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Copy of GCSE Business Studies Key Terms

Business Studies AQA

Jay Patel

on 2 March 2015

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Transcript of Copy of GCSE Business Studies Key Terms

Profit & Loss Account
Balance Sheet
Business Studies
Key Terms...

(cc) photo by Metro Centric on Flickr
(cc) photo by Franco Folini on Flickr
(cc) photo by jimmyharris on Flickr
(cc) photo by Metro Centric on Flickr
turnover can also be called REVENUE
TURNOVER - means the value of goods and services sold.
COST OF SALES - means the cost to the business of making or buying the goods that have been sold. They are the variable costs.
GROSS PROFIT - means Revenue - cost of sales
CURRENT ASSETS are items that are owned by a business which are likely to be cash within one year e.g. stock, debtors, bank and cash.
FIXED ASSESTS are items that are owned by a business and used for more than one year e.g. land & buildings, vehicles, equipment, machinery and furniture
STOCK means material or goods that have been purchases but not sold.
EXPENSES are the overheads (the fixed costs) of the business
NET PROFIT means Gross profit - Expenses
LONG TERM LIABILITIES are amounts owned by a business that will take more than one year to repay e.g. bank loan or mortgage
CURRENT LIABILITIES are amounts owned by the business that should be paid within one year e.g. crediots, bank overdraft
RESERVES are accumulated retained profits or losses since the company come into being
WORKING CAPITAL is a broad description of the funds available to run a business
Working capital is the same as current assets - current liabilities
SOLVENCY means the ability of a business to pay its running costs
Sources of Finance
a bank loan is a large amount that is repaid, plus interest, in monthly instalments over a number of years
a mortgage is a bank loan that is specifically used to buy a property
Interest has to be paid
Security is needed
Repayments start immediately, even if the business cannot afford them
A quick source of finance
No ownership of the business is lost
it is completely repaid after a known period of time
Source of Finance
Bank Overdraft means having a negative balance in your bank account
- it is flexible, you can borrow exactly how much you need
- you repay it as soon as funds are available

- interest is charged
Share Capital means money is invested by new owners who will recieve part of the profits
- the money does not haave to be repaid
- no interest has to be paid
- dividends are only paid if the business can afford them
- shareholders will always be entitled to a share of the profits
- the original owners can lose control of the company if they now own less than 50% of the shares
it is a slower way to raise finance
Sources of Finance
Retained Profits means using profits from previous years to reinvest into the business instead of being paid out to the owners
- instantly available
- no repayments or interest has to be paid
- you don't lose control of the business
- it may leave the business short of cash
- The shareholders may be unhappy about not receiving large dividens
Trade Credit means not immediately paying for stock
- no interest charged
- supplies may not agree to sell on credit
Full transcript