Unit 3 Personal and Business finance
TOPIC C KEYWORDS : EXPLORE THE PERSONAL FINANCIAL SECTOR
Key words Definition
C1 – PURPOSE OF ACCOUNTING
1. Compliance Financial reporting is governed by laws and regulations. This is to ensure that
all financial records give a fair and accurate picture of the business.
2. Corporation tax Is a tax that all limited companies must pay and it's a tax that's payable
against the profits a company makes.
3. Value-Added Is a consumption tax assessed on the value added to goods and services.
(Tax VAT)
C2 TYPES OF INCOME
4. Capital income Is the money invested by the owners or other investors that is used to set up a
business or buy additional equipment.
5. Loans Is an amount of money lent from a bank or other financial institution.
6. Mortgages Is a larger sum of money loan taken out to buy a property and is paid over a
long period of time (typically 25 years).
7. Shares Portion of a larger amount which is divided among a number of people, or to
which a number of people contribute. Eg shareholders
8. Owner’s capital Owner’s capital is money invested in a business from the owner’s personal
savings.
9. Debentures Are medium- to long-term sources of capital income.
10. Revenue income Is the money that comes into the business from performing its day-to-day
function –selling goods or providing a service.
11. Cash sales Sales or sales turnover, is money coming in from the sales of goods or
services. For example, a jeans shop has money coming in each time a
customer buys a pair of jeans.
12. Credit sales The customer buys then but pays at a later date.
13. Rent received A business that owns property and charges others for use of all or part of that
property will receive rent as their main source of income.
14. Commission They sell another business’s products on their behalf and, for each sale they
received make, they get paid a percentage on that sale. This percentage is called
commission.
TOPIC C KEYWORDS : EXPLORE THE PERSONAL FINANCIAL SECTOR
Key words Definition
C1 – PURPOSE OF ACCOUNTING
1. Compliance Financial reporting is governed by laws and regulations. This is to ensure that
all financial records give a fair and accurate picture of the business.
2. Corporation tax Is a tax that all limited companies must pay and it's a tax that's payable
against the profits a company makes.
3. Value-Added Is a consumption tax assessed on the value added to goods and services.
(Tax VAT)
C2 TYPES OF INCOME
4. Capital income Is the money invested by the owners or other investors that is used to set up a
business or buy additional equipment.
5. Loans Is an amount of money lent from a bank or other financial institution.
6. Mortgages Is a larger sum of money loan taken out to buy a property and is paid over a
long period of time (typically 25 years).
7. Shares Portion of a larger amount which is divided among a number of people, or to
which a number of people contribute. Eg shareholders
8. Owner’s capital Owner’s capital is money invested in a business from the owner’s personal
savings.
9. Debentures Are medium- to long-term sources of capital income.
10. Revenue income Is the money that comes into the business from performing its day-to-day
function –selling goods or providing a service.
11. Cash sales Sales or sales turnover, is money coming in from the sales of goods or
services. For example, a jeans shop has money coming in each time a
customer buys a pair of jeans.
12. Credit sales The customer buys then but pays at a later date.
13. Rent received A business that owns property and charges others for use of all or part of that
property will receive rent as their main source of income.
14. Commission They sell another business’s products on their behalf and, for each sale they
received make, they get paid a percentage on that sale. This percentage is called
commission.
