AQA Business Studies Unit 1 key terms A-Z

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  • Created on: 28-05-13 13:59

AS Business Studies key terms a-z

Adding value
A process through which a business increases the worth of the resources included in production so that customers perceive the product to be worth more than the cost of the inputs

An external contact of a business that provides support and advice, sometimes for free

Bank loan
A fixed amount loan from a bank which is generally used to finance long-term assets

Bank overdraft
Borrowings from a bank on a current account which are payable on demand

Breakeven output (or point)
The point at which the total sales of a business equal total costs -i.e. the business is making neither a profit nor a loss

A detailed plan of income and expenses expected over a certain period of time

Business angel
A particular type of investor, usually a successful entrepreneur, who is willing to invest in high-risk, high-growth firms at a very early stage

Business plan
A detailed description of a new or existing business, including the company’s strategy, aims and objectives, marketing & financial plan

Business objective
A stated goal or target of a business (note: a business can have more than one objective!)

Cash flow
The movements of cash into (“inflows”) and out of (“outflows”) a business

Cash flow forecast
A projection, usually by week or month, of the likely cash inflows and outflows in a business

The difference between total sales and total variable costs

Contribution per unit
A key number for breakeven analysis: the difference between selling price per unit and variable cost per unit.

Amounts incurred by a business as a result of its trading operations

The amount of a product or service that customers are willing and able to pay at a given time

Defining a market in terms of social-economic factors such as segmentation age, income, class etc

Elasticity of demand
The responsiveness of demand to a change in price or incomes

Electronic market
A market in which buyers and sellers are brought together using digital means of communication (e.g. online) in order to exchange information (e.g. prices) and conduct transactions.  Compare with physical markets where buyers and sellers meet face to face.

The process by which new businesses are formed in order to offer products and services in a market

An individual who sets up and runs a new business and takes on the risks associated with the business

Expenditure budget
The budget which sets out the expected costs to be incurred by the firm, usually split into various categories (e.g. production, marketing, administration)

Fixed costs
Costs that do not vary with the level of output – e.g. rent, salaries)Franchisee The person or company which operates a franchised business format - under licence from a franchisor

The owner of a business format (franchise) which


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