Business & Financial Markets
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Fundamentals of Business
The money used by enterprises to buy what they need to make their products (or provide their services). Understanding Finance The difference between expenditure and payments, income and receipts must be appreciated before any other understanding of finance can be pursued.
| Income | Expenditure |
| Is the money that - received result of the normal business activities of an individual a business. | Broadly relates to the total cost of the resources used up per period. Capital is cash used in purchase of fixed assets that last one year or more. Land, buildings, equipment, machinery, vehicles, leasehold improvements, and other such items Fixed assets are not consumed or sold dunng the normal course 0(3 business but their owner uses them to carry onHs operations. |
| Sales revaiue by Value Amount realized from gelling goods 01 services in the normal operations of a firm in a specified period. By Volume Quantity or number of good sold or services rendered in tbe normal operations of a firm In a specified Period. Turn over Is the number of units sold (sales volume) times the unit selling price. |
Revenue (Working) cash used in payment for goods and services consumed In a short period Costs Cost is the value of money that has been used up to produce something, and hence is not available for use anymore. Accounting costs Fixed (In relation to capacity) Periodic cost that remains (more or less) unchanged Irrespective of the output level or sales revenue ofafirm. such as depreciation. Insurance, interest, rent, salaries, and wages Semi-Variable (mixed) which has both a fixed cost element (such monthly rental for a phone line) and a variable cost element (call charges). Variable Payments cost that varies, more or less, in step with the output or the sales revenue 0(3 firm. Such costs include raw material, energy usage, labor (wages). distribution costs, etc. |
| Receipts Describe money transactions actual cash received for goods and services delivered by the firm whether those goods/services were provide during the period of |
Payments Describe money transactions actual cash received for goods and services delivered by the firm whether those goods/services were provide during the period of account or not. |
NOTE:All expenses are costs, but not all costs are expenses.
Expenses are costs that can be recovered, through for example,
reimbursement, tax relief e.t.c.
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