Business Exam Revision

• Medium Sized Business


  A type of business that employs 20 -199 employees​ and can be structured as a Partnership or Private / Public Company​. Decisions are made by the management team / owners​ & finance may be provided by owners investors / shareholders or financial institutions​.
• Not-for-profit businesses


  A type of business that has a social mission or objective in that they aim to provide social, educational, religious or information services to those in need rather than earning a profit which is distributed to owners.​
• Equity


  Represents the portion of the business that is owned by the owner.
• Liability


  A financial obligation that the business has to another entity, that will need to be settled.
• Competitive Advantage


  A source of advantage that one business has over its competitors that is sustainable over a period of time.
• Good


  A tangible product offering that customers exchange payment for.
• Service


  An offering to the market that involves the use of time labour and expertise in exchange for payment.
• How to calculate profit

  Revenues-Expenses=Profit
• Examples of Micro Businesses


  hairdresser, accountant, café.
• Examples of Large Businesses

  ANZ, Coles, Qantas, Linfox, Toyota, Red Cross.
• Entrepreneur


  a person who organises and operates a business or businesses, taking on greater than normal financial risks in order to do so.
• innovation


  An improvement of an existing technological product, system, or method of doing something.
• Financial skill


  An ability that enables someone to find, process, and use relevant financial information
• Bank


  A for-profit institution that offers personal loans, mortgages, and other services to businesses and consumers
• Examples of Medium Sized Business

  Motel, Real Estate Agency, Construction company
• Shareholders


  individuals that receive dividends from their investment in a company
• Expenses


  Represents money spent by a business in order to produce a good or service. ​Example: wages rent, electricity, ingredients, inputs, machinery
• Small Business


  A business that has fewer than 20 employees ( 0-19)​ and is usually owned and operated by one or two people (Sole trader / Partnership)​. The Owner is responsible for the majority of decisions​and often finances the business / bank loan.​ Examples of small businesses include - hairdresser, accountant, café.
• Large Business


  A business that has over 200+ employees​ and can be either Public or Private Companies. Decisions are made by senior managers / CEO. Large businesses have a more diverse range of products / services​ due to their size and command a significant market share​.
• A For Profit business


  A business where the main objective is to provide goods / services to consumers in order to make a profit for the owners or shareholders.
• Sole trader


  1. business owned and operated by one person

  2. simple to establish and operate

  3. Personal TFN

  4. Unlimited liability

  5. Business and owner are the same legal entity

  6. Cheapest ownership structure
• Partnership


  1. A business in which 2-20 combine their assets and skills

  2. Unlimited liability

  3. A partnership agreement is signed
• partnership agreement


  a written agreement among all owners
• shareholder


  A person who invests in a corporation by buying stock and is a partial owner
• legal entity


  a business organization that is recognized by the law as having a separate legal existence
• proprietorship


  A form of business organization with one owner who takes all the risks and all the profits.
• Capital


  the account used to summarize the owner's equity in a business
• A Business


  A business is an organisation that provides goods and /or services to consumers in order to make a profit.
• Revenue


  Represents money or income a business receives from sales or transactions before any expenses or other financial obligations are deducted.
• Profit


  A profit is made when the income earned (revenue) is greater than the costs of production (expenses).
• Micro Business


  A micro business has 0-4 employees​ and is usually owned and operated by one (Sole trade)​. The Owner is responsible for the majority of decisions​and often finances the business / bank loan.​ Examples of small businesses include - hairdresser, accountant.
• Goodwill


  is the cost (monetary value) of purchasing the reputation and good name of the business built up by the previous owner.
• ASX


  Stands for Australian Securities Exchange. ASX is an integrated exchange offering listings, trading, clearing, settlement, technical and information services, technology, data and other post-trade services.
• Franchisor


  A company that develops a product concept and sells others the rights to make and sell the products.
• Australian Consumer Law


  Consumers are protected by the ACCC laws, that are there to make sure businesses deal fairly with their customers. Certain guarantees are given to customers under this legislation, which protects them when they make purchases from an Australian businesses.
• Loan


  An amount of money given to the borrower for a set period of time. After the set time has passed, the money must be paid back plus the lending fee, called interest. Payments are normally made over a series of months.
• Company (Private)


  1. Separate legal entity

  2. Limited liability

  3. Shareholders limited to 50 max

  4. Pty Ltd

  5. Examples: 7-11, Linfox
• Company (Public)


  1. Separate legal entity

  2. Large business

  3. Listed on ASX

  4. General public can buy shares

  5. Unlimited number of shareholders

  6. Must report on earnings
• legal structures


  The legal structure, also known as business ownership structure, will determine which income tax return form you have to file but more importantly, it determines how much tax you have to pay, and determines your risk exposure.
• unlimited liability


  when the owner of the business must take full responsibility for all debts of the business