L9

Question 1

Initial operation

Answer 1

Install telephone 
office supplies 
promote the shop opening 
buy insurance 
pay liscense, permit and miscellaneous fees

Question 2

acquainted with the finance

Answer 2

- initial capitals
working captital 
reserve capital 
promotional capital 
gowth capital

Question 3

initial capital

Answer 3

need this to start new business to buy over from someone else or to sign up with franchiser

Question 4

working capital

Answer 4

to purchased goods for stock to pay salaries

Question 5

reserve capital

Answer 5

funds that for those unexpected contingencies that crop up from time to time

Question 6

prrmotional capital

Answer 6

fund that get business off the ground and ensure viability

Question 7

growth capital

Answer 7

a form of capital that use for some future date

Question 8

Budgetary control

Answer 8

• a plane that estimate future sales espenses

actual figures are to compared with estimated to determine how well specific area are staying with estimates

Question 9

3 types budgetary control

Answer 9

operating budget
cash budget
capital budget

Question 10

Sales budget

Answer 10

developing forecast on experience and knowledge of the field

inputting from supplier and sales staff
past sales report

Question 11

merchandise budget

Answer 11

-stock to accommodate sales pattern

difficult to operate at a constant retail inventory level

season variation

Question 12

Expenses budget

Answer 12

fixed and variable expenses

fixed - do not vary with volume of the business e.g insurance , depreciation , property tax

variable - vary in direct proportion to biz volume e.g sales commission, advertising and delivery expenses

Question 13

cash budget

Answer 13

enable small biz to increase operational performance

ensure sufficient fund for buying merchandise paying all operating expenses and future growth

Question 14

Capital bUdget

Answer 14

ensure sufficient funds for future growth

evaluated by :

• sales and mark downs
• inventory and stock turn over
• stock shortage
• gross margin

Question 15

mark down

Answer 15

sales figures below estimated will have an excess merchandise

it’s effective to speed up the sales of merchandise or dispose merchandise that is unsaleable at it present price

Question 16

Inventory

Answer 16

• key to profitability
• impt to know amount of stock on hand and make appropriate decision
• carry out periodic inventory of perpetual inventory

Question 17

Stock turn over

Answer 17

too much inventory = excessive markdowns if merchandise can’t be sold

too little leaf to list of sales

to measure how fast merchandise is sold and replace and its ability to meet cash obligations

Question 18

increase stock turn over

Answer 18

• carry minimum slow moving merchandise or do not sell them at all

reduce no. of lines carried and concentrate on key merchandise

nego w supplier to speed up deliveries or merchandise ordered

reduce price and increase sales promotion

Question 19

stock shortage

Answer 19

• diff between book value and physical count
• unavoidable and reduce gross margin

attempt to minimise by recognising reason why it occur by taking measures to prevent

can be due to staff error, error in selling, theft , error in stock count or poor housekeeping

Question 20

Gross margin

Answer 20

difference between net sales and cost of good sold

high to cover operating expenses

Question 21

improve gross margin

Answer 21

• sell exclusive merchandise to enhance sales and discourage price comparison
• sell more higher margin merchandise
• reduce markdowns and discount
• reduce merchandise shortage

Question 22

evaluate retail performance

2 tools

Answer 22

balance sheet ( accountant it’s the statement of financial condition of format given point in time ) 
income statement

Question 23

net worth formula

Answer 23

Assert - liability’s

Question 24

cash flow statement

Answer 24

cash receipt -disbursement = net cash flow

positive or negative cash flow
excess or lack