
*repairs
*telephone
*advertising
*insurance
*salaries/wages

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8
Q

When are salaries and wages paid

A

Salaries - monthly
Wages - weekly

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9
Q

Profit =

A

Income - expenses

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10
Q

How can a business obtain cash *3

A

*owners capital
*selling assets for cash
*taking out loans

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11
Q

Cash flow =

A

The cash portion of various transactions

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12
Q

What is owners equity

A

The value of the owners money in the business

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13
Q

Profits …. owners equity

A

Increase

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14
Q

What decreases owners equity

A

Drawings - taking out money or assets for personal use

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15
Q

What are assets

A

Possessions of the business

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16
Q

Assets = a + b

A

a owners equity
b liabilities

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17
Q

Assets are used to…

A

Make money

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18
Q

Types of assets *2

A

Non- current (long term)
Current

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19
Q

Examples of long term assets *4

A

*land and buildings
*vehicles
*equipment
*investments longer than a year

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20
Q

Examples of current assest *3

A

*trading inventory
*cash
*debtors

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21
Q

What are liabilities

A

The debt of the business

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22
Q

Types of liabilities *2

A

Non current
Current

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23
Q

An example of non current liability

A

Mortgage bond

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24
Q

Examples of current liabilities *2

A

*creditors
*bank overdraft

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25
Mortgage bond definition
A long term loan from the bank used to but land or buildings
26
Statement of comprehensive income includes *2
Income Expenses
27
Statement of financial position includes *3
*owners equity *assets *liabilities
28
Fixed costs...
Remain the same irrespective of output
29
People with fixed salaries are...
*are part of fixed costs *are not directly directly involved in the production process
30
Example of workers with fixed salaries *3
Cleaners Secretary Manager
31
Variable costs are costs that
Vary according to output produced
32
Examples of variable costs *3
Water and electricity Raw materials Wages of workers that get paid according to output produced
33
Total cost =
Fixed + variable cost
34
Costs per unit =
Total costs / number of units produced
35
Break even point is when...
Income=total costs Therefore neither profit or loss
36
What is the safety margin
How far above the break even point the business has to perform to ensure it can safely continue to exist
37
What is a feasibility study
The process of assessing a business idea's potential
38
Viable and feasible meaning
Viable - ability to sustain itself and make profit Feasible- if possible and practical to implement
39
Why is a feasibility study important *4
*it determines the possibility of success *forces an entrepreneur to focus on facts by answering questions objectively *forces one to think about what they want to do and if there's an opportunity to make money *guides business to develop business plan
40
What are the steps in a feasibility study *3
Describe business idea Describe market via research Consider other factors after realising idea is viable
41
Describe step one if a feasibility study *2
*provide a description for whafs being sold *state why idea is unique to competitors
42
What questions should be asked in step one of a feasibility study *4
*will the business manufacture the product *will a patent be used *what distribution channels will be used *who is the supplier
43
What should be researched (in the market) in step 2 of feasibility study *4
*who is the target market *is there potential for growth *is the market price sensitive *who are the competitors
44
What should the business consider after realising the idea is viable *4
*skills needed *equipment needed *location *capital needed
45
What is money management
The ability to obtain optimum return from their money
46
What can the business owner choose to do with profit *3
*withdrawing for personal capacity *withdrawing for personal capacity *investing it in the business
47
What 2 purposes of investment are there
*to generate monthly income *to achieve long term growth
48
Name a pro and con of selling on credit
Pro - healthy profit Con - cash flow issues if money isn't payed back
49
If ones aim is to crate a monthly stream of income, where should they consider investing it *2
The bank Property
50
What does ROI measure
The profitability of a business
51
Equation for ROI =
Additional money generated by investment/ Original amount X 100/1
52
What criteria indicates the success of a business in the future *4
*industry type *business brand strength *liquidity *management team
53
Business brand strength is
An indicator of how people view the brand Therefore and indicator of support
54
What does a good management team do *2
*understand business dynamics *ensures the business gets publicity for the right reasons
55
Liquidity can refer to
How easily it is to get out of and investment
56
Bad debt =
Debt the business is unable to collect and needs to be written off Is possible but expensive
57
Insurers need information on *2
*amount of stock on hand *how much was stolen
58
EPOSSE stands for
Electronic Point Of Scale Scanning Equipment
59
What does an EPOSSE system do
Automatically subtract stock from records as they're scanned from the till
60
Why is break even important
It provides information on how much expenses need to be exceeded To make profit
61
Units aka
Goods produced
62
Overdraft definition
Withdrawal of more money than what is in the account
63
Overhead expenses consist of
Fixed and variable costs
64
Overhead expenses are expenses that
Are not related to production, rather the general business functions
65
Credit limit means
The maximum a person is allowed to spent from business undertaking
66
Theft =
Goods taken from property after forced entry
67
Short term capital aka
Working capital
68
Examples of short term capital *6
Overdraft Short term loan Credit card Trade credit Instalment sale transactions Leases
69
Trade credit is when
Supplier allows buyer credit based on credit worthiness
70
Leases is when
One pays a monthly installment but ownership is never possessed
71
Long term capital aka
Fixed capital
72
Examples of long term capital
Selling shares, bank loan
73
Explain insurance on building
Any structural damage
74
Types of risk for insurance on building *4
*fire *natural disaster *explosions *vehicle impact
75
Explain business interruption insurance *2
*loss that results in reduction in turnover *can occur over incidents preventing customers from accessing b.s
76
Explain fidelity insurance
Theft by employees (money or stock)
77
Explain public liability *2
*owner/employee causes damage to customer property *injury/death during during course of business
78
Explain insurance on vehicles *2
*can be fully comprehensive *or cover 3rd party
79
Explain theft, burglary and robberies
*Insurance needs info on how much stock was on hand and how much was stolen Easier with an EPOSSE system
80
Explain EPOSSE system
Electronic Point Of Scale Scanning Equipment Stock is automatically subtracted from records as they're scanned from till
81
Explain bad debt
Debt the business is unable to collect and needs to be written off

Business (29 decks)

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