Unit 1 - What Is Business Flashcards
A good
Is a physical product such as a house or a suit
A service
Is an intangible item such as car insurance or decorating
A product
Is a general term which includes goods and services
Gross Domestic Product (GDP)
Is the measure of the total value of the production of an economy over a period of time , normally one year
A mission statement
Sets out a business’ overall purpose to direct and simulate the entire organisation
Aims
Are long-term plans of the business from which its corporate objectives are derived
Objectives
Are medium to long-term goals established to co-ordinate the business
Profit
Is the surplus of total revenue over total costs for a business over a trading period
Cash flow
Is the amount of money moving into and out of a business over a period of time
Stakeholders
Are individuals or groups (e.g. employees, customers and local residents) who have an interest in a business
Revenue
Is the earning or income generated by a firm as a result of its trading activities
Profit
Is the surplus of total revenue over total costs for a business over a trading period
Fixed costs
Are costs that do not alter when the business alters its level of output (e.g. rent and rates)
Variable costs
Alter directly with the business’ level of of output, for example, fuel costs
Average costs
Are total costs of production divided by the level of production or output to give the cost of producing a single unit of output
Sole trader
Is a business that is owned and managed by one person, but it may employ other people
Unlimited liability
Occurs when an individual or group of individuals is personally responsible for all the actions of their business. With sole traders, there is no distinction in law between the individual and the business so they could lose their personal assets if the business has financial problems.
Company
Is a business organisation that has its own legal identity and that has limited liability.
Incorporation
Is the process of establishing a business as a separate legal identity that allows it to benefit from limited liability
Shareholder
Is an investor in and one of the owners of a company
Limited liability
Means that in the event of financial difficulties, the personal belongings of shareholders are safe
Dividends
Are a share in the profits of a company that are distributed to the holders of certain types of company shares
Market capitalisation
Is the total value of the issued shares of a public limited company
Takeover
Occurs when one company acquires control of another by buying more than 50% of its share capital
Privatisation
Is the process under which the state sells businesses that it has previously owned and managed to private individuals and businesses
Real incomes
Are incomes that are adjusted for the rate of inflation ( or increase in prices ) to show changes in purchasing power
Interest rates
Are the price of borrowed money
Sustainable production
Occurs when the supply of of a product does not impose costs on future generations by, for example, depleting non-renewable resources
Fair trade
Is a social movement that exists to promote improved trading terms and living conditions for producers of products in less-developed countries
