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Key Terms

Glossary

KEY TERMS

accounts: these summarise all the financial activity of a business and can be used to keep track of how much customers owe

Administration: the functional area which deals with clerical work and maintenance

advert: a picture, film, jingle or blurb which promotes a business or product in the media

advertising: the placing of adverts in the media to promote a business or product

agriculture: the study and practice of farming

aim: what an organization wants to achieve

area of loss: the area on a break-even graph that is below the break even point – where the business is making a loss

area of profit: the area on a break-even graph that is above the break even point – where the business is making a profit

at cost: organizations charge enough on the goods they sell to cover what they spent but not make a profit

attitude: how a person thinks and behaves

behaviour: how a person acts in a situation

below cost: organizations charge less on the goods they sell than the price it costs to make or supply them

body language: non-verbal communication such as posture

brand loyalty: a strong preference by a consumer for a particular brand

break-even point: the point where revenues equal costs

budget:

1) a specific amount of money that a business can spend without getting into debt

2) a financial plan for future action that attempts to forecast amounts of income and spending

business: a person or group selling products (goods or services) to make a profit

business activity: what a particular business or organization produces and/or the types of services it provides

business environment: anything that surrounds a business

business ownership: who owns the business

business purpose: what a business does and its reasons for doing it

business scale: the different areas over which businesses operate

business size: the size of the business or organization

capital: the large sum of money needed to start up a new business or to invest in a business

capital expenditure: when a business invests in large ‘one-off’ purchases which will last for a long period of time, e.g. buying a new premises

card fraud: an illegal activity where another person’s card is used fraudulently to pay for goods or services

cash balance: the amount of money left in the business’s bank account at the end of a specific period

cash flow: the money coming in and going out of a business

cash flow forecast: a prediction of the future flows of money in and out of the business for a specified period of time

cash flow statement: a financial statement that shows a business’s inflows and outflows during a certain time period

charities: organizations that provide services at no cost to the people that need them

cheque: a written document which directs the account holder’s bank to pay the person specified a particular amount of money

chip and PIN: used in credit and debit card transactions, requires the customer to type in their personal four-digit PIN number at the point of sale in order to verify payment

closing balance: opening balance + net cash flow

communication skills: the ability to share information with other people

competitors: businesses that compete with each other for customers

construction: the production, or building of buildings, roads, motorways, railways, bridges, etc.

consumer co-operative: a business owned by its customer shareholders

contribution: the difference between the sales revenue/price charged, and the variable costs involved in producing a unit

core business activity: the main business activity on which an organization depends

corporation tax: the tax that companies pay on the revenue they have earned to the Inland Revenue

cost of sales: the cost of production including the changes in stock levels

cost-effective: activity that has desired results at a reasonable cost

costs: the costs a business must pay

credit: a customer’s ability to obtain goods or services before payment, with the trust that the payment will be made in the future

credit note: a financial document issued by a supplier if a customer has paid too much, or to acknowledge refund for faulty, excess or unwanted goods

credit payment: a customer’s repayment to the business for credit given on goods or services at an earlier date

creditor: A person or business owed money by a business

customer: a person who uses products (goods or services)

customer needs: what the customer requires from the business

customer satisfaction: customer’s feel that their needs and expectations have been fully met

customer service: to look after the needs of customers by providing for their needs and expectations

customer service targets: targets set for the staff dealing with customers

customer services: the functional area which looks after the needs of customers

Data Protection Act (1998): the law that prevents businesses from misusing their customers’ personal information

debit card: a popular method of paying for goods in shops, online or over the phone, where money is transferred directly from a customer’s bank account

deception: the act ofseeking to gain an advantage by misleading, misinforming or violating trust – often an illegal activity in financial situations

decline: decreasing in amount over a period of time

deficit: in a cash flow forecast, the money it is predicted will be lost

department: a part of a business which performs certain tasks

difficult: an unfamiliar task requiring new responses

direct costs: these are costs which change directly with output (also known as variable costs)

director: a person chosen to control a company

Disability Discrimination Act (2005): the law that forces businesses to ensure equal treatment of disabled persons and safe access to their premises and facilities

dividends: the payments made to shareholders from a business’s profits to reward them for their investments

dress code: the style of clothing is not specified in detail, but must conform to certain standards

efficiency: completing a task quickly but accurately

e-mail: an electronic letter that is sent between computers via the Internet

energy production: the production and distribution of gas and electricity from raw materials

engineering: the design, construction and functioning of machinery and equipment

EPOS: an acronym: electronic point of sale; the system that links bar code scanners to databases, so they update with each transaction

ethical standards: codes of practice designed to eliminate dishonest or corrupt practices, and make the business more socially and environmentally responsible

evaluate: the skill of collecting and examining data to make judgments and appraisals using established evidence

expenditure: the spending of funds

expenditure per period: all the outflows within a specific period

expenses: costs not directly related to production, e.g. wages, rent, utilities, equipment etc.

external: outside, or from outside something

external customers: people or businesses who buy products (goods or services) from a business

extracted: removing a substance from within something else

Finance & Accounts: the functional area which keeps the accounts and sets the budgets

financial documents: documents, issued either by a supplier or a customer which are used to record the processes of a financial transaction

financial objective: the financial aim of a business, e.g. to break even

financial year: businesses must keep accounts of their financial transactions each year from 6 April to 5 April

fixed costs: these are costs or bills which do not change as a business’ output changes, i.e. rent, insurance payments etc. (also known as indirect costs)

floating: selling company shares on the stock exchange

forecast: to make a statement about what you expect will happen in the future

forestry: the study and practice of managing forests

franchise: arrangement in which one business gives another the right to trade using its name

franchisee: the person or company buying the franchise

franchisor: business which sells the right to trade its product or service

functional area: a section of a business that performs particular tasks

global: at a worldwide level

goal: working towards achieving a set target

goods: items for sale, e.g. pens, TVs, computers, etc.

government departments: organizations run by the government that provide services at a national level

gross profit: the profit that a business has made before expenses and tax have been deducted

growth: increasing in amount over a period of time

Health and Safety at Work Act (1974): the law that forces businesses to make their premises and facilities safe for their employees, visitors and customers

Human Resources/Personnel: the functional area which looks after the welfare of the employees

identify: to recognize and explain something.

identity theft: an act of fraud in which a person claims another’s identity in financial transactions

image: how a person appears to the world

income: the money received for work

income per period: all the inflows within a specific period

income tax: the tax that individuals and small businesses must pay to the government

increase: to make it greater or larger than it was before

indirect costs: these costs are not affected by the number of sales the business receives (also known as fixed costs)

inflows: the money coming into a business

informal: a relaxed style or situation

informal customer feedback: verbal feedback which is not formally recorded by the customer

informal feedback monitoring: monitoring verbal customer feedback

information services: computer related services, e.g. ICT services, consultancy, research and development, etc.

Inland Revenue: the government organization which collects and administers taxes

interest: 1) regular payments for the use of money lent to the bank, i.e. in a bank
account, or borrowed from the bank, i.e. repaying a bank loan

Internet: the system linking computers around the world; it can be used for communicating, sharing information, researching and selling

Internet fraud: where an illegal deception is carried out on the Internet – often purchasing goods with another person’s financial details

interpersonal skills: how you communicate with other people

Intranet: the system that links computers together within an organization, it can be used for communicating and sharing information

invoice: a detailed financial document, sent by a supplier to a customer as a request for payment for the goods detailed on it

IT Support: the functional area which fixes problems with computers and networks

leasing: this is when a business leases out their property or equipment to other organizations

level of sales: the volumes of products or services being sold

limited company: a business set up as a separate body from its owners

loan: money that has been borrowed and will be paid back with interest, often from a bank

loan repayments: the payments that must be made back to the bank, usually including interest, for borrowing money

local authorities: like government departments, but providing services for the local community

logistics: the detailed planning and organization of a large complex operation

loss: 1) when a business has lost money, e.g. when a product sells badly and it doesn’t cover
              costs
          2) when a business’s costs and expenses are higher than its sales revenue a loss is
             created

manufacturing: the process of making or producing goods

margin of safety: the quantity of goods or services sold which is greater than the break-even level of output

market research: investigation into consumer likes and dislikes

Marketing: the functional area that makes customers aware of what the business sells

marketing mix: the strategy a business uses to make customers aware of what it sells

media: means of public communication, e.g. newspapers, TV, radio, film, Internet, magazines, etc.

mined: dug out of the earth

mission statement: sets out the values and goals of a business

mobile phone: a portable telephone used for oral communication

monitor: check, track or observe

multinational: a business that operates in more than one country

mystery shoppers: people who are employed to dress as ordinary customers to test a business’s products and services and, to observe the other customers

negative cash flow: when the money going out of the business is greater than the money coming in

net cash flow: the total inflows minus the total outflows

net profit: the overall profit a business has earned

non-renewable: energy sources that can’t be produced again once they have been used, e.g. oil, gas, etc.

objective: a goal to be achieved

objectives: goals which businesses set themselves to help them to achieve their aims

opening balance: the amount of money already in an account; the closing balance from the month before

operating costs: costs incurred in the day-to-day running of a business (also known as running costs)

Operations: the functional area which organizes the resources and oversees production

organisation: a group of people with a particular purpose

organisational targets: these are targets against which staff performance can be measured (also called performance indicators)

outflows: the money going out of a business

outsourced: to have a service performed or a function completed by others outside of a company

overdraft: an extension of a bank account allowing more money to be withdrawn than is actually in the account

partnership: between two and twenty people owning a business together

performance indicators: targets set by organizations which are used to measure performance

personal hygiene: keeping oneself clean and presentable

petty cash: this account records small items of expenditure such as bus or taxi fares (or cakes and biscuits for a company meeting!)

point of sale: the time and/or place at which a product or service is requested, ordered and/or sold (not necessarily when payment is made)

positive cash flow: when the money coming into a business is greater than the money going out

presentation skills: being able to control how we appear to other people

pre-tax profit: the profit before tax is deducted

price: the amount of money for which anything is bought or sold

primary sector: businesses involved in the production or extraction of raw materials

private limited (Ltd): a privately owned business which benefits from limited liability

private sector: organizations owned by private individuals or groups belong to this sector

private services: services offered by privately owned businesses

privatized: an organization that used to be in the public sector but is now in the private sector

product groups: groups of particular types of goods

product life cycle: the time period during which a product is expected to sell

production: department, often part of the Operations function, which is responsible for the manufacture of goods

products: goods or services that businesses sell or organizations provide

profit:

1) the extra money a business makes after covering its costs
2) the amount that is left from sales revenue after costs are deducted

profit and loss account: a record which summarizes a business’s revenue and costs

promotion:

1) how a business makes customers aware of it
2) to give an employee a better job

public corporation: profit-seeking business owned by central government

public limited company: company whose shares are sold on the stock exchange

public sector: organizations owned by central or local government

public services: provided on a local and national level by central government and local authorities

publicity: involves creating an image or impression by attracting media attention

purchase transaction: (also known as a financial transaction) the process of obtaining and paying for goods

purchases: the stock and raw materials that a business buys/bought to use for production

purpose: an aim or reason for existing

quaternary sector: businesses within the tertiary sector which provide IT-related services

receipt: a financial document, issued by a supplier to a customer to confirm they have received payment for an order

regional: a geographical area or division outside the capital, e.g. Oxfordshire

regular inflows and outflows: inflows or outflows that occur regularly, e.g. wages, loan repayments, etc.

remittance advice slip: a financial document, completed by a customer when paying a supplier to show exactly what is being paid for

renewable: energy that is not used up or can be made again, e.g. water, wind, etc.

repeat customers: previous customers who return to the same business to purchase good or services again

repeat custom: customers return to a business from which they have previously purchased a product or service

Research & Development: the functional area that researches and develops products and services

resources: the things a business needs in order to operate, i.e. staff, land, buildings, equipment, etc.

revenue: the total value of a business’s sales (also called sales revenue, sales turnover or turnover)

safety standards: the approved level of safety for certain activities that organizations must keep to

Sales:

1) an amount of goods or services sold

2) the department that offers specialist advice to sell customers products

sales income: the amount of money which a business generates (also known as revenue)

sales promotions: the ways in which a business tries to make its products very appealing in order to sell more of them

seasonal: variable depending on the time of year

secondary sector: businesses which process and manufacture raw materials into goods to be sold (also known as the manufacturing sector)

sector of industry: a particular area of business activity that can be classed as either primary, secondary or tertiary

service sector: businesses which provide a service to the customer or end user (also known as the tertiary sector)

services: forms of work that can be sold to other people, e.g. gas supply, gardening, cleaning, etc.

shareholder:

1) a person who owns part of a company
2) people who own shares in a business

SMART objectives: an acronym: specific, measurable, achievable, realistic, time constrained

sole trader: a person who is personally responsible for every aspect of their business

spreadsheet: a computer program used for calculations and accounting

staff appraisal: staff provide feedback about the organization in a formal meeting, often with a manager present

staff meeting: a meeting for employees

staff turnover: the number of employees leaving the organization in a set period

stakeholders: people or groups who have a direct interest in an organization

start-up costs: costs incurred in setting up a new business or product

statement of account: a financial document, issued by a supplier on a regular basis, which summarises all financial activity in a customer’s account for that period

stock control: a method of keeping track of stock levels and making sure they meet levels of demand

supply chain: the network of retailers, distributors, transporters, storage facilities and suppliers that participate in the sale, delivery and production of a particular product

surplus: in a cash flow forecast, the money it is predicted will be gained

takeover: gaining control of a company through buying shares on the stock exchange

target: a mark or point at which a person or business can aim

technical language: terms that are only used in particular industries

tertiary sector: (also known as the service sector) – businesses which provide a service to the customer or end user

tone: the manner or attitude in your voice

total costs: the sum of fixed costs plus variable costs

total expenses: the total of all of the expenses that a business has paid

total sales revenue:

1) the amount of income which a business generates
2) the total value of a business’s sales (also known as turnover, sales turnover or revenue)

trend: a general direction in which something is developing or changing

turnover:

1) the amount of income (money that is earned) which a business generates
2) the total value of a business’s sales (also called sales turnover, sales revenue, or revenue)

uniform: a particular style of clothing which must be worn for certain jobs

units of production: goods or services to be sold

unlimited liability: responsibility for an unlimited amount of debt in the business

urgent: important, and requires speed

value for money: the quality of a product or service is above the expectations of the consumer, considering the price they paid

values: a principle, standard, or quality considered worthwhile or desirable

variable costs: costs which change directly with output (also known as direct costs)

vision: a business’s long-term goals or outlook for the future

voluntary organizations: an organization run by volunteers that provides services at no cost to the people that need them

voluntary services: services provided by charitable and voluntary organizations in line with their particular cause or interest

wages: a fixed amount of money that employees are paid in return for their work, usually weekly

workers’ co-operative: business owned and run by the people who work in it

working capital: the money available after a business has paid out all the money owing

working environment: a place of work

written feedback: where customers give their views on an organization in writing

Business studies

BTEC Business Overview

Specification At a Glance

Key Terms

Assessment Example

Useful Links