Unit 3

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  • Created by: liznick
  • Created on: 28-04-14 20:43
Costs
The expenses paid by a business e.g. wages
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Revenue
The income received by a business from selling goods and services
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Financial Management
The process of producing and interpreting accounts that record a business’s expected or actual costs, revenues, profits. This helps managers to make good decisions
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Budget
Is a financial plan for the future operations of the business. They are used to set targets to monitor performance and control operations
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Business Plan
detailed statement setting out proposals for a new business or describing the ways in which an existing business will be developed
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Define Cash flow
measure of the amount of money moving into and out of a business over some time period
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Sole Trader
is a business owned and operated by a single person
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Partnership
is a group between 2 and 20 people who contribute capital and expertise to an enterprise
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Company
is any incorporated business
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Shareholders
Are the owners of a company
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Limited Liability
provides protection for the owners of a company. They only risk the amount they have invested in the business in the event of its failure.
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Internal sources of finance
is one that exists within the business
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Share
document representing part ownership of a company
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Assets
anything owned by a business from which it can benefit. These include land, vehicles, stocks and brand names
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Trade Credit
is a period of grace offered by suppliers before payment for goods and services is due.
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Collateral
security offered to back up a request for a loan. This is in the form of property, as this is unlikely to lose value
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Marketing
is the management process that identifies, anticipates and supplies customer requirements efficiently and profitability
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Business objectives
are the targets or goals of the entire organisation
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Profit
measures the amount by which revenues received from selling a product exceed the total costs involved in supplying it over some time period
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Revenue
is the income a business earns from selling its goods and services
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Human Resources
are the people who work within an organisation, including office staff, operational staff and shop floor employees, and managers
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Physical Resources
are an organisations fixed assets such as premises and vehicles, as well as tangible items such as stocks of raw materials, components and finished goods
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Financial Resources
are a business’s cash and capital resources. An assessment of a business’s financial resources involves examining profits and profitability as well as cash flows, working capital requirements and company financing
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Allocative efficiency
is the process of distributing resources effectively so that the minimum number of resources are in the right place at the right time
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Calculate Profit
Profit= revenue- total costs
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Calculate Total costs
Total costs= fixed costs + variable costs
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Calulate Revenue
Revenue= quantity sold x average selling price
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Fixed Costs
are costs that do not vary with the level of output. Fixed costs exist even if a business is not producing any goods or services
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Variable Costs
vary directly with output. Includes labour, fuel and raw materials
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Semi-variable costs
are expenses incurred by a business that have fixed and variable elements
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Breakeven
the point at which a business sells exactly the right number of products so that its revenue equals its costs. At Breakeven the business makes no profit but also incurs no loss
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Margin of safety
is the amount current output exceeds the amount necessary to break even
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Calculate breakeven
Breakeven point= total fixed costs ÷ selling price- variable cost per unit
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Trade credit
is an arrangement in which suppliers allow customers a period of time to pay their bills
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Overtrading
occurs when a firm expands too rapidly without having the cash resources in place to adequately finance the expansion and meet its day-to-day commitments as well
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Working capital
the excess of current assets over current liabilities
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Variance analysis
is one of the methods used to monitor company performance. It is the comparison of what actually happened with what the business budgeted
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Adverse variance
occurs when the business’s actual results are worse than those anticipated and planned for in the budget
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Favourable variance
occurs when the actual results are better than those anticipated and planned for in the budget
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Other cards in this set

Card 2

Front

The income received by a business from selling goods and services

Back

Revenue

Card 3

Front

The process of producing and interpreting accounts that record a business’s expected or actual costs, revenues, profits. This helps managers to make good decisions

Back

Preview of the back of card 3

Card 4

Front

Is a financial plan for the future operations of the business. They are used to set targets to monitor performance and control operations

Back

Preview of the back of card 4

Card 5

Front

detailed statement setting out proposals for a new business or describing the ways in which an existing business will be developed

Back

Preview of the back of card 5
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