Section B - Business Finance- Key Terms Flashcards

1
Q

Definition of financial transactions:

A

Actions by a business that involve money injected or withdrawn from a business.

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2
Q

Definition of HMRC:

A

A British government responsible for the collection of all types of taxes.

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3
Q

Definition of fraud:

A

An individual acquires business money for personal gain through illegal actions.

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4
Q

Definition of profit:

A

When revenue exceeds expenditure.

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5
Q

Definition of loss:

A

When expenditure exceeds revenue.

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6
Q

Definition of gross profit:

A

Sales revenue - cost of goods sold.

The cost of actual materials used to produce the quantity of goods sold.

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7
Q

Definition of sales revenue:

A

Selling price X quantity sold.

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8
Q

Definition of net profit:

A

Gross profit - other expenses.

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9
Q

Definition of trade receivables:

A

Money owed to the business from sales made but not paid yet.

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10
Q

Definition of trade payable:

A

Money the business owes suppliers which hasn’t been paid for.

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11
Q

Definition of fixed assets:

A

Items of value owned by a business that are likely to stay in the business for longer than a year.

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12
Q

Definition of asset:

A

Any item of value for an individual or business.

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13
Q

Definition of comission:

A

Fee paid to a salesperson in exchange for services in facilitating or completing a sales transaction.

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14
Q

Definition of capital items:

A

Assets brought from capital expenditure that will stay in the business for more than a year.

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15
Q

Definition of statement of financial situation:

A

A financial document showing the net worth of a business by balancing assets and liabilities.

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16
Q

Definition of depreciation:

A

Spread the cost of an asset over its useful life.

17
Q

Definition of internal sources of finance:

A

Money available to fund expenditure in the business.

18
Q

Definition of cash flow forecast:

A

Document showing the predicted cash flow of a business in and out in a given time.

19
Q

Definition of opening balance:

A

Amount of cash available in a business at the start of a set time period.

20
Q

Definition of closing balance:

A

Amount of cash available in a business at the end of a set time period.

21
Q

Definition of credit period:

A

Length of time given to customers to pay for goods and services received.

22
Q

Definition of liqidity:

A

Measurement of a business’s ability to meet short term cash paayments.

23
Q

Definition of insolvent:

A

When a firm is unable to meet short term cash payments.

24
Q

Definition of statement of comprehensive income:

A

Shows business trading position which is used to calculate gross profit then profit/loss.

25
Definition of statement of financial position:
Business's net worth at a particular moment in time.
26
Definition of cost of goods sold:
Actual value of inventory to generate sales.
27
Definition of opening inventory:
The value of inventory for the business at the start of a financial year.
28
Definition of closing inventory:
The value of inventory at the end of the end of a financial year.
29
Definition of historic cost:
The cost of an asset when it was first purchased.
30
Definition of expected life:
How long an asset is expected to be used.
31
Definition of residual value:
Asset value when it's deposed of by the business.
32
Definition of current assets:
Items owned by the business that changes in value on a regular basis.
33
Definition of capital employed:
Total capital tied in a business at a point in time. | Shareholders capital + retained profit - drawings = capital employed.
34
Definition of interfirm:
Between different firms.
35
Definition of intrafirm:
Within the firm.
36
Definition of stakeholder:
Anyone with an interest in the business's activities.
37
Definition of illiquid:
Not easily converted into cash.
38
Definition of business-to-business
One business sells to another business.
39
Definition of business-to-consumer:
One business sells to an individual.