Business studies Year 10 - Finance

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Define overdraft
bank allows business to take out more money than it has in its band account
1 of 30
Define trade credits
suppliers who allow debts for goods to be paid one or two months after delivery
2 of 30
Define loans
give by banks or family and friends
3 of 30
define grants
from charities or governments to help start a business
4 of 30
define mortgage
long term loan for purchasing a building
5 of 30
ad and dis of overdraft
ad- used as many times a business wants dis- high interest rate
6 of 30
ad and dis of trade credits
ad- free finance available for a period dis- discounts for immediate purchasing lost
7 of 30
ad and dis of loans
ad - banks give large loans and families can be flexible and charge no interest dis- banks charge interest and families might not give you much money
8 of 30
ad and dis of mortgages
ad- often with fixed interest rate dis- if it has a variable interest rate it can become expensive
9 of 30
ad and dis for grants
ad - money doesn't need to be paid back dis- not a lot of businesses qualify for a grant
10 of 30
whats the difference between a creditor and debtor
creditor is the person you owe money to and debtor is the person who owes the creditor money
11 of 30
define revenue
amount of money a business earns
12 of 30
define costs
expenses of producing goods
13 of 30
define a loss
when revenues less than costs
14 of 30
define profit
whats left over after costs-revenue
15 of 30
whats revenue calculation
number of sold products x selling price = revenue
16 of 30
whats the costs calculation
all costs added together = total costs
17 of 30
whats the profit (or loss) calculation
costs-revenue = profit (or loss)
18 of 30
define cash flow
movement of money in and out of the business
19 of 30
define cash
money that businesses have available straight away
20 of 30
define forecast
technique businesses use to estimate future sales and cash flow
21 of 30
define cash flow forecast
prediction of businesses further cash inflows and outflows
22 of 30
define net cash flow
difference between cash in and cash out
23 of 30
calculation for net cash flow
receipts - payments
24 of 30
calculate the closing balance
netcashflow + opening balance
25 of 30
three reasons why cash flow forecast is important
check if they have enough cash for the future, persuade banks for loans and reduce future outflows of cash
26 of 30
define receipts
money businesses is paid in a month
27 of 30
define payments
what business spend eg- rent
28 of 30
whats insolvency
when businesses run out of cash to pay workers or suppliers
29 of 30
Identify three solutions to cash flow problems
making payments to suppliers a later date, use a source of finance and cut payments by reducing costs e.g.- reduce employee number
30 of 30

Other cards in this set

Card 2

Front

Define trade credits

Back

suppliers who allow debts for goods to be paid one or two months after delivery

Card 3

Front

Define loans

Back

Preview of the front of card 3

Card 4

Front

define grants

Back

Preview of the front of card 4

Card 5

Front

define mortgage

Back

Preview of the front of card 5
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