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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. Personal finance - I am an advice worker for 'Life Start Bradford', which is an advice centre for young people in the Bradford. Many of my clients are young employed adults who are in their first jobs and living away from home.

    You should draw up a list of goals, you should look for things that will help you feel financially secure, happy or fulfilled. Some of the items that you need save on are: * a emergency fund * getting out of debt * and paying the kids education Financial planning also helps you: * make the most of your money * sort out your priorities * work towards long-term goals, allowing you to carry them out as and when you can afford it * find the right products to meet your needs * be prepared for unexpected financial shocks, such

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  2. In What Ways Did The Conditions At Greg's Mill Differ From Some Other Textile Mills?

    Samuel Greg employed a doctor/dentist to look after his workers when they were ill or needed a tooth pulled out. This was extremely unusual because, you could see the doctor for free whereas if you were working somewhere else, as a plain village shopkeeper for example, you often couldn't afford to go to the doctor. Greg did this because if he had unhealthy workers, he would have low profits. Richard Arkwright was another Mill owner that treated his workers fairly.

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  3. You have chosen to set up a News Agency in Southall. You will be selling newspapers, magazines, as well as confectionary, stationary, occasional cards etc. The name of your business is 'Rattan's News Agency'.

    It is fixed as you will only pay one price when you buy or rent it. It will cost about �450, or about �20 a month if rented, and you will only need one. The counter will not have to be too big as it is a small property, so I suggest a small or medium sized counter. 1.1.5 Shelves - You will need these to display your goods and keep them organised to help your customers find their desired products. These will remain the same price as you will be paying one price for them that will not change when sales do.

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  4. Comparison of The long and the short and the tall and Journeys end

    This may mean that it is more factually correct. In Journeys End we get to see the whole spread of ranks in the army. We can see that in The long and the short and the tall although there is less of a spread the soldiers pull together more and don't worry that much about rank. In The long and the short and the tall the war is seen as more of a joint effort. In Journeys End it starts off with less detail and lets it slowly unfold each of the characters.

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  5. For a business to be successful in the increasingly competitive business environment detailed financial plans and accounts must be drawn up and followed consistently.

    * Hygiene * Appearance * Safety By applying serious thought and consideration I aim to solve these issues and be able to design a shop that is both efficient and appealing to customers. Hygiene The layout of the equipment I require in my shop has to allow for easy cleaning. Equipment must be placed in areas that do not harbour dirt. Appearance As I am entering a competitive market it is important that the design of my shop is appealing to prospective customers.

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  6. I think our progressive tax structure is pretty fair. The only thing I resent about is the taxpaying distribution. I think they (the government) put too much burden on compensation income earners, salaried workers in short.

    Otherwise, it would be quite a sizable and painful amount considering all the expenses I have to pay for. I think our progressive tax structure is pretty fair. The only thing I resent about is the taxpaying distribution. I think they (the government) put too much burden on compensation income earners, salaried workers in short. It was only when I glanced upon an article at the Philippine Daily Inquirer when I realized this painful reality. I'm a business owner, what do I know? Anyway, the burden that salaried workers are carrying is just too much.

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  7. To investigate variation I will need to take a range of results of people, probably in my teaching class, and some from other means.

    I am going to be taking results of peoples Sex, eye colour, hair colour, fixed or free ear lobe and whether they have the ability to roll their tongue. I feel that if I take a range of continuous variation results I will not be able to make a good conclusion because the test will not be fair. I hope to see the variants to eventually balance out on a graph, however this may not happen because not enough results have been able to be taken.

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  8. Explain what is meant by the term financial markets. How do financial markets bridge the gap between savers and borrowers?

    Within these financial institutions there is a variety of financial market products in the economy to meet the various needs of lenders and borrowers as according to risk, return and liquidity. The three main products are consumer credit, housing loans and business loans, which exist as a means of transferring financial resources between savers and borrowers. Finally, the three major functions of financial markets continue to further develop the economy at stake, as well as economies all around the world, not to mention in the future.

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  9. Financial forecasting

    It is calculated by working out how much it costs to make a batch of products, including materials and labour and then dividing it by the amount of individual items produced. It is useful to the company because they can work out the eventual selling price from the cost price by adding a % mark up e.g. 10% which will give them their profit. * Break even analysis This shows the company when their costs are covered and where they begin to make profit.

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  10. 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.

    The Audit Commission (2002c) states that public sector organisations, including NHS Trusts, have a duty to ensure that public money is "properly accounted for and used economically, efficiently and effectively." Therefore, audit must not be limited to financial regimes, but must also evaluate clinical practice and other processes. Moreover, the documenting of audit processes and results are essential. The Cadbury Committee in 1992 (cited in HFMA and the NHS Executive - 2001) identified three key fundamental requirements for good corporate governance in organisations, these being: * Internal financial controls * Efficient and effective operations and * Compliance with applicable laws

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  11. Report on Max Wrench’s Business by Gerald Sim & Partners

    Management accounts which are prepared regularly and kept up to date will allow Max to keep track of the financial performance and to take remedial action should the need arise. These reports can be prepared monthly or quarterly. The Management accounts will comprise some or all of the following, depending upon the complexity of his business and the progress of his expansion. These requirements may vary as Max's business continues to grow. * A forecast of the likely year end results and financial position (based on the actual 6 months to date results and the expected business for the remainder of the year)

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  12. MBA Accounting For Managers - Discuss the extent to which the legal and professional regulatory framework of accounting ensures that corporate reports provide relevant, objective and comparable information to users?

    At present these rules are a mixture of statutory requirements, accounting standards (with a measure of statutory backing) and listing requirements. In between, there exist a number of "hybrid" guidelines, which combine self-regulation with legislative intervention3. The basic statutory structure has changed little since the 19th century. All the accounting and reporting requirements are contained in primary legislation, principally the Companies Act. This Act specifically provides the overarching obligation on companies to prepare accounts to provide a "true and fair" view of the company position4.

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  13. Enzyme amylase action on starch

    Use a pipette to add one drop of starch suspension to one of the iodine drops. Record the color it goes. Take up exactly 10 cm3 of the starch suspension into a syringe. Wash the outside of the syringe under a tap to prevent contamination with the amylase solution. Now take up exactly 5 cm3 of amylase solution into the same syringe and draw in a little air after it. Rock the syringe backwards to mix the contents and then push out one drop of the mixture onto the second drop of iodine solution.

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  14. Looking at life.

    but only a few get to know me. I love to sleep. eat. and have fun. live the life. not letting life run me. I have a heart. but I choose when to use it. I like to help people. but refuse help when I need it. I want to give it up for God. but yet again.

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  15. Where To Look For Loans Long-Term Loans for my Business

    The cost of more conventional medium-term finance may be slightly less, and the bank will generally look for security in the form of fixed or floating charge over the companies' assets. A commitment fee is usually charged and the browser is required to pay any costs. Short-term loans Factoring provides sales accounting collecting services and sometimes an element of protection against bad debts; sometimes 80% of the debts are recovered. There is a range of other discounting services, which may not involve managing the sales accounting.

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  16. A Day In The Life

    So I stand on top of it and push off to grind it on my soaps. I am doing a nice royale down the rail but then half way down I lose complete balance and did the worst stack in the world and landed wrong. At this moment I felt really sick and in pain at my ankle so I look down at it and what do I see my big white bone sticking out. At this moment I know exactly what I have done and shout out in pain a swear word followed by "I've broke my ankle" which

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  17. Method used to work out the breakeven

    In order to construct the breakeven I had to calculate all my fixed and variable costs. My fixed costs add up to �47851 and my variable costs are zero as there are no costs affected by how much the internet is used. In order to calculate sales revenue I had to calculate the average amount spent by each consumer this is how I worked it out: 1.

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  18. Market Survey testing for new products

    -This was to tell us when it would be the best time to sell it and when the consumers would be more likely to be able to buy the product. Question 7: How should we promote it? -This was to tell us what method of advertising we should use and which methods would be the most effective in promoting the game. This survey was carried out randomly and was completed in by 55 different pupils and with the results we will be able to make a product the will sell well and also be of benefit to the consumers Description

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  19. The history of accounting in the United States of America

    The standards set by this board are not only influential in their own country but also in other countries around the world, as they provide harmonisation for other countries and businesses that act within the USA and follow their lead. The accounting practises of the USA, although are now more regulated than those in the U.K, the original principles were imported to the United States of America by early pioneers from the United Kingdom who established business practises in the USA. These principles are now referred to as 'US GAAP' this is short for the US general accepted accounting principles.

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  20. Information Technology has had considerable impact on the working environment of accountants

    'In recent years, software companies have been developing a wide spectrum of accounting software packages and currently there are well over 100 accounting software packages on the market ranging from simple cheque-book programs to powerful modular systems.' (Industrial Management & Data Systems, Hamid Tavakolian, 1995 Volume: 95, Number: 10, pg 19 - 24) It would certainly appear that today's accountant, or accounting firm is drawn towards the use of the Internet. This could encourage a paperless environment. The use of Electronic Data Interchange to aid auditing requirements, has lead to the expansion of E-Commerce.

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  21. German World War One Sources Question

    The source aims to inform, and is very likely to be unbiased because of the time it was written. Some of the facts, which he has included in the article, are a generalisation. He writes 'The British could not stand a shock on this scale and were broken through'. This is an example of generalisation. In some areas, especially in the north the British did not allow the Germans to break through the lines, they kept strong.

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  22. Launching a Shooting Gallery

    Finally we were worried about stock and how if we didn't correctly calculate how much stock we needed then there could be vast amounts of left-over, and they do go out of there sell by date very rapidly. ==> Sweets Stall: Pros: This would be the most easiest as it doesn't take much preparation, all you do is lay out the boxes with the sweets and chocolates inside. Also it would be bought in bulk so you would make a lot of profit selling it in singles.

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  23. Management accounting

    * Control the day-to-day operations. * Focus their attention on specific issues, which really need their consideration. * Solve a variety of problems, e.g. investment decisions. * Take account of behavioural factors. Understanding the nature of measurement and communication, the characteristics of economics information, the theories and practices of the decision making process and the identification of accounting information users are crucial to the understanding of accounting in general. The major users in accounting information can be divided into three groups: 1. Internal managers who use the information for short run planning and controlling everyday operation. 2.

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  24. If You Were a Teacher How Would You Teach Personal Finance and What Lessons Would You Want Your Pupils to Learn

    This is a very important lesson as people?s wants are unlimited and hence it is good if the pupils understand at an early age that money is a very limited resource hence they should manage it wisely by spending it carefully and looking at the best options to borrow and spend. Secondly, I would teach personal finance over a course of a few lessons and that way I could cause excitement within the pupils to build up and make them look forward to the lessons.

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  25. I will be illustrating the financial state of SR building by different ratios. The ratios which Ill be using are net profit, gross profit, return on capital employed, asset turnover, current ratio, acid test ratio, stock turnover, debtor days,

    Debtors 35,000 135,000 Current liabilities Creditors 56,000 Bank overdraft 36,000 92,000 Net Current Asset 43,000 163,000 Less Long-Term Liability - Bank Loan 58,000 105,000 Financed By Share Capital 40,000 Retained Profits 65,000 Capital employed 105,000 Profitability ratios These ratios consist of three ratios which are the gross profit, net profit and the return on capital employed. Gross profit ratio: this is the profit amount after you have deducted your cost of sales.

    • Word count: 1174

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