BTEC Business – Accounting Flashcards

Current liabilities

Debts a business must repay within 12 months, e.g. overdrafts and trade payables.

Non-current liabilities

Debts that take longer than one year to repay, e.g. mortgages and bank loans.

Depreciation

Spreading an asset's cost over its useful life to reflect its declining value.

Straight-line depreciation

Depreciating an asset by the same fixed amount each year.

Reducing balance depreciation

Depreciating an asset by a fixed percentage of its remaining value each year.

Gross profit margin

Gross profit expressed as a percentage of sales turnover.

Mark-up

Gross profit expressed as a percentage of the cost of sales.

Net profit margin

Net profit expressed as a percentage of sales turnover.

ROCE (Return on Capital Employed)

The percentage return a business earns from its capital employed.

Current ratio

Current assets in relation to current liabilities.

Liquid capital ratio

Business liquidity after excluding inventory from current assets.

Trade receivable days

The average number of days customers take to pay money owed.

Trade payable days

The average number of days a business takes to pay its suppliers.

Inventory turnover

The average number of days stock is held by a business.