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Buss1 Key Terms AS
Buss1 Financial Planning
| Question | Answer |
|---|---|
| What is left after costs have been deduced from revenue. Profit = Total revenue – total costs. | Profit |
| These are expenditures made by a business as part of its trading operations. | Costs |
| The value of sales made during a trading period. Total revenue = selling price x number of items sold. | Revenue |
| Costs that do not change with the level of output or sales. | Fixed Costs |
| Costs that change directly with the level of output or sales. | Variable Costs |
| Fixed costs + variable costs. | Total Costs |
| This is the difference between sales revenue and variable costs of production. | Contribution |
| This is the difference between the selling price of one unit and the variable cost of producing one unit. | Contribution per Unit |
| Unit contribution x no. of units sold. | Total Contribution |
| This is the level of output or the number of customers that earns enough revenue to cover total costs of production. | Break-even Level of Output |
| This is the amount by which the existing level of output is greater than the break-even point. | Margin of Safety |
| The total cash payments (inflows) into a business minus the total cash payments (outflows). | Cash Flow |
| This is turning assets into cash and may be insisted on by courts if suppliers have not been paid. | Liquidation |
| When a business cannot meet its short-term debts. | Insolvent |
| Payments in cash received by a business such as those from customers or from the bank e.g. receiving a loan. | Cash Inflows |
| Payments in cash made by a business such as those to suppliers and workers. | Cash Outflows |
| These are customers who have bought products on credit and will pay cash at an agreed date in the future. | Debtors |
| Value of goods sold to customers who do not pay cash immediately. | Credit Sales |
| An estimate of the firm’s future cash inflows and outflows. | Cash Flow Forecast |
| The estimated difference between monthly cash inflows and outflows. | Net Monthly Cash Flow |
| Cash held by the business at the start of the month. | Opening Balance |
| Cash held at the end of the month – becomes next month’s opening balance. | Closing Balance |
| Financial targets for the future covering revenue (income) and expenditure over a certain time period. | Budgets |
| A fixed sum of money to be spent in a given time period by a department. | Expenditure Budgets |
| A person who is accountable for seeing that a budget is kept to. | Budget Holder |
| The sales revenue target for a department or the whole business. | Income Budget |
| Giving some control in the setting and spending of budgets to departments or individuals. | Delegated Budgets |
| The target profit for the business over a given time period. | Profit Budget |
| Keeping a check on progress towards achieving targets during the budget period. | Monitoring Budgets |
| Clearly defined targets for a business to achieve over a certain time period. | Business Objectives |
| The estimated difference between monthly cash inflows and outflows. | Net Monthly Cash Flow |
| Cash held by the business at the start of the month. | Opening Balance |
| Cash held at the end of the month – becomes next month’s opening balance. | Closing Balance |
| Financial targets for the future covering revenue (income) and expenditure over a certain time period. | Budgets |
| A fixed sum of money to be spent in a given time period by a department. | Expenditure Budgets |
| A person who is accountable for seeing that a budget is kept to. | Budget Holder |
| The sales revenue target for a department or the whole business. | Income Budget |
| Giving some control in the setting and spending of budgets to departments or individuals. | Delegated Budgets |
| The target profit for the business over a given time period. | Profit Budget |
| Keeping a check on progress towards achieving targets during the budget period. | Monitoring Budgets |
| Clearly defined targets for a business to achieve over a certain time period. | Business Objectives |
| Making enough profit without risking too much stress or loss of control through employment of too many professional managers. | Profit Satisficing |
Created by:
carole appleton
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