Putting A Business Idea Into Practice - 3

Question 1

Aim

Answer 1

What a business wants to achieve

Question 2

Objective

Answer 2

How a business will achieve their aim

Question 3

Profit

Answer 3

Amount of money made (revenue) minus the total cost

Question 4

Social objective

Answer 4

Action a business will take to help the community- normally non-financial

Question 5

Revenue

Answer 5

Amount of money made from sales

Question 6

Fixed cost

Answer 6

A cost which stays the same

Question 7

Variable cost

Answer 7

A cost which changes - varies through how much a business sells

Question 8

Total cost

Answer 8

Fixed cost + variable cost

Question 9

Interest

Answer 9

A percentage change on the amount of money borrowed

Question 10

Break even point

Answer 10

When the total cost and revenue equal the same amount

Question 11

Loss

Answer 11

When revenue is lower than total cost

Question 12

What is the formula for sales revenue?

Answer 12

Revenue = price x quantity

Question 13

What is the formula for interest

Answer 13

Interest percentage = total repayment - borrowed amount / borrowed amount x 100

Question 14

What is the formula for break even

Answer 14

Break even = fixed costs
/ sales price - variable cost

Question 15

Define margin of safety

Answer 15

The amount of sales above the break - even point

Question 16

Define cash

Answer 16

Money available in the business to pay the bills

Question 17

Define cash flow

Answer 17

The movement of money into and out of the firm accounts - difference between cash into and out of a business over time

Question 18

Define inflows

Answer 18

Money coming into business

Question 19

Define outflows

Answer 19

Money coming out of a business

Question 20

Define opening balance

Answer 20

If the business has been trading then it will be whatever cash is available at the start of the month

Question 21

Define Closing balance

Answer 21

How much cash is available at the end of the month to be carried over to the next month as an opening balance

Question 22

Examples of Short term raising finance

Answer 22

-Overdraft
- trade credit

Question 23

Examples of long term raising finances

Answer 23

• personal savings
• venture capital
• share capital
• loans
• retained profit
• crowdfunding

Question 24

Define short term finance

Answer 24

Money that is needed to finance activities that are usually going to last less than one year. Generally used for day to day operations

Question 25

Define long term finance

Answer 25

Finance that is needed over a period of time- over a year or many years