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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.

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  1. Portfolio analysis

    Amount invested in each company= �10,000. Week 2 In my 2nd week of Investment I had invested �10,000 in each company In my first company which was Sony. I had made a Decrease of �3.40 which was disappointing to see and I hope to see a big improvement in the future. The share price that was decreased was equivalent to 3.40. The total percentage of decrease is 61% I was really disappointed with this. My 2nd company that I had invested in was Tesco which made a �3.50 profit this made me very happy as I had made a good profit.

    • Word count: 4180
  2. Investment Portfolio - Shares and other investments

    Ethical Investments When you came to me for my services, you told me that the money you won at the Casino would be your last "dodgy harrah". You asked me to provide an overview of what is called ethical investing - that is, investing on the basis on what one thinks is morally right. There are several advantages to ethical investing; however there are also some disadvantages. One of the main points in favour is its benefit to society, as unmoral practices will not be able to generate profit if there is no investment in them, or it will become

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  3. Task 6 Competitors

    > Airports taxes are the same at Manchester airport and at Leeds and Bradford airport. > Leeds and Bradford airports advertise on billboards - so do Manchester airport - this is cost effective. > Leeds and Bradford airports don't advertise on TV - Manchester airport do - this is very expensive- too expensive for Leeds and Bradford airport. > Leeds and Bradford airports advertise in local press - this is cheap and it reaches Leeds and Bradford airports TARGET AUDIENCE. > Leeds and Bradford airports sponsor local sport teams as a form of advertising - Manchester airport do not as they advertise on a bigger scale.

    • Word count: 1146
  4. Manchester Airport's Stakeholders Task 4

    Manchester Airport Staff Internal The Manchester airports are another important group who have an interest in the business. The airport will really upon the business to provide them with a regular wage or salary. Manchester airport customers will hope for job security, safe working conditions and perhaps training and the chance of promotion. Manchester airport need the business to be successful and profitable but, equally, they will hope to see their or salary rising. Manchester airport managers on the other hand may be expected to hold down staff wage cost to improve the profitability of the business so there is the potential for conflict.

    • Word count: 1139
  5. Ao3 Business Structure Task 3

    2. Describe the chains of command within Manchester airport structure. * Orders and instructions work their way down the hierarchy from senior managers to the airport floor workers. * Managers have authority over their subordinates. * Managers can ask subordinates to carry out tasks but they remain responsible for seeing the work is carried out. 3. Describe the span of control within Manchester airports organisational structure: In Manchester airports structure the span of control is small because: * There are lots of layers.

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  6. Free essay

    Describe the trends of growth and decline for the sector in which Manchester airport operators and compare with other sectors.

    Examples Include: -Brewing (making beer) -Steel Manufacture -Construction Tertary Sector: The Tertary sector is sometimes called the service sector. This sector provides services or sells products that can be consumed by customers. Examples Include: -Hotels -Beauty Salons -Clothing Shops -Magazines Manchester Airport is in the tertary sector because: * They sell products such as news agents, clothes shops and electrical shops. * They offer services such as cafes, food hall and flights. * The main service they provide is flights. * They do not manufacture on a large scale. * They do not extract raw materials.

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  7. 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.

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  8. ways of finance (bussiness studies)

    You my have to pay interest if you do not pay back with in 30 days. 2 Bank loans (short term) A bank loan is where you take an amount of money from your bank but you will have to pay a high interest on top of the amount you have borrowed for example you borrow �100 you will have to pay back anther �10 on top so you will be paying back �110 back to the . There are disadvantages high interest and I not paid back it can be taken back by your asset taken away.

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  9. Six month cash flow.

    �4,935 total variable cost �5,720 �10,010 �25,740 �41,470 �15,730 �12,870 total cost �10,655 �14,945 �30,675 �46,405 �20,665 �17,805 less revenue - total cost �4,365 �13,930 �44,395 �95,760 �112,925 �126,290 closing balance �4,365 �13,930 �44,395 �95,760 �112,925 �126,290 As you can see in six month we have make �126,290 but because of we are partners we have to share the money so this is the way I will share the money: I look how much money I put for business and my partner as well.

    • Word count: 611
  10. Cash flow forecast and break even for a cafe

    My start up costs are just needed at the fist month of my business, power and water is due every 3 months and I just need to buy one food license and it can last a period of time. I have got a start up cost of �134300 in my starting up cost page and using the costs from the Peking Restaurant, I have got �2500 of food stock each month, �3000 of power bill which is due in every 4 months, �1500 of water bill which is also due in every 4 months.

    • Word count: 572
  11. 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.

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  12. business studies profit and loss

    When the nurse enters to inform Juliet of her mother's arrival, the tension is created through the quick speeches. This has an affect on the audience, as the characters become more anxious and uneasy. 'Then, window, let day in, and let life out.' The mood of the opening scene is calm and peaceful, as Romeo and Juliet exchange their love for one another. 'Its not yet near day, it was the nightingale, and not the lark.' Later in the scene, we see the first change of mood, as Juliet objects to her parent's wishes.

    • Word count: 549
  13. Investigating Richer Sounds PLC.

    > Taking action if advising and supporting the store managers are not meeting the targets. > Checking stock orders sent in by the stores. We check both the type of stock and the quantity ordered. > Communicating with all stores to give regular feedback and advice. > Deciding the minimum staffing level (MSL) of each store. > Organising stores visits and obtaining regular feedback from colleagues. > Customising individual stores to meet local needs in relation to layout, opening hours or prices.

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  14. PEST Analysis

    There are three types of taxes that come under 'direct'. National insurance that is paid by both employer and employee, which contributes towards the social security system. Corporation tax that is paid by companies on their profits and finally Income tax that is paid by private individuals on the amount they earn. There are also three types of taxes that come under 'indirect'. Excise duties are additional taxes on top of VAT placed on certain goods such as cigarettes and alcohol.

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  15. Unit 3 - Investigating Financial Control

    Fixed costs are also called indirect costs; these costs include rent and rates. Variable costs are costs which occur once the business has been set-up. This costs varies on output and is also called direct costs, an example of this cost are the amount of hot dogs vendor requires this depends on the amount it sells. Revenue is the amount of money received from all of the businesses activities. The main sources of income for most businesses are its sales which include money received from its customers who buy its products or services.

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  16. 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.

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  17. International Accounting Standarts

    When foreign companies are planning to launch their shares on the Wall Street (as the German Telecom), accounts must be balanced in the US-GAAP format. Not at least that circumstance lead to a new law in Germany, which allows listed entrepreneurships to hand in their annual balance in IAS or US-GAAP format.1 Also the EU tried to set up guidelines, to uniform accounting systems at least among EU members.2 However, those guidelines still did not become valid yet and are no real alternative to IAS or US-GAAP (since they are established already).

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  18. Financial Control

    * Income/revenue - These both mean the same thing. They are the total amount of money a business receives from their customers. * Expenditure/costs - These are the total amount of money spent, e.g. to suppliers, on staff (wages) and for other requirements. * Profit - A business makes a profit when income is higher than expenditure. This is an example of a break even chart and the way it should look. As you can see the lines 0A represent the variation of income of different levels of production activity. The lines OB represent the fixed costs in the business.

    • Word count: 907
  19. Why was Bletchley Park able to break the German Enigma codes?

    Unknowingly Germans provided BP with clues by starting many messages with "To all units." Many messages did not exceed 26 letters, meaning the middle Enigma wheel did not turn, ruling out many possibilities. Also one letter could never represent itself in Enigma; this was precious information when liked with other facts and compared with other texts. Codes were sometimes sent in two forms; Enigma and a simpler code. Most German operators could not be bothered to follow codebook rules, sending repeated messages so other operators could quickly set their machine.

    • Word count: 552
  20. 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.

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  21. Harmonisation of accounting standards in Europe

    The harmonisation process would therefore avoid any difficulties for multinational businesses to analyse accounts from different European countries. Especially investors and financial analysts need to be able to understand the financial statements of foreign companies when deciding to buy their shares. For them the statements from different countries need to be reliable and comparable. This means that harmonisation of accounting standards removes barriers to international capital flows by reducing differences in financial reporting requirements for actors in international capital markets and it reduces financial reporting costs for multinational companies so that they can achieve substantial savings on costs of recruitment,

    • Word count: 3425
  22. Complete Report on Askari Commercial Bank

    management in a modern and progressive organizational culture of meritocracy, maintaining high ethical and professional standards, while providing enhanced value to all our stakeholders, and contributing to society. Objectives * To achieve sustained growth and profitability in all areas of business. * To build and sustain a high performance culture, with a continuous improvement focus. * To develop a customer-service oriented culture with special emphasis on customer care and convenience. * To build an enabling environment, where employees are motivated to contribute to their full potential.

    • Word count: 20225
  23. Financial Services

    cash-flow forecast, and an assessment of their financial needs, I also need to identify the financial service needs of a business, and explaining how the size of an organization can be a significant factor. The final part of the report will include how the advances of technology has affected the level of customer service provided to all three customers by the financial service providers, and I also need to explain how the financial service providers chosen in the report are regulated under current legislations.

    • Word count: 3378
  24. Internal Auditors in Banking

    The role of the internal auditor The keys to an internal audit are independence, risk, and control. Independence from the rest of the bank is essential. This is because an auditor sometimes has to comment on unsatisfactory procedures. This may be compromised if conflict of interest situations arise. The risk is an internal auditor's starting point. It is important for auditors to focus their energy on contributing their efforts to the greatest risk in order to make an effort in remedying it.

    • Word count: 1215

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