Paper 2

• What is the sales revenue formula?

  Selling Price x Quantity Sold
• What is the cost of sales formula?

  Variable Costs x Quantity Sold
• What is the gross profit formula?

  Sales Revenue - Cost of Sales
• What is the net profit formula?

  Gross Profit - Expenses
• What is the gross profit margin formula?

  (Gross Profit/Sales Revenue) x 100
• What is the net profit margin formula?

  (Net Profit/Sales Revenue) x 100
• What is the break-even formula?

  Fixed Costs/Contribution per unit
• What is job production?

  products being made individually
• What is batch production?

  Products being made in quantities
• What is flow production?

  production of one product that takes place continuously using a production or assembly line
• What is automation?

  production process involving machinery
• What is quality control?

  system for inspecting the quality of the goods or services produced
• What is quality assurance?

  Process of carrying out quality checks at specific stages during the production process
• What is E-commerce?

  buying and selling of good or services electronically
• What is click and collect?

  ordering online and collecting goods from store at a later time
• What is telesales?

  sales completed over the telephone
• What is after-sales service?

  advice and help given to a customer after they have bought a product or service
• What is the consumer law?

  area of law which protects the customers of a business - mainly through the Consumer Rights Act 2015
• When a customer is buying goods or services, they must be...

  Of satisfactory quality, fit for purpose and as described
• What is satisfactory quality of goods?

  How goods are made will reflect the price
• What is proximity?

  'Nearness to' the market e.g. raw materials/labour supplies
• What are raw materials?

  Materials that are processed in the manufacturing of the product
• What is logistics?

  Management of the transportation and storage of goods
• What is procurement?

  Management of purchasing within a business
• What is the role of procurement?

  1. identifying goods and services to buy
  2. choosing supplies
  3. ordering goods and services
  4. receiving deliveries from suppliers
• Where are finance departments usually found in?

  Larger businesses
• What is interest?

  Amount of money that has to be paid on borrowed money
• What are overdrafts?

  arrangement with the bank that a business can spend more money that it has in its account
• What is trade credit?

  when the business has the goods to sell and agrees to pay at some time later
• What is sale of assets?

  items sold by the business
• What is owner's capital?

  money from savings put into the business by the owner
• What is share issue?

  money raised from investors by selling new shares
• What is crowdfunding?

  money raising through an appeal to the public
• What is a disadvantage of sale of assets?


  Can take time/May not be possible to find buyer
• What is a disadvantage of an overdraft?

  Interest is charge on the daily amount of money that the business owes to the bank so it can be expensive
• What is a disadvantage of trade credit?

  Goods must be paid even if they don't sell/Interest is charged if the credit is not repaid in the time limit
• What is a disadvantage of a loan?

  Interest has to be paid/Business may need to risk an asset as security
• What are disadvantages of a share issue?

  Dividends may have to be paid/ Shareholders have an entitled say in the running of the company
• What is a disadvantages of crowdfunding?

  Interest will to be paid on loans/Profits may be shared
• What are the types of internal sources of finance?

  Owners' capital, Sale of fixed assets, Retained profit