Business and Economics Revision

Wednesday, 11 January 2012

business legal identities

sole trader: 1 owner
partnership: 2 peopple or more
private limited companys: often a family run business with the protection of limited liability
public limited companys: large organisation whose shares are on the stock exchange
Franchises: small business trading with agreement of a large firm
Co-operatives: collectivly owned by workers/ customers

what is an entrepreneur and the qualities to be a good one ...

someone who makes a business idea happen either through their own effort or by organising others to do their work.

qualities of a good entrepreneur..
understanding of the market
determination
passion
persuasive abilities
able to build relsionships with the network and customers
ability to cope with risks.

stages of the business cycle

Contraction - When the economy starts slowing down.
Trough - When the economy hits bottom, usually in a recession.
Expansion - When the economy starts growing again.
Peak - When the economy is in a state of "irrational exuberance."

what is the business cycle and what is meant by GDP ?

The recurring and fluctuating levels of economic activity that an economy experiences over a long period of time. The five stages of the business cycle are growth (expansion), peak, recession (contraction), trough and recovery. At one time, business cycles were thought to be extremely regular, with predictable durations, but today they are widely believed to be irregular, varying in frequency, magnitude and duration.
The gross domestic product (GDP) is one the primary indicators used to gauge the health of a country's economy. It represents the total dollar value of all goods and services produced over a specific time period - you can think of it as the size of the economy.

what are uncrontrolable variables?

Things that change
Uncontrollable factors are often called as "Environmental Factors"
it includes:
Political factors,
Economical Factors,
Social Factors,
Technological Factors,
Competitive forces factors
Regulatory forces factor

Friday, 6 January 2012

cashflow, and what is the difference between cash inflows and outflows?

Cash flow is the movement of money into or out of a business, project, or financial product

cash inflow means the cash comesin to the company i.e,cash 
which has to come towards the company that amount is called 
cash inflow it includes revenue
the cash out flow means the amount or cash that which has 
to pay by the company i.e,the actual amount of cash which 
has to be go out from teh company that amount is called 
cash outflow it includes expenditure.

how is adveradge cost calculated

total production cost divided by number of items manufactured

how is total cost calculated

Total cost are calculated by adding variable cost and fixed cost

oppurtunity cost

The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.

The opportunity cost of going to college is the money you would have earned if you worked instead. On the one hand, you lose four years of salary while getting your degree; on the other hand, you hope to earn more during your career, thanks to your education, to offset the lost wages.

direct and indirect costs

Direct Cost:

Definition and explanation of direct cost:

A direct cost is a cost that can be easily and conveniently traced to the particular cost object under consideration. A cost object is any thing for which cost data is required including products, customers jobs and organizational subunits. For example, if a company is assigning costs to its various regional and national sales offices, then the salary of the sales manager in its Tokyo office would be a direct cost of that office.

Indirect Cost:

Definition and explanation of indirect cost:

An indirect cost is a cost that cannot be easily and conveniently traced to the particular cost object under consideration. For example a soup factory may produce dozens of verities of canned soups. The factory manager's salary would be an indirect cost of a particular verity such as chicken noodle soup. The reason is that the factory manager's salary is not caused by any one variety of soup. To be traced to a cost object such as a particular product, the cost must be caused by the cost object. This salary of manger is called common cost of producing the various products of the factory. A common cost is a cost that is incurred to support a number of costing objects but cannot be traced to them individually. A common cost is a particular type of indirect cost.

Semi Variable costs

Semi-variable cost is an expense which contains both a fixed-cost component and a variable-cost component

variable and fixed costs

Fixed costs are costs that are independent of output. These remain constant throughout the relevant range and are usually considered sunk for the relevant range (not relevant to output decisions). Fixed costs often include rent, buildings, machinery, etc.
Variable costs are costs that vary with output. Generally variable costs increase at a constant rate relative to labor and capital. Variable costs may include wages, utilities, materials used in production, etc.