terminology

Question 1

Debtors

Answer 1

trade receivables

Question 2

Creditors

Answer 2

trade payables

Question 3

Fixed assets

Answer 3

non-current assets

Question 4

Long term liabilities

Answer 4

non-current liabilities

Question 5

Sales revenue

Answer 5

This is the revenue received by the business from selling its products. It is also referred to as simply sales or turnover (net sales) because it takes into account any price discounts or goods returned by the customer​

Question 6

Cost of sales

Answer 6

this includes the cost of making the products.​

Question 7

Gross profit

Answer 7

Gross profit = turnover – cost of sales​

Question 8

Net profit

Answer 8

Once sales, cost of sales and expenses are identified, the net profit or loss can be calculated: Net profit = Gross profit - Expenses​

Question 9

Loss​

Answer 9

If total costs (cost of sales + expenses) are greater than the revenue, the enterprise will make a loss, as shown in the example.​

Question 10

Profit​

Answer 10

On the example above both gross profit and net profit were positive figures, which means the enterprise made a profit.​