key terms

Question 1

budgeting

Answer 1

continuous process of estimating future inventory and markups

Question 1

cash flow

Answer 1

movement of money in and out of a company

Question 2

inventory

Answer 2

more important asset
- main source of revenue
- susceptible to damage and theft

Question 3

cost price

Answer 3

initial price, the amount it cost a company to purchase it

Question 4

Selling price

Answer 4

the price the firm sold it for (to make profit)

Question 5

selling price formula

Answer 5

cost price x (1+markup%)

Question 6

Cost price formula

Answer 6

selling price/ (1+markup%)

Question 7

finacial indicators

Answer 7

Net profit
Gross profit

Question 8

net profit

Answer 8

how well a business is controlling their expenses and overall spending

Question 9

Gross profit

Answer 9

measures average markup

Question 10

Break even

Answer 10

• a point at which revenue equals expenses/ money isn’t made or lost
  > assume:
• All goods are sold
• all expenses divided into a fixed and variable cost
• Selling price=constant
• all costs are known and remain constant

Question 11

fixed costs

Answer 11

expense that stay the same regardless of amount of goods sold

Question 12

variable costs

Answer 12

expenses that vary depending on amount of goods sold

Question 13

contribution margin

Answer 13

amount a single unit contribute towards profit
> selling price- variable cost

Question 14

break even steps

Answer 14

1) find out the fixed and variable cost
2) formula: fixed cost/contribution margin