Finances

Question 1

Trade credit

Answer 1

Arrangement for buying goods without paying immediately.

Trade payable: money owed to supplier

Trade receivable: money owed by consumer

Question 2

Cashflow

Answer 2

Movement of money: cash inflow and cash outflow.

Cashflow forecast is used to identify surplus or deficit.

Question 3

Break-even point

Answer 3

Number of units needed to be sold to equal revenue and costs.

Fixed costs ⁒ contribution

Contribution = Sales price per unit-variable cost per unit

Question 4

Costs

Answer 4

Cash the enterprise spends to produce goods or services.

Fixed costs + variable costs = total costs

Question 5

Income statement

Answer 5

Revenue - expenditure = Profit or loss

Expenditure: all money that goes out of the enterprise

Question 6

Profit

Answer 6

Financial gain, difference between amount earned and amount spent.

Gross profit = revenue - cost of sales

Net profit = gross profit - other expenditures (overheads)