Term3 key terms

Question 1

What does liquid mean

Answer 1

what assets can be turned into cash the quickest, it includes cash

Question 2

working capital

Answer 2

money available for everyday running of the business

Question 3

cash flow

Answer 3

continuous movement of cash in and out of the business

Question 4

Financial year

Answer 4

1st April to 31st of March

Question 5

Income statement

Answer 5

Show profit/loss made by business at the end of the year

Question 6

Statement of financial position

Answer 6

Assess what overall financial shape of business is and gives a figure of what the business is worth

Question 7

Cost of sales

Answer 7

opening inventory+purchases-closing inventory

Question 8

Trading account

Answer 8

shows first level of profit using Revenue-cost of sales

Question 9

Overheads/ expenses

Answer 9

operating expense such as wages and rent

Question 10

Finance expenses

Answer 10

interest that has to be paid to the bank on loans

Question 11

Appropriation account

Answer 11

shows the distribution of profit for the year between shareholders and the company

Question 12

Gross profit margin

Answer 12

gross profit over revenue

Question 13

operating profit margin/ profit margin/ net operating profit margin

Answer 13

operating profit over revenue