GCSE Business Studies
Finance - TERMS
This is a cost that does not change
with the amount the firm is producing
or selling. Usually expressed in terms
of an amount per time (week, Month
etc). This can change over
time…e.g. the insurance, rent or
rates can change BUT not with the
amount sold.
GCSE Business Studies
Finance - TERMS
Money owed which does not
have to be paid back within
the next year…a long term
bank loan, company stock,
debentures.
GCSE Business Studies
Finance - TERMS
An amount owing that the
business will have to repay in
the next year…e.g. an
overdraft (repayable when
asked for by the bank) trade
credit (usually one month).
GCSE Business Studies
Finance - TERMS
The output at which the firm stops
making losses and is about to
begin making a profit. It is where
the turnover = total cost. You
should be able to draw a simple
diagram and shade in the areas of
profit and loss.
GCSE Business Studies
Finance - TERMS
Security for a long term loan
from a building society or bank
which is used to buy property
(or machines). The lender has
first claim on the sale of the
property up to the point it has
got its loan and interest repaid.
GCSE Business Studies
Finance - TERMS
Gross Profit x 100
Turnover
GCSE Business Studies
Finance - TERMS
This has to be held by the
company every year. It gives
shareholders a chance to vote
about what the company is
doing.
GCSE Business Studies
Finance - TERMS
Bank overdraft
Trade Credit
Debt Factoring
GCSE Business Studies
Finance - TERMS
This is the total sales revenue
of the firm.
It is the number of items sold
x the price charged per item.
GCSE Business Studies
Finance - TERMS
The original owners sell these to raise
the money for the business…the
buyers have not made a loan to the
company but have bought a piece of it.
They can vote about what happens
and are entitled to the profits. People
can sell these on the stock
exchange…prices do vary so there is a
risk of loss.
GCSE Business Studies
Finance - TERMS
These may be given by
government to encourage a
firm to invest…not a loan as it
doesn’t need to be repaid.
GCSE Business Studies
Finance - TERMS
If you buy these in a company you don’t
become a shareholder and get no cut out of
profit and no say in how the company is run.
You would get an interest rate on the money
you have loaned plus a guarantee about
when the money will be repaid…you can
always sell these at an exchange if you want
the money back sooner… though you might
get a lower price…there is a risk.
GCSE Business Studies
Finance - TERMS
These are assets which the
business has in the form of
cash in its tills/ bank or items
which will soon become
cash…e.g. stocks of goods or
debtors (people that owe the
business money).
GCSE Business Studies
Finance - TERMS
Bank loan
Hire Purchase
Leasing
GCSE Business Studies
Finance - TERMS
This is an estimate or prediction about how
a business thinks that money will come in
and how it will leave the business.
The main aim is to identify times when the
business is likely to be short of money…this
is a risky time as the business could easily
become bankrupt if it is unable to pay its
bills. Usually the business will have an
overdraft to cover these times.
GCSE Business Studies
Finance - TERMS
This is where profit is put
back into the business rather
than being given as a
dividend to the shareholders.
GCSE Business Studies
Finance - TERMS
Sometimes known as profit
percentages.
GCSE Business Studies
Finance - TERMS
This shows the assets (resources
owned by the business) and the
liabilities (amounts owing by the
business…including the money put in
by the owners).
GCSE Business Studies
Finance - TERMS
This is the account in which the gross
and net profit of the business are
worked out…it normally covers one
year of trading.
GCSE Business Studies
Finance - TERMS
This is where a business needs money
for a short period of time and will soon
be able to repay it e.g. borrowing to
pay wages because the goods made
should be sold quickly and the
business will get the money back in a
short time e.g. overdraft and trade
credit.
GCSE Business Studies
Finance - TERMS
These are costs that change
directly with the amount being
produced or sold by the
firm…e.g. raw materials,
delivery charges.
GCSE Business Studies
Finance - TERMS
A cost which usually has to
be paid when a firm
borrows money.
GCSE Business Studies
Finance - TERMS
These are made up of the
retained profits of the business
over time …and are used by it
to keep the company going or
to expand.
GCSE Business Studies
Finance - TERMS
This type of profit is the Gross Profit
minus the expenses (overheads) of
the business. Suppose a shop has
overheads of £9000, then the type of
profit in question would have been
£6000:
£15000 gross less £9000 overheads
= £6000 of this type of profit.
GCSE Business Studies
Finance - TERMS
The current assets minus the
current liabilities…most
businesses would like the
current assets to be twice as
big as the current liabilities.
GCSE Business Studies
Finance - TERMS
The part of the profit paid to the
shareholders…usually expressed
as pence per share…e.g. 5p per
share means that you will get 5p
for every share you own.
GCSE Business Studies
Finance - TERMS
This is another name for a
fixed cost.
GCSE Business Studies
Finance - TERMS
Same as turnover
GCSE Business Studies
Finance - TERMS
Net Profit × 100
Turnover
If this was 12% then the business
would be keeping 12p from every
£ of sales.
GCSE Business Studies
Finance - TERMS
Someone who the business owes
money to…often a supplier who
allows one month’s credit on the
stock delivered. It is not usual to
be charged interest on such trade
credit.
GCSE Business Studies
Finance - TERMS
Those amounts which are
owed by a business to
others.
GCSE Business Studies
Finance - TERMS
The amount of money which has
been put into the business…either
by the owners/ shareholders or
been borrowed by the business.
GCSE Business Studies
Finance - TERMS
People who owe money to a
business…if they are unable to
pay in the end then the debt will
have to be forgotten about…it
becomes a bad debt. Businesses
obviously need to be careful who
they give credit to.
GCSE Business Studies
Finance - TERMS
Turnover minus the cost of the
goods sold e.g. a retailer buys in
stocks of clothes for £20000 and
sells them for £35000…the profit
in question on these sales would
be £15000.
GCSE Business Studies
Finance - TERMS
Profit made which has not
been given to the
shareholders as a dividend
payment.
GCSE Business Studies
Finance - TERMS
Items which are owned and will
stay in the business over a long
time … e.g. machines, tills,
counters, delivery vans etc.
GCSE Business Studies
Finance - TERMS
This is what a firm will
charge its customers for the
goods or service being sold.
GCSE Business Studies
Finance - TERMS
Shown in the balance sheet.
This is the amount of money
that belongs to or is put into
the business by the
shareholders.
GCSE Business Studies
Finance - TERMS
These are items that are
owned by a business.
GCSE Business Studies
Finance - TERMS
Fixed cost plus the
variable cost.