Business
studies
year
12
notes
Cash
–
refers
to
money
in
use
in
the
business,
not
all
cash
is
profit
Profit
–
refers
to
the
amount
of
money
which
is
surplus
at
the
end
of
a
trading
period,
when
all
expense
have
been
paid
Cash
flow
forecasting
–
used
to
describe
the
flow
of
money
in
and
out
of
a
business
over
a
given
period
of
time
A
cash
flow
forecast
–
predicted
the
level
of
spending
and
the
level
of
income
a
business
ill
have
during
a
period
of
time
Creditor
–
people
that
the
business
owes
money
to
Examples
of
flows
Inflows
-‐
Loans,
owner’s
capital,
income
from
sales,
grants
Outflows
–
purchase
of
stock,
expenses,
purchase
of
equipment,
repayment
of
loans
If
a
business
has
good
cash
flow
it
could
take
advantage
of
cheaper
stock
offers,
e.g.
discount
form
suppliers
,How
long
should
a
new
business
produce
cash
forecast
for?
The
first
5
years
What
are
the
6
main
reasons
for
preparing
a
cash
flow
forecast?
Enables
owner
to
plan
firms
expenditure
-‐
could
show
them
if
there
will
be
cash
shortage
at
certain
times
It
shows
the
amount
required
and
when
it
is
needed
-‐
prevents
payment
of
interest
longer
than
necessary
It
shows
when
loans
could
be
repaid
-‐
this
would
encourage
back
giving
a
loan
Inspires
confidence
and
acts
on
a
check
on
spending
It
supports
the
firm’s
business
plan
It
sets
targets
for
the
business
-‐
these
actual
results
can
be
compared
to
the
forecast
What
are
variances
–
the
difference
between
hat
really
happened
in
the
business
and
what
was
forecasted
Consequences
of
incorrect
forecasting
It
would
cause
a
shortage
of
working
capital
-‐
running
expenses
might
not
be
able
to
be
payed
Some
of
the
business
assets
may
have
to
be
sold
-‐
this
could
affect
production
What
are
the
following?
Receipts
–
the
total
money
received
form
sales
or
other
means
over
the
period
Payments
-‐
payments
recorded
over
the
period
are
recorded
and
shown
separately
Balances
–
the
opening
and
closing
balances
of
cash
each
month
Business
studies
notes
What
are
fixed
cost
, The
costs
which
are
not
affected
by
quantity
of
good
produced,
sold
or
by
the
scale
of
services
rendered
,
they
are
called
fixed
because
they
never
change
On
a
graph
what
would
fixed
costs
look
like
Shown
as
a
horizontal
straight
line
What
are
variable
costs
Those
cots
which
vary
or
change
according
to
the
amount
of
work
being
done
in
a
business
What
should
be
remembered
There
are
no
variable
cost
at
the
point
of
no
production
What
are
the
total
cost
formula
Total
cost
=
fixed
cost
+
variable
cost
Were
will
the
line
start
on
the
graph
Starts
at
the
level
of
the
fixed
costs
What
is
total
revenue
Revenue
is
the
money
coming
in
form
sales
What
is
it
sometimes
called
Sales
turn
over
What
is
break
even
When
the
business
total
cost
equal
the
total
of
its
sale
income
What
is
it
in
business
life
The
minimum
part
at
which
a
business
can
survive
What
is
the
significance
of
the
break
even
point
(
what
does
it
show)
S
The
amounts
of
good
that
need
to
be
sold
to
make
a
profit
is
L
visible
P
The
level
of
costs
which
can
be
born
c
The
price
which
need
to
be
charged
for
goods
How
price
change
would
effect
the
business
profits
How
do
you
calculate
the
formula
for
it
Total
cost
divided
by
selling
price
per
unit
take
away
variable
cost
per
unit
What
must
you
remember
about
breakeven
studies
year
12
notes
Cash
–
refers
to
money
in
use
in
the
business,
not
all
cash
is
profit
Profit
–
refers
to
the
amount
of
money
which
is
surplus
at
the
end
of
a
trading
period,
when
all
expense
have
been
paid
Cash
flow
forecasting
–
used
to
describe
the
flow
of
money
in
and
out
of
a
business
over
a
given
period
of
time
A
cash
flow
forecast
–
predicted
the
level
of
spending
and
the
level
of
income
a
business
ill
have
during
a
period
of
time
Creditor
–
people
that
the
business
owes
money
to
Examples
of
flows
Inflows
-‐
Loans,
owner’s
capital,
income
from
sales,
grants
Outflows
–
purchase
of
stock,
expenses,
purchase
of
equipment,
repayment
of
loans
If
a
business
has
good
cash
flow
it
could
take
advantage
of
cheaper
stock
offers,
e.g.
discount
form
suppliers
,How
long
should
a
new
business
produce
cash
forecast
for?
The
first
5
years
What
are
the
6
main
reasons
for
preparing
a
cash
flow
forecast?
Enables
owner
to
plan
firms
expenditure
-‐
could
show
them
if
there
will
be
cash
shortage
at
certain
times
It
shows
the
amount
required
and
when
it
is
needed
-‐
prevents
payment
of
interest
longer
than
necessary
It
shows
when
loans
could
be
repaid
-‐
this
would
encourage
back
giving
a
loan
Inspires
confidence
and
acts
on
a
check
on
spending
It
supports
the
firm’s
business
plan
It
sets
targets
for
the
business
-‐
these
actual
results
can
be
compared
to
the
forecast
What
are
variances
–
the
difference
between
hat
really
happened
in
the
business
and
what
was
forecasted
Consequences
of
incorrect
forecasting
It
would
cause
a
shortage
of
working
capital
-‐
running
expenses
might
not
be
able
to
be
payed
Some
of
the
business
assets
may
have
to
be
sold
-‐
this
could
affect
production
What
are
the
following?
Receipts
–
the
total
money
received
form
sales
or
other
means
over
the
period
Payments
-‐
payments
recorded
over
the
period
are
recorded
and
shown
separately
Balances
–
the
opening
and
closing
balances
of
cash
each
month
Business
studies
notes
What
are
fixed
cost
, The
costs
which
are
not
affected
by
quantity
of
good
produced,
sold
or
by
the
scale
of
services
rendered
,
they
are
called
fixed
because
they
never
change
On
a
graph
what
would
fixed
costs
look
like
Shown
as
a
horizontal
straight
line
What
are
variable
costs
Those
cots
which
vary
or
change
according
to
the
amount
of
work
being
done
in
a
business
What
should
be
remembered
There
are
no
variable
cost
at
the
point
of
no
production
What
are
the
total
cost
formula
Total
cost
=
fixed
cost
+
variable
cost
Were
will
the
line
start
on
the
graph
Starts
at
the
level
of
the
fixed
costs
What
is
total
revenue
Revenue
is
the
money
coming
in
form
sales
What
is
it
sometimes
called
Sales
turn
over
What
is
break
even
When
the
business
total
cost
equal
the
total
of
its
sale
income
What
is
it
in
business
life
The
minimum
part
at
which
a
business
can
survive
What
is
the
significance
of
the
break
even
point
(
what
does
it
show)
S
The
amounts
of
good
that
need
to
be
sold
to
make
a
profit
is
L
visible
P
The
level
of
costs
which
can
be
born
c
The
price
which
need
to
be
charged
for
goods
How
price
change
would
effect
the
business
profits
How
do
you
calculate
the
formula
for
it
Total
cost
divided
by
selling
price
per
unit
take
away
variable
cost
per
unit
What
must
you
remember
about
breakeven
