Key terms

Question 1

Business

Answer 1

an organisation that provides goods or services usually in exchange for money

Question 2

Capital

Answer 2

money or assets owned by an individual or organisation

Question 3

Cashflow

Answer 3

the amount of money moving into and out of a business

Question 4

Costs

Answer 4

the money a business has to spend in making and selling a product or service

Question 5

Fixed costs

Answer 5

costs that do not change as the amount of product or services increases or decreases (e.g. business rate)

Question 6

Growth

Answer 6

increasing the size of the business

Question 7

Mission

Answer 7

a statement that outlines the purpose of the company

Question 8

Not-for-profit organisation

Answer 8

is one that exists for a reason other
than making a profit – its income is used for social or charitable
purposes

Question 9

Objectives

Answer 9

something that the business wants to achieve within a specified time limit

Question 10

Price management

Answer 10

setting selling price and adjusting as
necessary to optimise sales

Question 11

Profit

Answer 11

what money is left after deducting business costs from revenue

Question 12

Profit margin

Answer 12

percentage difference between the cost to produce and selling price

Question 13

Revenue

Answer 13

the income earned by a business

Question 14

SMART

Answer 14

Specific, Measureable, Achievable, Realistic, Timebound

Question 15

Stakeholder

Answer 15

an individual or organisation who has an interest in the business

Question 16

Total cost

Answer 16

fixed + variable costs

Question 17

Variable cost

Answer 17

costs that change directly with the number of items
produced (e.g. packaging)

Question 18

AGM- Annual general meeting

Answer 18

a meeting that official bodies, including companies with shareholders are required by law to hold

Question 19

Creditor

Answer 19

a person or company to whom money is owed

Question 20

Dividend

Answer 20

an amount of money paid to shareholders out of company’s profits

Question 21

Incorporation

Answer 21

process of legally declaring a corporate entity as separate from its openers

Question 22

Limited liability

Answer 22

legal protection available to the shareholders of privately and publically owned organisations, under which the financial liability of each shareholder for the company’s debts is limited to the value of his or her shares

Question 23

Mutual

Answer 23

a business established for the benefit of its shareholders, who are called members and receive the firms profits as dividends

Question 24

Non-exclusive director

Answer 24

a member of the board of directors of an organisation who is not part of the executive management team

Question 25

Partnership

Answer 25

a type of business organisation in which two or more individuals pool money, skill or other resources and share profit and loss

Question 26

Private limited company (Ltd)

Answer 26

a type of company that offers limited liability, legal protection for its shareholders, though its shares are not traded as in plc

Question 27

Public limited company (plc)

Answer 27

a company whose stocks are traded on a stock exchange and can be bought and sold by anyone

Question 28

Public sector

Answer 28

part of national economy providing basic goods or services that are either not, or cannot be, provided by the private sector

Question 29

Rights issue

Answer 29

a method by which a company can raise money by issuing new shares to shareholders

Question 30

Share capital

Answer 30

represents the risk capital staked by owners thorough the purchase of a company’s ordinary shares

Question 31

Sole trader

Answer 31

a person who is exclusive owner of a business, entitled to keep all profits after tax but is liable for all losses

Question 32

Unlimited liability

Answer 32

a business where the owners personal assets can be seized if it is unable to meet any financial obligations or settle any outstanding debts

Question 33

Bank of England Monetary Policy committee

Answer 33

the body which meets monthly to set interest rates

Question 34

Business cycle

Answer 34

how the economy performs over a period of time. It has four distinct stages: recession, trough, recover and peak

Question 35

Disruptive innovation

Answer 35

innovations that are created to reach a new market of customers, as opposed to improving existing products

Question 36

Inflation

Answer 36

a rise in the level of the prices of goods and services, i.e. an increase in the cost of living

Question 37

Interest rates

Answer 37

the costs the bank charges you to borrow money. Interest rates are expressed as a percentage of the amount borrowed

Question 38

Lean processes

Answer 38

doing more with less, always trying to eliminate waste from processes and get them more efficient and streamlined

Question 39

Market segmentation

Answer 39

the breakdown of a market e.g. breakdown by age, gender and/or ethnicity of potential customers.

Question 40

Market structure

Answer 40

the interconnected characteristics of a market, such as the number and relative strength of buyers and sellers and degree of collusion among them, level and forms of competition, extent of product differentiation, and ease of entry into and exit from the market

Question 41

Recession

Answer 41

a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters

Question 42

Recovery

Answer 42

economy begins to grow again leading to virtuous economic cycle starting again

Question 43

SWOT Analysis

Answer 43

an analysis of the internal strengths and weaknesses of a business and the opportunities and threats in the external environment