Accounting Basics Quiz

3.1 Terms

• Capital expenditure: Business spending on fixed assets or capital equipment.
• Finance: Money available to fund business activities.
• Revenue Expenditure: Business spending on everyday and regular operations.

3.2 Terms

• Business angels: Wealthy individuals who invest in high-growth ventures.
• Crowdfunding: Raising finance from a large number of people, usually online.
• External sources of finance: Funds from outside the organization (e.g., banks, business angels, venture capitalists, government).
• Initial public offering (IPO): Finance from internal resources and assets without external providers.
• Leasing: Financial service enabling businesses to access non-current assets without high capital expenditure costs.

3.3 Terms

• Loan capital: Borrowed funds from financial lenders (e.g., commercial banks).
• Long-term finance: Funding for more than 5 years, often for assets or business growth.
• Microfinance: External finance for entrepreneurs, especially women and those with low incomes, who can't access commercial bank loans.
• Microfinance providers: Organizations providing small loans to entrepreneurs.
• Overdraft: Banking service allowing customers to withdraw more money than in their account.
• Personal funds: Internal finance from entrepreneurs' savings.
• Retained profit: Reinvested surplus funds rather than distributed to owners.
• Revenue Expenditure: Everyday and regular business spending (e.g., wages, raw materials).
• Sales and leaseback: Hybrid strategy involving divesting assets and leasing them back.
• Sale of assets: Selling existing assets as a source of finance.
• Share capital: Equity capital raised by issuing shares via a stock exchange.
• Share issue: Public limited companies selling additional shares to raise finance.
• Short-term finance: Funds needed for daily running of the business (e.g., revenue expenditure).
• Sources of finance: Different ways a company receives funds (e.g., personal savings, loan capital, crowdfunding, share capital).
• Stock exchange: Regulated market for buying and selling shares of public limited companies.
• Trade credit: Financial service allowing businesses to delay payment for goods/services.
• Average costs: Cost per unit of output (TC/Q).
• Average revenue: Amount a business receives from customers (TR/Q, or Price).

3.4 Terms

• Assets: Possessions with monetary value (e.g., buildings, land, machinery).
• Balance sheet: Statement of financial position of a firm, showing assets, liabilities, and shareholder's investment.
• Cash: Money available within the business and in the bank accounts
• Copyrights: Intangible assets granting legal rights to creative works.
• Cost of sales (COS): Direct production costs (raw materials, component parts, direct labor).
• Creditors: Suppliers who allow businesses to purchase on credit.
• Current assets: Short-term assets lasting 12 months or less (e.g., cash, debtors, inventory).
• Current liabilities: Short-term debts to be repaid within 12 months (e.g., bank overdrafts, accounts payable).
• Debtors: Customers who owe money to the business.
• Dividends: Payments from company profits to shareholders.
• Equity: Value of owners' stake in a firm.
• Expenses: Indirect costs of production (e.g., rent, management salaries, marketing campaigns).
• Final accounts: Published accounts available to stakeholders (e.g., managers, investors).
• Finished goods: Completed products ready for sale.
• Fixed assets: Long-term assets (e.g., property, equipment).
• Total assets: Sum of current and non-current assets.
• Total liabilities: Sum of current and non-current liabilities.
• Trade creditors: Suppliers providing credit.
• Trademark: Registered brand identifier with exclusive commercial use rights.
• Trademark: Involves the visual depiction of a concept or company to establish market dominance.
• Window dressing: Manipulating financial statements to make them look more positive.
• Work-in-progress: Partially completed goods.
• Working capital: Money available for daily operations. (Current assets - Current liabilities)
• Total assets: The total sum of current and non-current assets
• Total Liabilities: The total sum of current and non-current liabilities
• Tax: Compulsory deductions paid to the government from a firm's profit.
• Illiquid Assets: These items of value, owned by the business, cannot be sold easily, are difficult to sell, and/or cannot be sold without incurring a significant loss in value.
• Intangible Assets: Non-physical fixed assets that are valuable to firms' survival and success (e.g., brand name, goodwill).
• Intellectual property rights (IPRs): A firm's fixed, intangible assets with monetary value. (e.g., patents, copyrights, and trademarks).
• Liabilities: Debts owed to others (e.g., money owed to financiers).
• Net assets: Value of an organization's assets after deducting liabilities.

4.1 Terms

• Market Growth: Increase in market size, measured by sales revenue rise.
• Market leader: Company with the largest market share in an industry.
• Market orientation: Marketing approach focusing on meeting customer needs.
• Market share: Firm's sales revenue as a percentage of the total industry sales.
• Market size: Total number of customers or the total value of sales in a market.

4.2 Terms

• Bargain products: High-quality goods sold at low prices.
• Consumer profiles: Demographic and psychographic characteristics of consumers.
• Cowboy products: Low-quality goods sold at high prices.
• Demographic segmentation: Dividing customers based on population characteristics (e.g., age, gender).

4.3 Terms

• Differentiation: Distinguishing a company's products from competitors.
• Economy brands: Low quality, low-priced goods and services.
• Geographic segmentation: Dividing the market based on location.
• Market: Collective term for buyers and sellers of a product/service.
• Market segment: Distinct group of customers with common characteristics.
• Market segmentation: Dividing a market into smaller segments to meet specific needs.
• Marketing mix: Key elements of a successful marketing strategy (product, price, promotion, place).
• Marketing objectives: Goals and targets for marketing efforts.
• Marketing plan: Document outlining marketing objectives and strategies.
• Marketing planning: Structured process of developing marketing objectives & strategies.
• Marketing strategies: Long-term actions to achieve marketing goals.

4.4 Terms

• Focus groups: Small discussion groups to gain insights into attitudes and behaviours.
• Government publications: Official documents representing secondary market research.
• Interviews: Primary research method involving discussions to gather information.
• Market analysis: Secondary market research analyzing trends and characteristics of a market.
• Market research: Discovering opinions, beliefs, and preferences of customers.
• Media articles: Secondary market research using articles from various media.
• Observations: Primary research method involving watching how people behave.
• Online secondary market research: Internet-based data sources for market research.

4.5 Terms

• Above the line promotion (ATL): Paid-for promotions via independent media.
• Advertising: Informative and persuasive marketing communication.
• After-sales care: Value-added services after the sale (e.g., warranties, maintenance).
• Agents: Intermediaries who sell products on commission.
• Below the line promotion (BTL): Promotion that doesn't involve external media agents.
• Brand: Registered name/logo associated with a specific product/business.
• Brand awareness: Level of customer recognition for a brand.
• Brand development: Part of a firm's marketing strategy communicating the value of a brand.
• Brand royalty: Degree of customer loyalty to a particular brand.
• Brand switching: Consumer shifting from one brand to another.
• Brand value: Brand's potential for future earnings.

4.6 Terms

• Branding: Creating a distinctive name/logo for products.
• Competitive pricing: Pricing products similar to competitors' products.
• Consumer goods: Goods bought for personal consumption (e.g., household items).
• Customer care: Attentiveness from employees in meeting customer needs.
• Customer loyalty schemes: Rewards/incentives to retain repeat customers
• Direct mail: Using postal mail for promotional communication.
• Distribution (place): Getting products to customers at the right time and place.
• Distribution channel: Path for a product to reach the consumer.
• Extension strategies: Marketing approaches used to prolong a product in the market
• Genericized brands: Brand names that become synonymous with a product (e.g. Band-Aid).

4.7 Terms

• Global brands: Highly recognized brands in international markets.
• Impulse buying: Unplanned purchases due to attractive promotions.
• Informative promotion: Informing customers about products.
• Innovators: Customers who are the first to purchase new products.
• Intermediaries: Third-party distributors (e.g., agents, wholesalers).
• Intermediation: Marketing use of intermediaries between producers and customers.
• Logo: Visual symbol representing a business or product
• Loss leader pricing: Selling a product at a low price to draw in customers for other products.
• Mail order marketing: Form of distribution using postal services.
• Mark-up (profit margin): Difference between selling price and cost per unit.
• Merchandise: Goods that are available for sale
• Multi-brand strategy: Business using multiple brands for their overall product strategy.
• Payment methods: Different ways customers can pay for products/services.
• Penetration pricing: Low initial prices to gain market entry, followed by price increases.

4.8 Terms

• Personal selling: Face-to-face sales interactions by employees.
• Persuasive promotion: Marketing efforts encouraging purchases and building loyalty
• Point of sale (POS): Location retail stores where products are physically available for customers.
• Predatory pricing: Setting very low prices to harm competitior sales.
• Premium pricing: Selling high-price products for quality or prestige.
• Price: Monetary value of goods & services.
• Price leadership: Following the price of the leading company.
• Price wars: Setting very low prices to win market share causing competition.

4.9 Terms

• Pricing methods: Various ways companies set prices, paid by customers.
• Process: Ways to deliver a service or product to consumers
• Producer goods: Products purchased by businesses for internal use.
• Product differentiation: Strategies for making products unlike competitors.
• Product life cycle (PLC): Stages of a product's development within the market.
• Product portfolio: Complete range and mix of brands/products from a firm.

4.10 Terms

• Promotional mix: Variety of strategies used to promote products, above & below the line.
• Prototype: Trial product used in the pre-launch stages.
• Public relations: Managing public perception and understanding of a business.
• Retailers: Businesses selling products/services directly to consumers.
• Sales promotion: Short-term strategies used to attract customers.

4.11 Terms

• Services: Non-physical products offered by businesses.
• Slogans: Catchphrases representing brands/products.
• Social media marketing (SMM): Online strategies to create favorable brand impressions.
• Social networking: Use of online platforms for sharing content related to brands.
• Sponsorship: Promoting businesses that give financial support to other ventures.

4.12 Terms

• Profit and loss account Structure: Financial statement measuring a company's profit or loss.
• Revenue: Income generated from sales
• Cost of goods sold (COGS): Costs directly related to producing goods sold.
• Gross Profit: Profit after deducting COGS.
• Expenses: Overall operating costs.
• Net Profit Before Interest and Tax (EBIT): Profit after COGS, expenses and before paying interest or taxes
• Net Profit After Tax (EAT): Profit after paying all taxes
• Retained Profit: Profits kept by the company.
• Cash flow forecast: Projected inflows and outflows of cash to a business
• Break-even analysis: Identifying the point where total revenues equal total costs.