Key Words and Definitions

Question 1

Aim

Answer 1

A general goal of a business

Question 2

Objective

Answer 2

A specific target that is set for a business to achieve

Question 3

Stakeholder

Answer 3

Individuals and organisations that are affected by , and affect the activities of a business

Question 4

Shareholder

Answer 4

A person or an organisation that owns part of a company. Each shareholder owns a ‘share of the business’

Question 5

Company

Answer 5

A business that has its own legal identities

Question 6

Revenue

Answer 6

The total income that a firm receives

Question 7

Asset

Answer 7

Items of value owned by the business,(either in cash form or which can be turned to cash)

Question 8

Costs

Answer 8

Costs are the expenses paid out to run the business

Question 9

Profit

Answer 9

A business makes a profit if they earn more than they spend

Question 10

Entrepreneur

Answer 10

Someone who is willing to take risks involved in starting a new business

Question 11

Consumer

Answer 11

Someone who uses goods and services produced by businesses

Question 12

Break Even

Answer 12

Revenue and costs are equal, so the business is not making loss or profit

Question 13

Cash Flow

Answer 13

Money flowing in and out of the business

Question 14

Forecasting

Answer 14

Predicting future outcomes

Question 15

Short-term sources of finance

Answer 15

Sources of finance paid back to lender a short period of time

Question 16

Long-term Sources of finance

Answer 16

Sources of finance being borrowed for a longer period of time

Question 17

Interest rates

Answer 17

The cost of borrowing money or the reward for saving money, expressed as a percentage

Question 18

Dividends

Answer 18

The financial rewards paid out to shareholders each year.

Question 19

Trade credit

Answer 19

Arranging to delay or reschedule payments at a later date

Question 20

Overdrafts

Answer 20

These let firms take out more money out of its bank than it has paid into it

Question 21

Loans

Answer 21

Source of finance borrowed from bank and repaid with added interest

Question 22

Personal Savings

Answer 22

A business owners personal money invested into the business

Question 23

Share capital

Answer 23

When individuals buy shares in a business making them a shareholder

Question 24

Venture Capital

Answer 24

Source of finance raised through investors – taking a risk on entrepreneurial talent

Question 25

Retained profit

Answer 25

A portion of the companies profits that are kept in the business rather than paying it out to shareholder

Question 26

Crowd Funding

Answer 26

When a large number of people contribute money towards funding a business idea

Question 27

Limited Liability

Answer 27

The owners of the business can only loose the amount of money they put into the business

Question 28

Unlimited Liability

Answer 28

Owner can lose money they invested and their personal assets. One legal entity.

Question 29

Franchise

Answer 29

When a franchisor sells the “rights” to its products to a franchisee

Question 30

Franchisee

Answer 30

Buys a franchise and usually pays a fee or percentage of turnover.