Learning aim C

Financial transactions

Financial transactions

an agreement which is carried between buyer and a seller to exchange asset of payment.

(HMRC) Her Majesty's Revenue and Customs

is a non-ministerial department of the UK government responsible for the collection of tax

Fraud

Is a criminal deception intended to result in financial or personal gain

Profit

sales revenue - total costs

Loss

Is the amount of money lost in a business or organization

Gross profit

sales - the cost of sales

Sales Revenue

quantity sold x the selling price

Net profit

Is the actual profit after the working expenses gross profit - other expenses

Trade payables

The money the business owes from supplies purchased but not yet paid for. THE BUSINESS OWES

Trade receivables

The money owed to the business from sales made but not yet paid for. THEY OWE THE BUSINESS

Capital income

capital income is the money used to set up a business. it is a long term investment.

Fixed assets

Items of value owned by a business that are really likely to stay in business for more than one year. For example machinery. Also known as non-current assets.

Revenue income

This is income received by the business on sales of its goods and services.

expenditure

money spent by the business

Capital expenditure

These are assets - capital items - that the business plans to use over a long period of time. there are 2 types of assets - non-current (tangible) and intangible.

Revenue expenditure

the day-to-day costs incurred in running a business

Capital items

assets bought from capital expenditure such as machinery and vehicle that will stay in the business for more than a year.

Statement of financial position

a financial document that shows the net worth of a business by balancing its assets against its liabilities. It is often called a balance sheet

Trademarks

is a symbol or word that represent a company

Goodwill

it's represents the business

patents

t's a license that you can sell your products for a certain number of years

Brand name

is name given by the marker for the product

capital expenditure

Is used to buy capital items which are long term asset.

inventory

a list of items such as property, and goods in stock. revenue expenditure

Discount allowed

when the seller grants discount to buyers. revenue income

rent

regular payment to a landlord. revenue expenditure

Administration

the activity of running the company. revenue expenditure

depreciation

the value of the asset reduces

types of revenue expenditure

water insurance administration- paperwork required to run a business telephone - administrative cost postage - administrative cost stationery and printing- administrative cost salaries - annual sum of money marketing - reducing-balance depreciation straight-line depreciation wages bank charges interest paid (on mortgages/loans) discount allowed inventory rent rates heating and lighting.

capital expenditure non current assets/ tangible

land buildings and premises machinery and equipment vehicles fixtures and fittings

capital expenditures intangible assets

Goodwill patents trademarks brand names

revenue income

credit sales - through sales using a method of credit

rent received - when a business rents out a property it owns

commissions received - when a business acts as an agent for another business and receives a percentage of every sale

interest received - money owned on saving or lending

discount received - when a business pays a reduced price for goods and services

cash sales - through over the counter sales

capital income

mortgage shares loan debentures - a type of bond issued by large companies to raise money. owners capital

net current assets

current assets - current liabilities