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Description
Flashcards by patrick.j.dohert, updated more than 1 year ago
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Created by patrick.j.dohert
about 10 years ago
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| Question | Answer |
| Fixed cost | Costs that do not change with output-they have to be paid regardless of how much a business produces |
| Variable costs | Costs that do change with output-these costs are directly linked to the product or service |
| Start-up costs | Costs that a business has to pay when the the business sets up. For example, fixtures and fittings. |
| Operating costs(running costs) | Costs that have to be paid for the day to day running of the business. For example, heat, light, rent. |
| Total costs | TC=FX+VC |
| Revenue | This is the amount of money that comes into the business. It is also know as turnover or revenue. |
| Profit | This is the amount of money that the business earns AFTER paying for all it's costs. |
| Break-even | Level of output where total revenue=total costs |
| Margin of safety | This is the difference between your break even point and the number of units you expect to sell. |
| Cash flow forecasting | This is a forecast the business makes for what it expects to have coming into the business and out out of the business. |
| Inflows | Money coming into the business |
| Outflows | Money going out of the business |
| Cost of sales | Costs linked directly with the production of a product |
| Gross profit | GP=Sales-Cost of sales |
| Net Profit | NP=Gross profit-expenditure |
| Income statement(profit and loss) | A statement of income and expenditure -usually produced every 12 months |
| Balance sheets (statement of financial position) | A statement outlining the financial position of the business. |
| Assests | Things that a business owns |
| Liabilities | Things that a business owes |
| Sources of finance | Ways in which the business can raise money. These can be internal (from within the business) and external (outside of the business) |
| Budgeting | The process of planning income and expenditure within a business. |
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