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Business > Key term definitions 2.3 > Flashcards

Key term definitions 2.3 Flashcards

1
Q

what is the definition of amortisation?

A

the writing off of an intangible asset

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2
Q

what is the definition of cost of sales?

A

the direct costs of a business

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3
Q

what is the definition of exceptional costs?

A

a one-off cost such as a large bad debt

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4
Q

what is the definition of gross profit?

A

the difference between revenue/turnover and cost of sales

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5
Q

what is the definition of gross profit margin?

A

gross profit expressed as a percentage of revenue/turnover

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6
Q

what is the definition of operating profit?

A

the difference between gross profit and business overheads such as selling and admin expenses

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7
Q

what is the definition of operating profit margin?

A

operating profit expressed as a percentage of revenue/turnover

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8
Q

what is the definition of net profit?

A

the difference between operating profit and interest and exceptional items

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9
Q

what is the definition of net profit margin?

A

net profit before tax expressed as a percentage of revenue/turnover

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10
Q

what is the definition of statement of comprehensive income?

A

a financial document showing a company’s income and expenditure over a particular time period-usually 1 year

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11
Q

what is the definition of revenue/turnover?

A

the total income of a business resulting from sales of goods or services

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12
Q

what is the definition of acid test ratio?

A

similar to the current ratio but excludes stocks from current assets- a more sever test of liquidity

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13
Q

what is the definition of assets?

A

resources that belong to a business

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14
Q

what is the definition of capital

A

money put into the business by the owners

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15
Q

what is the definition of current assets?

A

liquid assets-assets that will be converted into cash within 1 year

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16
Q

what is the definition of current liabilities?

A

money owed by the business that must be paid within 1 year

17
Q

what is the definition of current ratio?

FORMULA

A

assesses whether the business has enough resources to meet any debts that arise in the next 12 months
current liabilites/current assets

18
Q

what is the definition of intangible assets?

A

non-physical assets e.g. brand names, patents and customer lists

19
Q

what is the definition of inventories?

A

stocks such as raw materials and finished goods held by a business

20
Q

what is the definition of liabilities?

A

money owed by the business to banks and supplies etc

21
Q

what is the definition of liquidity?

A

the ease with which assets can be converted into cash

22
Q

what is the definition of net assets?

FORMULA

A

total assets - total liabilities

23
Q

what is the definition of non-current assets?

A

long-term resources that will be used by the business repeatedly over a period of time

24
Q

what is the definition of non-current liabilities?

A

money owed by the business for more than 1 year.-long-term liabilities

25
Q

what is the definition of shareholders’ equity?

A

the amount of money owed by the business to its shareholders

26
Q

what is the definition of statement of financial position (balance sheet)?

A

a summary at a particular point in time of the value of a firm’s assets, liabilities and capital

27
Q

what is the definition of trade and other payables?

A

money owed by the business to suppliers and utilities- sometimes called trade creditors

28
Q

what is the definition of trade and other receivables?

A

money owed to the business by customers and any repayments made by the business

29
Q

what is the definition of working capital?

FORMULA

A

funds left over to meet day-to-day expenses after current debts have been paid.
current assets - current liabilities

30
Q

what is the definition of administration?

A

a failing business appoints a specialist to rescue the business or wind it up

31
Q

what is the definition of external factors?

A

factors beyond the control of businesses cause it to collapse

32
Q

what is the definition of internal factors?

A

factors that businesses are able to control cause it to collapse

33
Q

what is the definition of overtrading?

A

the situation where a business does not have enough cash to support its production and sales usually because it’s growing too fast

Business (22 decks)

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