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Busienss
| Question | Answer |
|---|---|
| Capital Income | Money invested into the business by owners or investors |
| Revenue Income | Money received from day‑to‑day trading activities |
| Capital Expenditure | Spending on long‑term assets like machinery or vehicles |
| Revenue Expenditure | Spending on day‑to‑day running costs like wages and bills |
| Assets | Resources owned by a business that have value |
| Liabilities | Debts owed by the business |
| Trade Credit | Buying goods now and paying later |
| Hire Purchase | Paying for an asset in instalments while using it |
| Leasing | Renting an asset instead of buying it |
| Overdraft | Borrowing more money than is in the bank account |
| Retained Profit | Profit kept in the business instead of being paid out |
| Break-even Point | The level of output where total revenue equals total costs |
| Margin of Safety | The difference between actual output and break-even output |
| Cash Flow | The movement of money into and out of a business |
| Cash Flow Forecast | A prediction of future cash inflows and outflows |
| Net Cash Flow | Cash inflows minus cash outflows |
| Opening Balance | The amount of cash at the start of the period |
| Closing Balance | Opening balance plus net cash flow |
| Gross Profit | Sales revenue minus cost of sales |
| Net Profit | Gross profit minus expenses |
| Statement of Financial Position | A snapshot of assets |
| Statement of Comprehensive Income | Shows revenue |
| Liquidity | How easily a business can pay its short‑term debts |
| Current Ratio | Current assets divided by current liabilities |
| Acid Test Ratio | (Current assets – inventory) divided by current liabilities |
| Depreciation | The fall in value of an asset over time |
| Straight Line Depreciation | (Cost – residual value) divided by useful life |
| Mark-up | Profit added to cost of a product |
| Budget | A financial plan for future income and expenditure |
| Variance | The difference between budgeted and actual figures |
| Favourable Variance | When actual performance is better than budgeted |
| Adverse Variance | When actual performance is worse than budgeted |
| Loan | A sum of money borrowed and repaid with interest |
| Mortgage | A long‑term loan secured on property |
| Share Capital | Money raised by selling shares in the business |
| Dividend | Share of profit paid to shareholders |
| Credit Rating | A score showing how reliable someone is at repaying debt |
| APR | Annual percentage rate showing cost of borrowing |
| AER | Annual equivalent rate showing interest earned on savings |
| Insurance | Protection against financial loss |
| Premium | The amount paid for insurance cover |
| Risk | The chance of something going wrong financially |
| Opportunity Cost | The next best alternative given up when making a choice |
Created by:
19063graingerD