Glossary – Business Finance:
Financial transactions = actions by a business that involve money either going into or out of
a business – for example, making a sale or paying a bill.
HMRC = HM is an abbreviation for Her (or His) Majesty’s, and the RC stands for Revenue and
Custom. HMRC is a British government department responsible for the collection of all types
of taxes.
Fraud = when an individual acquires company money for personal gain, through illegal
actions.
Profit = the percentage of margin mark-up over the unit cost. Aka a surplus achieved when
the total revenue (income) from sales is higher than the total costs of a business.
Loss = shortfall suffered when total revenue from sales is lower than the total cost of the
business.
Gross profit = sales revenue minus cost of goods sold (the cost of the actual materials used
to produce the quantity of goods sold).
Sales revenue = quantity sold multiplied by the selling price.
Net profit = gross profit minus other expenses, for example, rent and advertising.
Trade receivables = money owed to a business from sales made but not yet paid for (Owed)
Trade payables = money the business owes from supplies purchased but not yet paid for
(Owes)
Types of business income:
Capital income – money invested by the owners or other investors to set up a business or
buy equipment (buy things that stay in the business for a certain amount time)
Revenue income – money coming into the business from their normal day to day functions
– selling goods or providing a service. (Depends on the activities that the business does to
bring money in)
Revenue – cash sales, interest received, credit sales, rent received, commission received,
discount received.
Capital – mortgages, loan, shares, owner’s capital, debentures.
Cash sales – money coming in from the sales of goods and services. The customer pays
there and then with credit card, cash etc
(+) business gets it straight away
(-) hard to keep track of what’s coming in
Financial transactions = actions by a business that involve money either going into or out of
a business – for example, making a sale or paying a bill.
HMRC = HM is an abbreviation for Her (or His) Majesty’s, and the RC stands for Revenue and
Custom. HMRC is a British government department responsible for the collection of all types
of taxes.
Fraud = when an individual acquires company money for personal gain, through illegal
actions.
Profit = the percentage of margin mark-up over the unit cost. Aka a surplus achieved when
the total revenue (income) from sales is higher than the total costs of a business.
Loss = shortfall suffered when total revenue from sales is lower than the total cost of the
business.
Gross profit = sales revenue minus cost of goods sold (the cost of the actual materials used
to produce the quantity of goods sold).
Sales revenue = quantity sold multiplied by the selling price.
Net profit = gross profit minus other expenses, for example, rent and advertising.
Trade receivables = money owed to a business from sales made but not yet paid for (Owed)
Trade payables = money the business owes from supplies purchased but not yet paid for
(Owes)
Types of business income:
Capital income – money invested by the owners or other investors to set up a business or
buy equipment (buy things that stay in the business for a certain amount time)
Revenue income – money coming into the business from their normal day to day functions
– selling goods or providing a service. (Depends on the activities that the business does to
bring money in)
Revenue – cash sales, interest received, credit sales, rent received, commission received,
discount received.
Capital – mortgages, loan, shares, owner’s capital, debentures.
Cash sales – money coming in from the sales of goods and services. The customer pays
there and then with credit card, cash etc
(+) business gets it straight away
(-) hard to keep track of what’s coming in
