BTEC Enterprise Mini Test

What is cash flow?

The movement of money into and out of a business.

What is cash inflow?

Money coming into the business.

What is cash outflow?

Money going out of a business.

What is net cash flow?

Cash inflow minus cash outflow.

What is the formula for net cash flow?

Net cash flow = total inflow - total outflow

What is the closing balance formula?

Closing balance = opening balance + net cash flow

What is breakeven?

The point where total revenue equals total costs.

What happens at breakeven?

No profit or loss.

What is the breakeven formula?

Breakeven output = fixed costs/contribution per unit

What is contribution per unit?

The amount each sale adds towards fixed costs and profit.

What is the contribution formula?

Contribution = selling price - variable cost

What are fixed costs?

Costs that do not change with output.

Give 2 examples of fixed costs.

Rent and insurance.

What are variable costs?

Costs that change with output.

Give 2 examples of variable costs.

Raw materials and packaging.

What are total costs?

Fixed costs plus variable costs.

What is the total costs formula?

Total costs = fixed costs + variable costs

What is revenue expenditure?

Spending on the day-to-day running of the business.

Give 2 examples of revenue expenditure.

Wages and utility bills.

What is the difference between revenue expenditure and capital expenditure?

Revenue expenditure is everyday running costs. Capital is spending on long-term assets.

What are internal sources of finance?

Money from within the business.

Give 3 examples of internal sources of finance.

Owner’s savings
Retained profit
Sale of assets

What are external sources of finance?

Money from outside the business.

Give 3 examples of external sources of finance.

Bank loan
Overdraft
Crowdfunding

What is retained profit?

Profit kept in the business instead of being taken out.

What is a bank loan?

Borrowed money that is repaid over time with interest.

What is an overdraft?

A way for a business to spend more money than is in its bank account, up to a limit.

What is trade credit?

Buying now and paying later.

What is crowdfunding?

Raising small amounts of money from many people.