Share finance review units 3.1, 3.2, 3.3
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capital expenditure
Refers to business spending on fixed assets or capital equipment of a business.
revenue expenditure
Refers to business spending on its everyday and regular operations.
finance
Refers to the various available money that an organization has to fund its business activities.
true or false? Business angels are investors who provide grant to businesses approved by the government.
False.
true or false? A disadvantage of leasing is that at the end of the lease contract the hirer has to return the goods.
true
true or false? Share capital is an example of an internal source of finance.
false
true or false? Money that may be drawn from a bank account up to an agreed limit is known as an overdraft.
true
direct costs
Costs that are clearly associated with the output or sale of a certain good, service or business operation, e.g., raw materials.
indirect costs or overhead costs
Also known as overhead costs, these costs are not easily identifiable with the sale or output of a specific good, service or business operation.
Total costs
This refers to the aggregate amount of money spent on the output of a business. The formula is: TC = TFC + TVC where: TC = Total costs TFC = Total fixed cost,
revenue
The money (income) received by a business from the sale of goods and/or services.
total revenue
This is the sum of income received by a business from its trading activities. It is calculated using the formula: TR = P × Q.
price
Also known as average revenue, this is the amount of money a product is sold for.
A firm has fixed costs of $9,000, output of 1,000 units, and variable cost per unit of $5. The total costs of output is then equal to $15,000.
calculate the answer
true or false? The purchase of fabrics would be classified as a fixed cost of production for a textiles manufacturer.
false
true or false? Packaging costs can be classified as a fixed cost of production.
false
