Terminology

Question 1

Assets

Answer 1

• something of value to the business
• two types:
  fixed and current

Question 2

Fix asset

Answer 2

• not going to resell within a year
• E.g. car; property; building; equipment; machinery

Question 3

Current asset

Answer 3

• will sell within a year
• E.g. stock

Question 4

Liabilities

Answer 4

• debt or money owed by the business
• two types:
  current or short-term and long-term

Question 5

Current liability

Answer 5

• will repay within a year
• eg; suppliers you owe money to

Question 6

Long- term liability

Answer 6

• will take longer than a year to repay
• eg; long-term loan

Question 7

Capital

Answer 7

• money put into the business by the owner
• 2 types: start up and working

Question 8

Start-up capital

Answer 8

• money needed to cover all costs to start the business
• eg; purchasing equipment and stock

Question 9

Working capital

Answer 9

• money needed to keep business going until it’s making a profit to cover working expenses
• eg; rent, salaries, telephone, laundry, water and electricity

Question 10

Profit

Answer 10

• money left after paying expenses
• 2 types: net profit and gross profit

Question 11

Gross profit

Answer 11

• money left after immediate costs are paid
• sales less cost of profit

Question 12

Net profit

Answer 12

• money left after all expenses are paid from gross profit
• gross profit less expenses

Question 13

Calculating the cost of treatment involves:

Answer 13

• the cost of each product + overheads or expenses to perform the treatment