Financial Terms Flashcards
What is a cost?
The amount of money a business has spent on something
What is a fixed cost? (Rent)
Costs that do not change over time
What is a variable cost?(stock)
A cost varies on output
What are start up costs?
Money used to start a business
What is a running cost?
Money used to operate business day to day
How do you calculate total costs?
Total fixed cost + total variable cost
What is revenue?
Total amount of money coming into the business
How do you calculate revenue?
Output x cost per unit
What is profit?
Amount of money gained by the business after all costs are deducted
Ho do you calculate profit?
Revenue - costs
What is a price?
Amount of money charged for a good or service
Why is profit important?
- to reinvest
- to pay operating costs
Why is revenue important?
- to increase profit
- to cover costs
