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18 Cards in this Set
- Front
- Back
assets |
items with a monetary value that belong to a business. can be either fixed assets ( machinery, tools and buildings) or current assets (such as debtors, cash, stocks. |
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cash |
actual money a business has received from selling its products. can be cash in hand or cash at bank. |
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cash flow |
the transfer or movement of money into and out of an organization. cash inflows mainly come from sales revenue whereas cash outflows are for items of expenditure. |
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cash flow forcast |
refers to the financial document that shows the predicted future cash inflows and cash outflows for a business over a trading period. |
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cash flow statement |
refers to the financial document that records the actual cash inflows and cash outflows for a business over a specified trading period, usually 12 months. |
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closing balance |
refers to the value of cash left in a business at the end of the month, using the formula: closing balance= opening balance+ net cash flow. |
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current assets |
resources owned by a business and intended to be used within the next 12 months, such as cash, stocks and debtors. |
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creditors |
businesses that have sold goods or services on credit and will collect this money at a future date. |
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debtors |
customers who have purchased goods or services on credit,, so owe the business money money which is collected at a t later rate. |
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expenses |
the spending in the working capital cycle of a business, i.e. costs of production such as salaries, rent, advertising and distribution. |
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liabilities |
debts owed by a business. current liabilities are debts need to be repaid within 12 months from the balance sheet date.( an overdraft); long-term liabilities such as mortgages and bank loans, are repayable over a longer period. |
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liquidity |
the ability of a business to convert its assets into cash quickly and easily without a fall in its value. |
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liquidity crisis |
refers to a cash flow emergency situation where a business does no have enough cash to pay its current liabilities ( short term debts). |
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net cash flow |
the cash that is left over after cash outflows have been accounted for from the cash inflows. |
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overheads |
the costs nor directly associated with the production process yet necessary for providing and maintaining business operations, e.g. lighting, rent, security and insurance. |
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overtrading |
a situation that occurs when a business attempts to expand too quickly, without the sufficient resources to do so, usually by accepting so much orders. |
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stocks (inventories) |
the physical goods that a business has in its possession for further production,(raw materials and unfinished goods or fore sale (finished goods). |
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working capital |
the amount of finance available to a business for its daily operations. Also known as net current assets, it is calculated as current assets minus current liabilities. |