Business Management Unit 3

Some things to help remember financial terms...

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Name main tasks of finance department?
1. Maintaining financial records 2. Paying bills 3. Paying wages and salaries
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Describe main tasks of finance department?
1. Records of the money going out and coming into the business have to be kept 2. Suppliers have to be paid on time and other bills such as electricity also have to be paid 3. Employees have to be paid for the work that they carry out
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Explain why these tasks are important? (finance dep)
1. Must prepare financial statements eg budgets to help management in decision-making 2. Bills- paid on time = maintenance of good reputation/relationships with suppliers 3. Employees- paid the correct amounts on time so are not unhappy/demotivated
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Suggest uses of financial information?
1. To enable costs and expenditure to be controlled 2. To enable cash flow going in and out of the business to be monitored 3. To monitor performance
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Describe uses of financial information?
1. Costs/expenses must be controlled- avoid financial probs/need to borrow money to cover costs 2. Business needs to have enough 'cash' available for bills/employees' wages 3. Financial info from one year- compared against previous years/competitor
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What is a Trading account?
This shows how much profit a business has made from buying materials and selling products (gross profit)
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What is a Profit and Loss account?
It shows how much profit a business has made, once other income and expenses have been taken into account (net profit)
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What is a Balance sheet?
This shows the value or worth of a business at a particular point in time
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What is a Cash flow statement? (Cash budget)
It is a forecast of the money that is expected to come in and go out of a business over a period of time in the future
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What is Gross profit?
The profit made from buying and selling goods. This is profit before expenses are subtracted.
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What are expenses?
These are items the business has to pay for.
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What is net profit?
This is the amount of profit made after expenses have been subtracted from the Gross Profit.
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What are fixed assets?
Items owned by the business that will last longer than a year eg vehicles, premises, land, machinery
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What are current assets?
Items owned by the business that will last for less than one year eg stock cash, debtors
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What are current liabilities?
These are short-term debts that the business has
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What are drawings?
Money that the owners have taken out of the business for their own personal use
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What are debtors?
People who owe money to the business
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What are creditors?
People whom the business owes money eg suppliers
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What are long tern liabilities?
These are debts the business has that will last longer than one year eg mortgage
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What is working capital?
This is the difference between current assets and current liabilities. This shows the funds available after short-term debts are met.
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What is capital?
This is the investment that the owner has put into the firm
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Other cards in this set

Card 2

Front

Describe main tasks of finance department?

Back

1. Records of the money going out and coming into the business have to be kept 2. Suppliers have to be paid on time and other bills such as electricity also have to be paid 3. Employees have to be paid for the work that they carry out

Card 3

Front

Explain why these tasks are important? (finance dep)

Back

Preview of the front of card 3

Card 4

Front

Suggest uses of financial information?

Back

Preview of the front of card 4

Card 5

Front

Describe uses of financial information?

Back

Preview of the front of card 5
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