Revenue Income – Revenue income is money that comes into the business from selling goods or providing a service, it can come from sales, rent received or commission received. Sales are money coming in from the sales of goods and services, for example the ‘Smoothie and Snack Bar’ business will have money coming into the business every time someone buys a Smoothie or something from the Snack Bar. Rent received is when a business owns the premises and someone wants to set up their business on part on that premises, that business would then have to pay rent to be on the other business’s premises, for example in the business ‘Smoothie and Snack Bar’ wanted to put his shop on someone else’s premises then he would have to pay rent. Commission received is when someone or something sells products or services to customers, but the product or services are from another business. For example with the business ‘Smoothie and Snack Bar’, some could set up a stool in a market selling that business’s products. The money that the stool makes would have to be shared with the original business.
Capital Expenditure – Capital expenditure is money that is used to buy items that will stay in the business for a long period of time, these items are either fixed assets or intangible. Fixed assets are items in the business which will be there for a long period of time like land, machinery, furniture and vehicles. These are sometimes called tangible assets because we can touch them physically. For example the business ‘Smoothie and Snack bar’, the owners fixed assets would be the machines to make the smoothie, a place to keep the snacks cooled and his land or premises to put his business on. Intangible assets are things that are owned by the business however they cannot be touched but they still add value to the business, there are three main intangibles that are in the business which are Goodwill, Patent and Trademarks. Goodwill - is when you buy a business that already exists so it name and reputation is already known and may already have a set of clients. This increases the value of the business so therefore increases the selling price of the business. But there is a downside to doing this as you don’t know how much customers would pay for a recognised brand name.
Patent - When you invent something that you believe to be unique you should apply for a patent to protect your right to its use. A patent will give you the right to prevent others from manufacturing, importing, using or selling your invention without your permission.
Trademark - A trademark is a symbol, logo, brand name or words for a business or a product. It is a way of representing your goods or services from those of its competitors and can play an important role in your marketing and branding activities.
Revenue Expenditure – Revenue expenditure is money that is spent on items on a day-to-day or regular basis. These are the expenses that are shown on the profit and loss account. The types of costs vary from business to business but the most common types of revenue expenditure are: • premises costs • administrative costs • staff costs • selling and distribution costs • finance costs • purchase of stock.