Finance definitions Flashcards
1
Q
define profit & formula
A
revenue - expenditure
amount of money the business has earnt, once costs have been deducted
2
Q
what is cash flow?
A
timings of cash flowing in (inflows) and cash flowing out (outflows) of the business
3
Q
define revenue & formula
A
amount of money made from sales
quantity sold x price per unit
4
Q
define fixed costs
A
costs that do not later with output
5
Q
define variable costs
A
costs that alter with output
6
Q
define total costs & formula
A
all the expenditure of the business
fixed costs + variable costs
7
Q
when does profit exist?
A
In financial records when total revenue is greater than total costs
8
Q
what is cash?
A
the physical existence of money within the business
9
Q
why can profitable businesses fail?
A
due to lack of cash
10
Q
list why cash and profit may be different
A
- credit sales
- bad debts
- heavy stock holdings
- investment in fixed assets
- seasonality
- repayments of loans
