Finance - Key Terms

Question 1

Mechanism

Answer 1

When machinery is used, but labour is required the work it

Question 2

Automation

Answer 2

When machinery is used and a computer controls it

Question 3

Lean production

Answer 3

A Japanese production system, helps insure that was is kept to a minimum. On feature is JIT

Question 4

Just-in-time (JIT)

Answer 4

Materials are not stored but are sued immediately when they arrive at the factory

Question 5

Job production

Answer 5

Method of production involving production of each product individually, like a one-off

Question 6

Batch production

Answer 6

Used when there are set stages, one stage has to be completed before the next can start

Question 7

Flow/mass production

Answer 7

A continuous movement of items through the production process

Question 8

Flow/mass production

Answer 8

A continuous movement of items through the production process

Question 9

Flow/mass production

Answer 9

A continuous movement of items through the production process

Question 10

Division of labour

Answer 10

The organisation of production into a number of specialised ‘simple’ repetitive processes

Question 11

Specialisation

Answer 11

Occurs where workers specialise in carrying of simple production tasks

Question 12

Process production

Answer 12

A series of automated processes, which when applied to a variety of raw materials, results in a large amount of a fined product

Question 13

Added value

Answer 13

Increased worth of a product, i.e. Through branding, quality, convenience, service, design and USP

Question 14

Added value

Answer 14

Increased worth of a product, i.e. Through branding, quality, convenience, service, design and USP

Question 15

Efficiency

Answer 15

Maximising productivity with minimum wasted effort and expense

Question 16

Total quantity management (TQM)

Answer 16

The process where all workers are responsible for quality throughout the process of production

Question 17

Opportunity cost

Answer 17

The cost of missing out of something else

Question 18

Internal/external finance

Answer 18

Comes from within/outside the business

Question 19

Bank loan

Answer 19

Money borrowed from the bank for a stated purpose

Question 20

Leasing

Answer 20

Obtaining an item for a time period, at the end of which the item is returned

Question 21

Hire purchase

Answer 21

When you pay monthly for an item, the item becomes your when the (larger) final payment is made

Question 22

Taking a new partner

Answer 22

Sell of part of the business for a new partner, they may bring new skills

Question 23

Trade credit

Answer 23

When a business doesn’t need to pay for a certain time period, 30, 60, 90 days

Question 24

Trade credit

Answer 24

When a business doesn’t need to pay for a certain time period, 30, 60, 90 days

Question 25

Retained profit

Answer 25

Profit made that can be reinvested, stays within the business at all times

Question 26

Sale of assets

Answer 26

Selling of assets to make cash

Question 27

Mortgage

Answer 27

A loan used specifically to purchase a property

Question 28

Overdraft

Answer 28

An agreement with the bank where a business can withdraw more than it has

Question 29

Grants

Answer 29

An amount of money given to a business form the government, for a specific reason

Question 30

Owner investment

Answer 30

When an owner may invest their own money for business development

Question 31

Cash in bank

Answer 31

Money owned by a business that has been built up, used for whatever

Question 32

Share issue

Answer 32

What limited company raises money by selling shares.

Question 33

Fixed costs

Answer 33

Remain the same, regardless of output

Question 34

Variable costs

Answer 34

Do change when output changes

Question 35

Breakeven

Answer 35

The point at which sales at the same as costs

Question 36

Margin of safety

Answer 36

The difference between the actual level of output and the breakeven point

Question 37

Cash flow

Answer 37

The movement of money in and out of the business

Question 38

Inflows/income

Answer 38

Money received by the businesses

Question 39

Outflows/expenditure

Answer 39

Money paid out by the businesses

Question 40

Net cash flow

Answer 40

The difference between the inflows and outflows

Question 41

Opening/closing balance

Answer 41

The amount of money in a business account at any particular time, usually the beginning and end of the month

Question 42

Gross profit

Answer 42

The amount of profit made by a businesses as a result of buying and selling goods or services, without paying for any of the day to day running costs

Question 43

Net profit

Answer 43

The profit made as a result of buying and selling goods as well as costs of the day to day running costs

Question 44

Expenses

Answer 44

A cost of running a business

Question 45

Accounting

Answer 45

The process of keeping financial records

Question 46

Profit margin

Answer 46

The ratio of profit over revenue, expressed as a percentage

Question 47

Imports

Answer 47

Goods and services bought for other countries which leads to money going out of the UK

Question 48

Exports

Answer 48

Goods and services which are sold to other countries and which lead to payments into the UK

Question 49

Exchange rates (SPICED)

Answer 49

S trong
P ound
I mports
C heap
E xports
D ear (expensive)