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Business A Level > Management Accounting/ Accounting and Finance > Flashcards

Management Accounting/ Accounting and Finance Flashcards

1
Q

What is break-even?

A

how many products need to be sold before all costs are covered

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2
Q

What are fixed costs?

A

costs that never change (eg) rent or insurance

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3
Q

What are variable costs?

A

costs that vary (eg) wages, ingriedients

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4
Q

What is the formula for break even?

A

fixed costs / contributions (mark up on each product)

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5
Q

What is margin of safety?

A

How many products you are above the break even point (saftey)

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6
Q

Give 1 + and 1 - of break even.

A

+ sets targets

- unexpected costs many arise

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7
Q

What are business costs?

A

Any costs to the business (variable, fixed )

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8
Q

What is business revenue?

A

how much the business is making from sales

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9
Q

How is revenue calculated?

A

selling price x quantity sold

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10
Q

What is investment?

A

spend money now and see greater return

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11
Q

What are capital goods?

A

goods purchased such as machinery, buildings

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12
Q

What is an investment appraisal?

A

how a business decides if an investment project is worthwhile

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13
Q

Formula for payback?

A

intial costs / profit each year

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14
Q

Formula for average rates of return?

A

(average annual accounting profit / initial investment) x 100

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15
Q

What is net present value?

A

time value of money, principal that money will be worth more in the future

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16
Q

What is budget?

A

allocating set amounts of money each month for various expenses

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17
Q

What is variance?

A

where there is difference between planned budget and the actual budget

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18
Q

Give 1 + and 1 - of setting a budget.

A

+ allow departments to know budgets

- disregard unforeseen costs

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19
Q

What is zero budgeting?

A

no set budget, you have to justify costs to manager

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20
Q

What is cash flow?

A

money going into and coming out of the business

21
Q

What are the 3 ‘terms’ of sources of finance?

A

short, long and medium

22
Q

What are 3 internal sources of finance?

A
  • retained profits
  • personal savings
  • sale/lease back
23
Q

What are 3 external sources of finance?

A
  • trade credit
  • overdraft
  • loan
24
Q

What are income statements?

A

shows the profits of the year, with minus costs

25
Q

What are balance sheets?

A

value of the business at any one time

26
Q

What is business value?

A

How its financed

27
Q

What are liabilities?

A

what you owe (non-current and current assets)

28
Q

What is depreciation?

A

method of relocating the cost of a tangible asset over its useful life span

29
Q

What is working capital?

A

short term finance required for the day-to-day running of a business

30
Q

What is a stock market?

A

market where shares and debentures are bought and sold; only public companies have their shares traded on stock market

31
Q

What is unit cost?

A

to cost of producing one unit

32
Q

How do we calculate unit cost?

A

total cost / output

33
Q

Formula for contribution?

A

revenue - variable costs

34
Q

Formula for contribution per unit

A

price - variable costs per unit

35
Q

What is profit?

A

total contribution - fixed costs

36
Q

What is internal rate of return?

A

the discount ate at which the NPV is equal to zero

37
Q

What is delegation?

A

passing on responsibility, usually to someone at a lower level in the organisation

38
Q

What is liquidity ratio?

A

simple ways to assess the level of cash within a business

39
Q

Formula for current ratio?

A

current assets/current liabilities

40
Q

Formula for acid test ratio?

A

(current assets-stock) / current liabilites

41
Q

Formula for gross profit margin

A

(gross profit / sales)x 100

42
Q

Formula for net profit margin

A

(net profit margin/sales)x 100

43
Q

What are index numbers?

A

numbers used for comparison

44
Q

What is the formula for index numbers?

A

(no. in year required / no. in base year) x 100

45
Q

What are statements of financial position?

A

a method of recording the value or wealth of a business at a given moment in time

46
Q

Explain goodwill.

A

a business has a reputation, if it is good, then a business benefits from this

47
Q

Formula for return on capital employed

A

(net profit/capital employed)x 100

48
Q

Formula for efficiency

A

(revenue/non-current assets) x 100

Business A Level (10 decks)

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