KEY TERMS Flashcards
what are start up costs?
the amount of money spent setting up a business before it starts trading
what are operating costs?
money spent on a regular basis to keep a business running
what is income?
money which is paid into a business
what are fixed/indirect costs?
expenditure on items which does not change with the number of items sold or produced
what are variable/direct costs?
costs which vary according to the number of Items sold or produced
what is the total cost?
the total amount of money spent running a business over a certain period of time
what is expenditure?
money that a business spends
what are overheads?
the everyday running costs of the business
what is the profit?
occurs when revenue is more than expenditure
what is loss?
occurs when expenditure is more than revenue
what is budgeting?
planning future expenditure and revenue targets with the aim of ensuring a profit is made
what is budgetary control?
the process of checking what is actually happening, comparing this with the plan and taking actions if things are not correct
what are cash inflows?
the amount of money entering a business’s bank account
what are cash outflows?
the amounts of money leaving a business’s bank account
what is net cash flow?
the difference between the cash inflow and outflow figures over a particular time period
what is cash balance?
the amount of money forecast to be in the bank account after the net cash flow figure has been added or subtracted from the existing bank balance
what is overdraft?
this occurs if a business pays more out if its bank account that it has in credit, the bank may allow this but will make an extra change
what is the capital?
money spent by the business in items which should last a long time(assets)
what is the cost of sales?
the cost of producing a product
what is the gross profit?
the money made from selling a product (the sales revenue) after the costs of producing that product (cost of sales) has been deducted.
what is net profit?
the money made from selling a product after all costs( expenditure) have been deducted from the gross profit
what is a financial year?
the trading period over which a business collects information for their annual income statement (for example, a business might have a financial year that starts on 1 may and ends 30 april)
what are assets?
items that a business buys that normally lasts a long time, such as a van or a computer or money it is owed
what are debtors/ trade recievables?
people who owe money to the business for goods or services they have received. trade payables are traders to whom the business owes money because they have supplied goods or services
what are liabilities?
amount of money which business owes
what are share capitals?
the amount of money invested in the business by the shareholders
what are working capitals?
money the business can raise quicly which is calculated by deducting current liabilities
