Learning Aim C

Question 1

What is net profit?

Answer 1

The amount of money you have left after you have deducted your expenses from your Gross Profit

Question 2

What is the formula for net profit?

Answer 2

Gross profit - expenditure

Question 3

What are fixed assets?

Answer 3

Things the business needs to trade

Question 4

What is an example of a fixed asset?

Answer 4

A van

Question 5

What are current assets?

Answer 5

Cash or things that can be easily converted to cash

Question 6

What are current liabilities?

Answer 6

Debts that must be paid soon

Question 7

What are long term liabilities?

Answer 7

Funds borrowed over a long time, such as 10 years

Question 8

What is working capital?

Answer 8

The money the business needs to trade every day

Question 9

What is the formula for working capital (net current assets)?

Answer 9

Current assets - current liabilities

Question 10

How can you increase gross profit?

Answer 10

Reduce cost of sales, negotiate cheaper prices with the supplier.

Question 11

How can you increase net profit?

Answer 11

Reduce staff wages