Unit 3- Business and finance Flashcards
What is Debt?
Debt is money that has to be paid back to either a business or an individual.
What is credit rating?
Credit rating is a score given to an individual based on how likely they are to repay debts.
Define Bankrupt
This is when an individual or organisation legally states that they are unable to pay their debts.
What is Solvent?
Solvent is the ability to repay debts and day to day expenditures.
What is a current account?
An account with a bank or building society which is used for regular use e.g. Withdrawals and regular deposits.
What is an overdraft?
The ability to withdraw money that is not in your current account.
Define saving
Placing money in a safe and secured place so it can grow in value and be used in the future.
Define investments
Investment is an asset or item acquired with the goal of generating income or appreciation.
What is financial transactions?
Financial transactions is an action by a business that involve money either going into or out of a business e.g. making a sale or paying a bill.
What is HM revenue & Customs (HMRC)?
HMRC is a British government department responsible for the collection of all types of taxes.
What is expenditure?
Expenditure is the amount of money you will need to cover your expenses/outgoings e.g. mortgages or bills.
What is a shareholder?
A shareholder is someone who has invested in a company in return for equity i.e. a share in a business.
What is interest rate?
Interest rate is the cost of borrowing money or a reward for saving money.
What is insurance?
Insurance is an agreement with a third party to provide compensation against any financial losses that line with the conditions laid down in the policy agreement.
What is premiums?
Premiums is regular payments made by an individual or company to an insurance provider in return for protection.
Define Fraud
Fraud is when an individual acquires company money for personal gain through illegal actions.
What is profit?
Profit is when the total revenue in the business surpasses the total costs of a business.
What is loss?
Loss is when the total costs of a business surpasses the total revenue in a business.
What is gross profit?
Gross profit is the sales revenue in a business minus the cost of good ( cost of materials need to produce the quantity of products)
Define Sales revenue
Sales revenue is quantity sold multiplied by selling price of the product.
Define Net profit
Net profit is gross profit minus other expenses e.g. rent or advertising
What is trade receivables?
Trade receivables is money owed to the business from sales made but not yet paid for.
What is trade payable?
Trade payable is money the business owes from suppliers purchased but not yet paid for.
What is fixed assets?
Fixed assets are items of value owned by a business that are likely to stay in the business for more than one year e.g. machinery. It is also known as non-current assets.
Define Asset
Asset is any item of value owned by an individual or firm.
Define Commission
A commission is a fee paid to a salesperson in exchange for services in facilitating or completing a sales transaction. Commission could be a flat fee or a percentage of revenue, gross margin or profit generated by the sale. It could also be charged by brokers to assist in the sale of security e.g. properties.
What is capital items?
Capital items are assets bought from capital expenditure such as machinery or vehicles that will stay in the business for more than a year.
What is a statement of financial situation?
A statement of financial situation is a financial document that shows the net worth of a business by balancing its assets against its liabilities. It if often called a balance sheet.
