Learning Aim B Flashcards
What are the same when you ‘break even’?
Revenue and expenditure
What lines cross to show the breakeven point?
Total costs and revenue
What is the margin of safety?
The amount by which sales would have to fall before the breakeven point is reached
How does and increase in costs effect the breakeven point?
The breakeven point rises
How does a fall in cost effect the breakeven point?
The breakeven point gets lower
How she’s a fall in sales effect the breakeven point?
It increases the number of goods that need to be sold to breakeven
What is the purpose of budgeting?
To keep expenditure to a planned limit
What does budgetary control mean?
Checking performance to make sure that targets are met and are within budget
What is cash flow?
Money that flows in and out of the business
What are 2 cash inflows?
Bank loan
Sales revenue
What are 2 cash outflows?
Advertising
Fuel for vehicles
What is a benefit of using a cash flow forecast?
Expensive items can be bought at the best time
What is a risk of not using a cash flow forecast?
There may not be enough cash to pay bills and wages
