Key Words Component 1

Question 1

Adviser

Answer 1

An external contact of a business that supports advice and support

Question 2

Bank loan

Answer 2

A fixed amount loan from a bank that has to be paid back, generally used to finance long term assets

Question 3

Over draft

Answer 3

Not enough money in the bank to cover a transaction but the bank still pays the transaction anyways.

Question 4

Assets

Answer 4

Something that you own

Question 5

Current assets and examples

Answer 5

Something you own for less than 12 months
Cash
Stock
Raw materials

Question 6

Non-current assets and examples

Answer 6

Something you own for loner than 12 months
Land
Buildings
Machines/equipment

Question 7

Liabilities

Answer 7

What you owe

Question 8

Current liabilities and examples

Answer 8

Something you owe for less than 12 months
Short-term loan
Trades
Money owed to suppliers

Question 9

Non-current liabilities and examples

Answer 9

Something you back for longer then 12 months
Long-term loan
Mortgage
Company pensions

Question 10

Break-even

Answer 10

The point where total sales meet total costs
(The business is making neither a profit nor a loss)

Question 11

Budget

Answer 11

A plan of income and expenses over a certain period of time

Question 12

Business plan

Answer 12

A statement that outlines the way a business will achieve its objectives

Question 13

Cash flow

Answer 13

Movement of cash into and out of the business
(Tracking inflows and outflows)

Question 14

Contribution

Answer 14

Difference between total sales and total variable costs

Question 15

Demand

Answer 15

The quantity of a good that consumers will buy at a given price at the given time

Question 16

Elasticity of demand

Answer 16

The response to demand to a change in price

Question 17

Enterprise

Answer 17

Formation of a new business to provide products and services within the market

Question 18

Entrepreneur

Answer 18

Someone who has an idea and proceeds to create a business around it and takes on the possible risks associated within a business.

Question 19

Fixed costs

Answer 19

Costs that are the same monthly and don’t vary

Question 20

Limited liability

Answer 20

Shareholders are only liable for the money they have invested and not liable for the overall depts.

Question 21

Margin of safety

Answer 21

Difference between actual level of output and breakeven output

Question 22

Market

Answer 22

Meeting point for buyers and seller to trade and exchange goods.

Question 23

Market segmentation

Answer 23

The process of dividing a market into smaller sections which contains customers with similar needs and wants

Question 24

Revenue

Answer 24

The income or sales that a business achieves within a certain period of time

Question 25

Share capital

Answer 25

The finance invested in a business by the shareholders

Question 26

Social enterprise

Answer 26

A business that has objectives other then wanting to make a profit “not-for-profit”

Question 27

Sole trader

Answer 27

One person business with unlimited liability for the depts of the business

Question 28

Trade credit

Answer 28

Amounts owed to suppliers of a business

Question 29

Unlimited liability

Answer 29

Potential risk that sole traders face, as the are liable for the depts of the business.

Question 30

Working capital

Answer 30

The amount of money that a business has available to conduct day-today activities.