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Business > Finance C10 i think *G11 > Flashcards

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
Q

Mortgage bond definition

A

A long term loan from the bank
used to but land or buildings

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26
Q

Statement of comprehensive income includes *2

A

Income
Expenses

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27
Q

Statement of financial position includes *3

A

*owners equity
*assets
*liabilities

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28
Q

Fixed costs…

A

Remain the same irrespective of output

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29
Q

People with fixed salaries are…

A

*are part of fixed costs
*are not directly directly involved in the production process

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30
Q

Example of workers with fixed salaries *3

A

Cleaners
Secretary
Manager

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31
Q

Variable costs are costs that

A

Vary according to output produced

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32
Q

Examples of variable costs *3

A

Water and electricity
Raw materials
Wages of workers that get paid according to output produced

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33
Q

Total cost =

A

Fixed + variable cost

34
Q

Costs per unit =

A

Total costs / number of units produced

35
Q

Break even point is when…

A

Income=total costs
Therefore neither profit or loss

36
Q

What is the safety margin

A

How far above the break even point the business has to perform
to ensure it can safely continue to exist

37
Q

What is a feasibility study

A

The process of assessing a business idea’s potential

38
Q

Viable and feasible meaning

A

Viable - ability to sustain itself and make profit
Feasible- if possible and practical to implement

39
Q

Why is a feasibility study important *4

A

*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
Q

What are the steps in a feasibility study *3

A

Describe business idea
Describe market via research
Consider other factors after realising idea is viable

41
Q

Describe step one if a feasibility study *2

A

*provide a description for whafs being sold
*state why idea is unique to competitors

42
Q

What questions should be asked in step one of a feasibility study *4

A

*will the business manufacture the product
*will a patent be used
*what distribution channels will be used
*who is the supplier

43
Q

What should be researched (in the market) in step 2 of feasibility study *4

A

*who is the target market
*is there potential for growth
*is the market price sensitive
*who are the competitors

44
Q

What should the business consider after realising the idea is viable *4

A

*skills needed
*equipment needed
*location
*capital needed

45
Q

What is money management

A

The ability to obtain optimum return from their money

46
Q

What can the business owner choose to do with profit *3

A

*withdrawing for personal capacity
*withdrawing for personal capacity
*investing it in the business

47
Q

What 2 purposes of investment are there

A

*to generate monthly income
*to achieve long term growth

48
Q

Name a pro and con of selling on credit

A

Pro - healthy profit
Con - cash flow issues if money isn’t payed back

49
Q

If ones aim is to crate a monthly stream of income, where should they consider investing it *2

A

The bank
Property

50
Q

What does ROI measure

A

The profitability of a business

51
Q

Equation for ROI =

A

Additional money generated by investment/ Original amount
X
100/1

52
Q

What criteria indicates the success of a business in the future *4

A

*industry type
*business brand strength
*liquidity
*management team

53
Q

Business brand strength is

A

An indicator of how people view the brand
Therefore and indicator of support

54
Q

What does a good management team do *2

A

*understand business dynamics
*ensures the business gets publicity for the right reasons

55
Q

Liquidity can refer to

A

How easily it is to get out of and investment

56
Q

Bad debt =

A

Debt the business is unable to collect and needs to be written off
Is possible but expensive

57
Q

Insurers need information on *2

A

*amount of stock on hand
*how much was stolen

58
Q

EPOSSE stands for

A

Electronic
Point
Of
Scale
Scanning
Equipment

59
Q

What does an EPOSSE system do

A

Automatically subtract stock from records as they’re scanned from the till

60
Q

Why is break even important

A

It provides information on how much expenses need to be exceeded
To make profit

61
Q

Units aka

A

Goods produced

62
Q

Overdraft definition

A

Withdrawal of more money than what is in the account

63
Q

Overhead expenses consist of

A

Fixed and variable costs

64
Q

Overhead expenses are expenses that

A

Are not related to production, rather the general business functions

65
Q

Credit limit means

A

The maximum a person is allowed to spent from business undertaking

66
Q

Theft =

A

Goods taken from property after forced entry

67
Q

Short term capital aka

A

Working capital

68
Q

Examples of short term capital *6

A

Overdraft
Short term loan
Credit card
Trade credit
Instalment sale transactions
Leases

69
Q

Trade credit is when

A

Supplier allows buyer credit based on credit worthiness

70
Q

Leases is when

A

One pays a monthly installment but ownership is never possessed

71
Q

Long term capital aka

A

Fixed capital

72
Q

Examples of long term capital

A

Selling shares, bank loan

73
Q

Explain insurance on building

A

Any structural damage

74
Q

Types of risk for insurance on building *4

A

*fire
*natural disaster
*explosions
*vehicle impact

75
Q

Explain business interruption insurance *2

A

*loss that results in reduction in turnover
*can occur over incidents preventing customers from accessing b.s

76
Q

Explain fidelity insurance

A

Theft by employees (money or stock)

77
Q

Explain public liability *2

A

*owner/employee causes damage to customer property
*injury/death during during course of business

78
Q

Explain insurance on vehicles *2

A

*can be fully comprehensive
*or cover 3rd party

79
Q

Explain theft, burglary and robberies

A

*Insurance needs info on how much stock was on hand and how much was stolen
Easier with an EPOSSE system

80
Q

Explain EPOSSE system

A

Electronic Point Of Scale Scanning Equipment
Stock is automatically subtracted from records as they’re scanned from till

81
Q

Explain bad debt

A

Debt the business is unable to collect and needs to be written off

Business (26 decks)

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