BUSINESS STUDIES 0.0 / 5 ? Business StudiesStarting a businessProfitBalance sheetsGCSEEdexcel Created by: Tasnim35Created on: 02-01-17 22:04 WHAT IS START UP COSTS? MONEY PAID OUT BY A BUSINESS FOR THE ITEMS IT NEEDS BEFORE IT CAN START TRADING 1 of 37 WHAT IS RUNNING/OPERATING COSTS? EXPENSES A BUSINESS HAS ON A DAILY BASIS 2 of 37 WHAT IS FIXED COSTS? COSTS THAT STAY THE SAME NO MATTER HOW MANY ITEMS SOLD OR PRODUCED 3 of 37 WHAT IS VARIABLE COSTS? COSTS THAT CHANGE DEPENDING ON THE NO. OF ITEMS SOLD OR PRODUCED 4 of 37 WHAT IS THE FORMULA FOR VARIABLE COST? COST OF ONE UNIT X NUMBER OF UNITS 5 of 37 WHAT IS REVENUE? MONEY RECEIVED BY A BUSINESS 6 of 37 WHAT IS THE FORMULA FOR REVENUE? NUMBER OF SALES X PRICE PER UNIT 7 of 37 WHAT IS TOTAL COSTS? FIXED COST + VARIABLE COSTS 8 of 37 WHAT IS EXPENDITURE? MONEY THE BUSINESS PAYS OUT 9 of 37 WHAT IS PROFIT? WHEN REVENUE IS MORE THAN EXPENDITURE 10 of 37 WHAT IS THE FORMULA FOR PROFIT? REVENUE - EXPENDITURE 11 of 37 WHAT IS LOSS? WHEN EXPENDITURE IS MORE THAN REVENUE 12 of 37 WHAT IS BREAKEVEN? WHEN REVENUE AND EXPENDITURE ARE THE SAME 13 of 37 WHAT IS THE FORMULA FOR BREAKEVEN? FIXED COSTS DIVIDED BY SELLING PRICE PER UNIT- VARIABLE COST PER UNIT 14 of 37 WHAT ARE THE BENFITS OF BREAKEVEN? 1) THE BUSINESS KNOWS THE FIXED AND VARIABLE COSTS LINKED TO THE PRODUCTS. 2) IT ALLOWS THE BUSINESS TO SET A MARGIN OF SAFETY 15 of 37 WHAT ARE THE RISKS OF BREAKEVEN? 1) THE BUSINESS MAY MAKE A LOSS WITHOUT REALISING. 2) THE MARGIN OF SAFETY IS UNKNOWN 16 of 37 WHAT IS THE PURPOSE OF BUDGETTING? TO KEEP EXPENDITURE TO A PLANNED LIMIT 17 of 37 WHAT IS THE FORMULA FOR REVENUE BUDGET? NUMBER OF SALES X PRICE PER UNIT 18 of 37 WHAT IS THE DIFFERENCE BETWEEN BUDGETTING AND BUDEGETTING CONTROL? BUDEGTTING MEANS SETTING A BUDGET. BUDGETARY CONTROL MEANS CHECKING PERFORMANCE TO MAKE SURE TARGETS ARE MET 19 of 37 WHAT IS CASH FLOW FORECASTING? MONEY FLOWING IN AND OUT OF A BUSINESS ON A DAILY BASIS 20 of 37 EXAMPLES OPF INFLOWS BANK LOANS/RENT/SALES REVENUE/SHARE CAPITAL 21 of 37 EXAMPLES OF OUTFLOWS ADVERTISING/STAFF WAGES/INSURANCE/RENT+UNTILITIES 22 of 37 WHAT IS THE FORMULA FOR NET INFLOWS/OUTFLOWS? INFLOWS - OUTFLOWS 23 of 37 BENEFITS OF CASH FLOW FORECAST THE TIMING OF INFLOWS AND OUTFLOWS ARE KNOWN // EXPENSIVE ITEMS CAN BE BOUGHT AT THE BEST TIMES 24 of 37 RISKS OF CASH FLOW FORECAST LATE INFLOWS MAY NOT BE IDENTIFIED // THERE MAY NOT BE ENOUGH CASH TO PAY BILLS OR WAGES 25 of 37 WHAT IS COST OF SALES? THE MONEY IT COSTS TO MAKE A PRODUCT 26 of 37 WHAT IS THE FORMULA FOR GROSS PROFIT? REVENUE - COST OF SALES 27 of 37 WHAT IS GROSS PROFIT? HOW MUCH MONEY IS LEFT FROM SELLING AN ITEM AFTER THE MAKING COST HAS BEEN DEDUCTED 28 of 37 WHAT IS POSITIVE GROSS PROFIT? WHEN REVENUE IS MORE THAN COST OF SALES 29 of 37 WHAT IS NEGATIVE GROSS PROFIT? WHEN REVENUE IS LESS THAN COST OF SALES 30 of 37 WHAT IS NET PROFIT? THE AMOUNT YOPU HAVE LEFT AFTER YOU HAVE DEDUCTED YOUR EXPENSES FROM YOUR GROSS PROFIT 31 of 37 WHAT IS FINANCIAL STATEMENTS? STATEMENTS THAT SHOW WHETHER OR NOT A BUSINESS IS DOING WELL 32 of 37 WHAT IS INCOME STATEMENT? SHOWS THE PROFIT OR LOSS MADE BY THE BUSINESS OVER A PERIOD OF TIME (USUALLY A YEAR) 33 of 37 WHAT IS ASSETS? ITEMS THE BUSINESS OWNS OR MOENY OWED TO THE BUSINESS 34 of 37 WHAT IS LIABILITIES? DEBTS WONED BY THE BUSINESS 35 of 37 WHAT IS WORKING CAPITAL? MONEY THE BUSINESS NEEDS EVERY DAY TO TRADE 36 of 37 WHAT IS THE FORMULA FOR WORKING CAPITAL? CURRENT ASSETS - CURRENT LIABILITIES 37 of 37
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