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GCSE: Accounting & Finance

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How to calculate 'break even'

  1. 1 There are three ways this can be done. All will give the same answer which is the number of products the business must make or sell to ‘break even’. This means they receive as much revenue as their costs.
  2. 2 A break even table will list the fixed cost, variable cost, total cost (fixed plus variable cost), revenue and profit or loss for each level of output. As profit or loss is the revenue minus the total cost this can be calculated relatively easily, especially if you use a spreadsheet program..
  3. 3 A break even graph plots the total cost and revenue for all the levels of output. Where the total cost and revenue intersect is the break even point. This can be easily produced from the table using the chart wizard.
  4. 4 The break even formula gives you the break even output. The formula is fixed cost divided by the price of one unit minus the variable cost.
  5. 5 The margin of safety is the number of items being produced, over and above the break even point.

What is cash flow?

  1. 1 Cash flow looks at the cash flowing through a business. It is not the same as the profit being made as businesses may be receiving goods on credit or giving credit to customers. This means that although a business may be profitable, it may still run out of cash. This could cause the business to go bankrupt.
  2. 2 A cash flow forecast predicts the flow of cash going through the business. A business may use it to see if there are any months when it will run out of cash.
  3. 3 Knowing that it may run out of cash in any month means that a business can plan for this by possibly arranging a bank overdraft.
  4. 4 A bank overdraft is an agreement arranged with a bank whereby if the business runs out of cash, the bank will lend it money to keep it trading. This overdraft will normally be at a high rate of interest but is better for a business than running out of cash.
  5. 5 A business may also cover a period of negative cash flow by deferring payment to suppliers or getting payment early from customers.

What could be a source of finance?

  1. 1 Many students go wrong when discussing sources of finance by not relating them to the size of the business or the reason they need it. A new business starting up has different needs to an existing business looking to expand.
  2. 2 Sources of finance available to sole traders and partnerships include the owner’s funds, borrowing from friends and relatives, bank borrowing or funds from venture capitalists that specialise in lending to new businesses.
  3. 3 A problem for sole traders and partnerships is unlimited liability. This means that the owner is responsible for all the debts of the business, not just the amount they have invested.
  4. 4 Private limited companies and public limited companies have limited liability. This means that investors in the businesses can only lose the amount they have invested. This makes it much easier for them to raise finance as people are more likely to lend to them knowing the maximum amount they can lose.
  5. 5 A benefit of selling shares compared with borrowing from the bank is that the money does not need to be repaid. Share holders will expect a share of the profits. With a loan, the amount borrowed has to be repaid with interest.

  • Marked by Teachers essays 5
  • Peer Reviewed essays 7
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  1. Marked by a teacher

    Business Finance. There are a number of sources of finance, which businesses will need in order to start up a new business, make their business expand and buying materials required for their business.

    3 star(s)

    You can Retain Ownership; this means instead of raising funds by selling a share in the property or the business to an investor you retain complete ownership. There is also Tax Advantage because interest expenses on your mortgage are tax deductible and are made with pre-tax money. Disadvantages The Disadvantages using this method are that the longer you take to return the money, the higher the interest rate. Another disadvantage is that if the mortgage is not paid back, debt collectors will repossess your belongings so that you can pay back the mortgage.

    • Word count: 2125
  2. Compare the final accounts of two organisations explaining the similarities and differences.

    Subway Groningen doesn't have that because all the money will goes straight to the sole trader and he will have to pay subway LLC for the franchising of subway and the rest of the money will end up going into the business. As we look all the overheads from Groningen subway they have a lot of fixed cost to pay such as, rent and rates, heating and lighting, telephone and general expenses this is because they are running a business and is dealing with customers, now the subway LLC you can say is the head office of the subway industry, they more have office supplies and vehicles and the equipment which I would guess sells to the franchising companies.

    • Word count: 2232
  3. Describe the following features of their two chosen businesses.

    Limited Liability A limited liability means you only use your original investment. For example, if you own a business and it collapses the bank can only take the money back that you own them and no more. Unlimited Liability This means that the owner is responsible for all the debts. If the company fails you have to pay its debts or declare bankruptcy. The person you owe money to may take all your belongings or you have to sell all your personal belongings to pay that money back. Sole Trader There are many advantages to become a sole trader because it is easy to set the business up.

    • Word count: 2066
  4. Business BTEC

    This is important because without customers a business would not survive. Marketing/Sales The marketing department try to find out what customers want from the business in terms of the goods and services they provide. They use this information to develop strategies to ensure that the business can meet the needs of customers but at the same time make a profit or at least cover their costs if they are a public sector organisation. Research and Development The research and development department (often just referred to as R&D) spend time finding out how to develop new products that consumers might want.

    • Word count: 2026
  5. Borrowing guide

    A repayment period is the amount of time that you can pay back the money that you have borrowed. A secured loan is one in which some of your property (home, stocks and shares, etc) is held, by the lender, as security for the amount you have borrowed. Secured loans usually offer lower interest rates than unsecured ones. (definition from www.moneyfacts.co.uk/glossary) A personal loan available from a bank, building society or other financial institution without security. They are usually covered by the terms of the Consumer Credit Act.

    • Word count: 2439
  6. Task1: different types of business ownership

    Sole trader could change into private limited company. (LTD) > So that they have limited liability. > This means they can become bigger and better known. > So they can expand and raise capital through selling shares to family and friends. > Stressful > Sole trader may not get paid when they are ill or on holiday (could loose profit) > Unlimited liability > May be harder to raise capital > Could be lonely if the business is not busy. Sole trader could change into public limited company. (PLC) > To become better known. > So that they become bigger.

    • Word count: 2144
  7. Free essay

    planning personal finances

    This guide will give you information on personal finance and help you when you may want to start budgeting. When you are planning financially it would be best to get advice, this is because if you get a professional opinion it would help you get the best financial advice available. You can get advice from many different sources depending on what you need advice on. Some of the sources of financial advice are banks, building societies, solicitors or financial advisors these are only few source which all give advice on different money needs. * Banks: give advice on the most suitable accounts appropriate savings.

    • Word count: 2499
  8. Financial Products and Providers

    Deposit accounts are known as saving account, which is offered by financial service providers to give the customer a form of saving their money. Some of these accounts can be opened with a minimum of one pound. For example Barclay's offers an account, which is called E-savings account: this is a savings account that gives you frequent access to your savings, therefore you can access your balance on-line and you don't need to use the phone or visit the branch.

    • Word count: 2909
  9. It has been suggested that the so-called traditional systems should be replaced by new approaches. Factors Shaping Management Accounting Change However, before describing our observations on the changing nature

    Management Accounting changes for the 1990s: As international influences and technological advances changes the environment of managerial decision making considerably, managerial accounting system need to be updated and modified to accommodate the new, different informational need of managers. The following is a summary of the expected changes in managerial accounting for the 1990s: Job order costing: In a flexible manufacturing environment, workers and materials are frequently transferred between job orders. This will disrupt the accounting department's attempt to trance the costs of three elements to different job orders.

    • Word count: 2171
  10. Mathematics for Computing

    The properties following | help us to determine the elements of the set that is being described. Note: The notation {x | 1 ? x ? 5} is not an adequate description of the set A unless we have agreed in advance that the elements under consideration are integers. When such an agreement is adopted, we say that we are specifying a universe, or universe of discourse which is usually denoted by U . We then only select elements of U to form our sets.

    • Word count: 2241
  11. Budget in multinational company

    * Balanced Scorecard enables all employees to focus on strategy rather than numbers. But it is more likely to reach its full potential if there is no budgeting barrier to act as a counterforce that drives managers toward meeting this year's targets. * Activity based management systems can lead to radical decentralization with local managers having the freedom and capability to act with minimal central control and without budgets. Table of Contents EXECUTIVE SUMMARY 2 1. INTRODUCTION 4 2. CRITICISMS OF BUDGET 4 3.

    • Word count: 2032
  12. computer system

    A signed 8-bit binary numeral can represent every integer in the range -128 to +127. If the sign bit is 0, then the largest value that can be stored in the remaining seven bits is 27 - 1, or 127. Using two's complement to represent negative numbers allows only one representation of zero, and to have effective addition and subtraction while still having the most significant bit as the sign bit. 2.Hexadecimal Hexadecimal numbers are used for the benefit of human programmers, as they are easier to handle than long strings of binary 1s and 0s - with less chance of making an error.

    • Word count: 2463
  13. Give an explanation of break-even analysis and explain how it supports the achievement of strategic aims and objectives.

    It is also of value for established businesses which are planning to produce a new product. It also helps to support applications for loans from banks and offer financial institutions-the use of the technique may indicate good business sense as well as forecast profitability, and therefore businesses would be able to get financial help to support and meet any of their business objectives. Break-even analysis can also be calculated, this requires: * The selling price of the product. * The fixed costs.

    • Word count: 2133
  14. The concept of financial statement

    The financial statements must show a 'true and fair view'. The accounting principles of the CA85 are similar to the fundamental accounting concepts. The four concepts are embodied in the legislation under the heading 'Accounting Principles'. A fifth principle was added requiring the separate determination of value of each asset and liability. Fundamental Concepts of Accounting Accounting policies are the specific accounting practice issued and consistently followed by a business enterprise or an organisation as being, in the opinion of the management appropriate to its conditions and most suited to present fair results and financial statements.

    • Word count: 2090
  15. History of Pension Funds

    As moving to a new job would result in losing what they have already saved up. An advantage for the firm is that it gives the "firm a reputation for taking care of its employees" and so the firm would "find it easier to recruit good workers and to motivate them." I am going to look at in particular International Business Machines Corporation (IBM) pension fund. IBM has mentioned that they had done an analysis of "over 75 companies on all aspects of their compensation and benefit plans and program" and their results have shown that they were offering significantly

    • Word count: 2137
  16. What are the major risks that financial intermediaries face and how do they manage them?

    The final area which this essay will pick up on is the risk transformation. This service provides the know how of how to allocate loans and money to other money at the least possible risk to the institution. Risk is a major factor in any financial market and in particular to institutions which are borrowing money from there depositors or customers. This essay will now look at the potential risks involved through financial intermediaries. Financial intermediaries should be concerned with risk because it can make its capital volatile and in most cases when financial intermediaries are faced with these types

    • Word count: 2004
  17. The business plan

    We will be selling many product including ice cream. "Come On" also selling smile and friendly services for free to customers. 3. Methodology In my investigation of can I start a tuck shop in the boarding house? I have done massive amounts of research. First thing I have done is primary research so that I wrote printed and handed out 30 questionnaires each contain 10 questions. I handed out 30 questionnaires so that my result will not affected by bias, where as If I only hand out 10 questionnaires bias will be the problems for me in the questionnaires.

    • Word count: 2766
  18. 'Historic cost accounting is the worst possible accounting convention, until one considers the alternatives.'

    It uses valuations that rest upon recordable facts about prices paid for assets in the past or amounts agreed to be owing to, or owed by, a business. There are some problems in defining the time of the assets being bought or sold or when they can be agreed to have risen in value, but these can be solved by relying on the actual external transactions. This way of adding up the assets has been commonly used because it is simple, objective and prudent.

    • Word count: 2789
  19. Identify any imperfections in the way that Hermes Courier Ltd operated and to provide effective resolutions that would help to improve their service and reputation.

    My group comprised of five people. To work in a group successfully, members within the group needed to have good communication skills and also good teamwork skills. I felt that the selection of people that were in my group were good as they all looked like they were focused on completing the task ahead and also, I had previously worked with them on a different module and we worked well as a team. It was then necessary, once we had formed the group, to delegate the work between all members of the group.

    • Word count: 2453
  20. Enron Case Analysis

    Finally, the paper is wrapped up by personal reflections and recommendations for the company and others involved. Suggestions are given of what Enron should have done in order to never get into the trouble they did, and also what the company can do now to regain face. 2.0 Company History Enron was founded in 1985, when two small natural gas companies, Houston Natural Gas and InterNorth, merged and become Enron. InterNorth was a natural gas company based in Omaha, Nebraska. [1] This gave the company a large customer base and over 37,000 miles of pipe. Later in 1985, Enron merged with Florida Gas Transmission's, another natural gas company with operations mostly in the Southeast United States; this nearly doubled Enron's amount of customers.

    • Word count: 2859
  21. Financial Management

    " Finacial Accounting is the art of recording, classifying and summarising in a significant anner and in terms of money, transactions and events which are, in part at least, of a financial character and interpreting the results there of". 3. Managerial Accounting deals with procuring of data for the organisation's management i.e. to serve the internal users with necessary accounting information to carry out the management tasks of planning, organising, actualising and controlling. " Management Accounting is the presentation of accounting Information in such a way as to assist management in creation of policy and in the day to day operations of an undertaking".

    • Word count: 2511
  22. The Nature of Income measurements

    That means if the information carried by financial statements can satisfy all such groups' requirements, then they are useful. In conventional accounting, the measurement of income plays an important role in financial reporting, since the objectives of income measurement (Elliott and Elliott 2002; James 2002). First of all, income determines wealth transfers between persons. For example, employee bonuses and dividends are dependent on income. Second, Income usually is used as a means of control. It can measure the efforts and accomplishments of management of a business upon which they are rewarded or otherwise.

    • Word count: 2152
  23. Personal budget

    Expenditures Once you have assessed your income then you should then work out your levels of expenditures. You will need to put down the kinds of expenditures your personal budget needs to pay out. You will need to make sure that your expenses don't go over the amount of income you earn. The expenditures that you might have to pay could be things like the following: * Accommodation e.g. rent or mortgage. * Major purchases e.g. house or holiday. * Food and clothing. * Leisure activities. * Travelling expenses to work or for social or leisure purpose. * Insurance purchases e.g. car or motor bike. * Short term savings. * Medium term savings. * Household expenses e.g.

    • Word count: 2566
  24. Accounting Concepts and Conventions

    The prudence concept dictates that the stock should have been valued at �950. It is not enough to wait until the stock is sold, and then recognise the �300 loss; it must be recognised as soon as it is foreseen. For example, if Bosch bring out a state of the art washing machine Hotpoint may lower its asking prices so they can compete with a new model. A profit can be realised to be a realised profit when it is in the form of: > Cash > Another asset which has a reasonably certain cash value, this includes debtors from what they owe.

    • Word count: 2620
  25. The purpose of this report is to explain the legal and regulatory influences on the production and presentation of financial statements and assess the implications of such policies and concepts for users of financial statements and final account.

    The business's financial structure and prospects will also be let known, which is essential to owners and shareholders. Financial sphere of influence is colossal it will determine its own employees future, advisors/brokers in advising their clients, the business's ability to make repayment to lenders, customer relations, community interest, competitors own decision making, suppliers concerns and of course government agencies such as the inland revenue concerns on payments to employees and subcontractors as well as taxes on level of business profits.

    • Word count: 2441

Conclusion analysis

Good conclusions usually refer back to the question or title and address it directly - for example by using key words from the title.
How well do you think these conclusions address the title or question? Answering these questions should help you find out.

  1. Do they use key words from the title or question?
  2. Do they answer the question directly?
  3. Can you work out the question or title just by reading the conclusion?
  • Compare the two companies Tesco's and McDonalds

    "McDonalds first opened in 1974. More than 2.5 million people in this country trust McDonalds to give them food of a high standard, quick service and value for money. In my opinion McDonalds create a high standard of customer satisfaction. My reason for thinking is this because customer convenience and research is driving force behind new restaurant locations - which had led to new McDonalds in sites as varied as cross- channel ferries, a bowling alley and London's former county hall. Currently there are more than 1000 McDonald's restaurants throughout the UK. McDonald's business activity External Influences and the Stakeholder Model: McDonald's - Activity Image: Business has not been going as well for McDonald's in recent years because it is struggling to keep up with the demands being made to it. There are a number of Activities("

  • Assess the contribution of set and lighting to

    "In conclusion, the contribution of set and lighting in the play 'The Smallest Person' on their own was basic and failed to create an atmosphere that could affect the audience. However together, there was quite different effect as the two conventions worked together to find an equilibrium of their imbalances and achieve a good affect upon the audience. Khushwant Bhakar 12Jr"

  • Auditing is becoming an increasingly expensive part of the management of health care. Discuss the role it plays in the financial management of a hospital, and comment on the value this adds.

    "13. Conclusions The impact of US scandals have made auditing a high profile subject. The primary purpose of audit within the public sector remains to demonstrate the appropriate use of resources. It is important that the perception of the public and Parliament, through the PAC, are satisfied. In specific terms the future of audit is uncertain, however, given the facts identified in this report the demand for and the costs of auditing public sector organisations are likely to become more difficult to control. A key element in delivering effective audit will be the supply of a skilled audit workforce. There may be scope and a need for recruiting people from different professional backgrounds in order to support audit processes."

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