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| Question | Answer |
| what is a Start-up costs? | The expenses incurred when starting a business. E.g. Cash register, buying and installing a sign |
| what is Operating (running) costs? | The expenses paid out on a day to day basis e.g. Raw materials, utility's and rent. |
| what is Fixed costs? | Expenses that say the same. E.g. Rent or/and bills |
| What is Variable costs? | Costs that vary depending on the input e.g. Wages and raw materials. |
| what is Direct costs? | Costs that are directly related to that certain output. For example: stuffing for a teddy bear making factory. |
| What is Indirect costs? | Is independent of the output, for example cost of staff uniforms. |
| Formula for total cost | Fixed cost + variable cost = total cost |
| Formula for revenue | Number of sales x price per unit = revenue |
| Formula for profit/loss | Revenue - Expenditure = profit |
| Define the term break even point. | When a business has generated enough revenue to cover the cost of sales (cost of making that product). |
| what is a Break-even chart? | It shows roughly how much money is needed in order to reach break even. |
| what is a break even? | Where there is no profit or loss. The money made equals the exact amount of money spent. |
| Break-even formula | Fixed cost/selling price per unit - variable cost per unit = break-even |
| what is The purpose of Budgeting? | To keep expenditure to a planed limit, because if expenditure is less that revenue, the business will make a profit. |
| whta is Cast flow? | The money going in and out of the business on a daily basis. |
| what is a Cast flow forecast? | A predication of what the future inflows and outflows may be. Enables the owner to spot any problems before it's too late thus avoiding negative cash flow. |
| what is Cost of sales? | The money it costs to make a product. |
| Gross profit formula | Revenue - cost of sales = gross profit |
| Net profit formula | Gross profit - expenditure(overheads) = net profit |
| what is a Financial statements? | Show whether a business is doing well or not. |
| what is a Income statement (profit and loss account)? | Shows profit or loss. |
| what is a Statement of financial position (balance sheet)? | This lists assets and liabilities. |
| what are Assests? | Items owned by the business that are worth money. |
| what are Liabilities? | Debts or obligations that the business has. |
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