3.2 Costs and revenues

These flashcards cover key vocabulary and concepts from the Finance and Accounts lecture notes, aimed at helping students review essential terms and definitions for their upcoming exam.

Cost

Total expenditure incurred by a business in order to run its operations.

Revenue

Measure of the money generated from the sale of goods and services.

Fixed Costs

Costs that do not change or vary with the amount of goods or services produced.

Variable Costs

Costs that vary with the number of goods or services produced.

Total Costs (TC)

Total costs equal the sum of total fixed costs (TFC) and total variable costs (TVC).

Semi-variable Costs

Costs comprising both fixed and variable components, remaining fixed for a certain level of production or consumption.

Direct Costs

Costs that can be directly attributed to the production of specific goods or services.

Indirect Costs

Costs that are not directly associated with the production of specific goods or services, often referred to as overhead costs.

Total Revenue

Total income received from selling goods or services; calculated as quantity sold multiplied by selling price.

Break-even Analysis

A method to determine when a business will be able to cover all its expenses and begin to make a profit.

Profit

The financial gain calculated as the difference between revenues and costs.

Cash Flow

The total amount of money being transferred into and out of a business.

Investment Appraisal

The evaluation of the profitability and risk of an investment proposal.

Budgets

Financial plans that outline expected revenues and expenses over a specific period.