Business Studies

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Capital
Money invested in a business
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Fixed Capital
Money invested in fixed assets such as buildings and machinery and equipment
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Working Capital
Money used for the day to day running of a business also known as operating capital operational capital
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Unlimited liability
Business owners do not have a limit to the amount that they have to repay in debts
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Limited Liability
Owners have a limit in the amount of debts that they have to pay for the business
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Separate legal identity
When a business is considered to be separate from it's owners i.e. an incorporated company or limited company is a separate legal entity
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Sole Trader
A business owned and controlled by one person
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Partnership
A legal agreement between two or more people, up to 20, to own, finance and run a business together and to share any profits as well as liabilities
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General Partner
A partner with unlimited liability
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Limited partner
A partner with limited liability
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Joint Stock Company
Limited companies jointly owned by shareholders
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Annual General Meeting
An annual meeting between the directors and shareholders of a company to discuss company performance, vote on major decisions and elect directors
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Incorporated Business
A business with a separate legal identity from its owners. It is a limited company with shareholders whose liability is limited to the amount that they invested
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Stock Market
A global market for the purchase and sale of new or existing shares in public limited companies
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Flotation
When shares in a public limited company are made available for sale to the public for the first time through a stock exchange
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Franchise
An agreement by one company with another to allow them to distribute its goods and services using its trademark or brand name.
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Multinational
A company or corporation with business operations in more than one country
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Direct Inward Investment
The purchase of fixed assets such as land, buildings, machinery and equipment in a country by an overseas business or investor
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Organizational Structure
How roles, responsibilites and managment are allocated within a business
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Organizational Chart
A diagram of an organizational structure
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Department
Subdivision of a business organization that specializes in performing a particular job or function
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Hierarchy
The layers of management and command in an organization
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Chain of Command
The line of management authority in a hierarchical organization
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Span of control
The number of staff a manager supervises
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Delegation
The process of assigning tasks and the authority to carry them out to other employees
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Managing Director
The most senior manager in a company
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Tall Structure
An organization with a long chain of command in which managers have a narrow span of control
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Flat Structure
An organization with a short chain of command in which managers have a wide span of control
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Centralized organization
An organization in which authority, responsibility and decision making is concentrated at the top of the chain of command
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Decentralized Organization
An organization in which a lot of authority, responsibility and decision making is delegated to lower levels of management
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Management
The organization and co-ordination of people and activities in order to achieve agreed aims and objectives
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Management Functions
The roles and responsibilities of managers, including planning, organizing, co-ordinating, commanding and controlling how labour and other resources are used in an organization
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Internal communications
Messages and information passed between people within an organization
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External communications
Sending or receiving information and messages to or from indivduals or organizations outside of a business
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Vertical communications
messages and information passed up and down a chain of command
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Horizontal communications
messages and information passed between different departments in an organization
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Two-way communications
Direct feedback from a receiver to a sender of a message or information
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Open Communications
Can be read or listened to by anyone
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Restricted communications
Messages or information intended only to be received by an identified person or group of people
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Verbal Communications
Spoken messages
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Written Communications
Handwritten or electronically typed messages
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Communication Barriers
Obstacles and problems that prevent effective communication
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Communication Breakdowns
A failure to communicate accurately and effectively
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Capital Expenditure
Money spent on fixed assets
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Operating Expenditure
Money spent on the day to day running of a business
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Short term finance
Funds available to a business for up to one or two years, often for operating expenditures
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Venture Capital
Funding for a business start-up and small businesses with exceptional growth potential
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Fixed Capital
Money invested in fixed assets
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Long Term finance
Funds available to a business over many years, usually for fixed assets
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Internal Sources of Finance
Money a business can raise from its own resources, e.g. sale of shares
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Retained Profit
Profit saved by a business and not paid out to shareholders or owners
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Mortgage
A long term loan to buy property
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Trade Credit
Short Term (up to 90 days) deferred payment terms offered by suppliers
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Hire Purchase
Paying for an asset in instalments. The sellers owns the asset until final payment is made
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Leasing
Renting the use of an asset with the option to buy at a later date
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External Sources of Finance
Money raised from organizations and individuals outside of a business
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Business Angel
A wealty INDIVIDUAL who provides venture capital for a business start up
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Collateral
Assets that provide security for a loan. They can be sold by the lender if the loan is not repaid
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Debenture
A loan certificate issued for sale by a company that can be bought and resold by investors. The final holder of the certificate is repaid the loan on maturity with interest
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Permanent Capital
The sum of shareholders' funds invested in a company. It never has to be repaid.
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Equity Finance
Selling Shares to raise funds. Money is theirs because they sold assets.
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Debt Finance
Repayable long term finance. A firm sells bonds, bills or notes to investors to raise funds. Assets were not sold, so funds have to be paid back.
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Default
Failure to meet loan payments
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Gearing Ratio
The proportion of capital gained by money invested versus borrowing money.
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Highly Geared
When a business has borrowed more that what was invested.
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Dividend
Money paid out to shareholders out of profits at the end of the year.
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Other cards in this set

Card 2

Front

Money invested in fixed assets such as buildings and machinery and equipment

Back

Fixed Capital

Card 3

Front

Money used for the day to day running of a business also known as operating capital operational capital

Back

Preview of the back of card 3

Card 4

Front

Business owners do not have a limit to the amount that they have to repay in debts

Back

Preview of the back of card 4

Card 5

Front

Owners have a limit in the amount of debts that they have to pay for the business

Back

Preview of the back of card 5
View more cards

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