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Business > Unit 6 Finance (mock) > Flashcards

Unit 6 Finance (mock) Flashcards

1
Q

Government grants

A

Often given to new or small firms. They don’t have to be repaid

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2
Q

Trade credit

A

Businesses may give a small business one or to months to pay back for the stock they have bought

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3
Q

Overdraft

A

Banks allow you to spend more money than you have in your current account

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4
Q

Loan/mortgage

A

A fixed amount of money lent for a fixed amount of time with interest charged by the bank

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5
Q

Family and friends

A

When people known by the business lend it money

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6
Q

Retained profit

A

What is left of sales revenue after all expenses have been paid, including tax and dividends

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7
Q

Issuing shares

A

When a limited company sells shares

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8
Q

Selling unwanted assets

A

Selling items such as old machines or vehicles that are no longer needed

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9
Q

Hire purchase

A

when a business can rent an asset for a period, and after that time they own it

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10
Q

Factors to consider when choosing how to finance your business (5)

A
  • how much you need
  • how quick you can pay back
  • whether your business is already operating or a startup
  • whether you are a sole trader/partnership/plc/ltd
  • if you want to obtain complete control over the business
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11
Q

Family and friends (internal or external)

A

Internal

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12
Q

Retained profit (internal or external)

A

Internal

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13
Q

Share issue (internal or external)

A

External

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14
Q

Loan (internal or external)

A

External

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15
Q

Mortgage (internal or external)

A

External

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16
Q

Selling unwanted assets (internal or external)

A

Internal

17
Q

Overdraft (internal or external)

A

External

18
Q

Trade credit (internal or external)

A

External

19
Q

Trade credit (internal or external)

A

External

20
Q

Hire purchase (internal or external)

A

External

21
Q

Government grants (internal or external)

A

External

22
Q

Inflow

A

Money that goes into your account

23
Q

Outflow

A

Money that goes out of your account

24
Q

Opening balance

A

The amount of money you start with at the start of the month

25
Q

Closing balance

A

The amount of money you Finnish with at the end of the month

26
Q

Cash flow forecast

A

A forecast of all the expected future income and outgoings from an account over a period of usually a year

27
Q

Cash flow statement

A

A record of past income and outgoings from an account over a period of usually a year

28
Q

Ways to improve cash flow

A

Reduce outflows and increase inflows

29
Q

Equation for profit

A

Profit= total revenue - total costs

30
Q

Breakeven

A

When a business makes neither a profit nor loss

31
Q

Advantages of break even (3)

A
  • Allows managers to see the effects of a change in costs
  • shows managers the effect of a change in price
  • producing break even charts helps to persuade investors that you have planned how to make your business successful
32
Q

Disadvantages of break even

A
  • assumes that the business sell all the products it produces
  • prices and costs can change rapidly in some markets, so the break even charts become out of date quickly.
33
Q

Price

A

The amount a business asked a customer to pay for a single product

34
Q

Sales

A

The number of products sold by a business over some time period

35
Q

Costs

A

Spending that is necessary to set up and run the business

36
Q

Fixed costs

A

Costs that do not vary with outflow e.g. rent

37
Q

Variable costs

A

Costs that can change

Business (7 decks)

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