BGCSE Commerce 0598 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Commerce

The set of activities that moves goods and services from producers to consumers, comprising trade and the aids to trade such as banking, insurance, transport and warehousing.

Aids to trade

Services that remove barriers between producer and consumer: banking supplies finance, insurance covers risk, transport moves goods, warehousing stores them, advertising informs buyers.

Visible trade

Trade in physical goods that can be recorded at customs, such as exports of fish or imports of fuel, as opposed to invisible trade in services.

Sole proprietorship

A business owned and controlled by one person who keeps all profits but bears unlimited liability, meaning personal assets may be sold to settle business debts.

Limited liability

A shareholder's loss is limited to the amount of capital invested, because the company has a separate legal personality and can be sued in its own name.

Cooperative society

A business owned by its members, run on one member one vote, and sharing surplus as dividends based on how much each member traded with it.

Public corporation

A state-owned enterprise created by statute, funded by government, managed by an appointed board and usually required to return surplus to the treasury.

Factors of production

The four resources used to make goods and services: land earning rent, labour earning wages, capital earning interest, and enterprise earning profit.

Division of labour

Splitting production into specialised tasks so each worker repeats one job, raising output and skill but increasing dependence and monotony.

Chain of distribution

The route goods follow from producer to consumer, commonly producer to wholesaler to retailer to consumer, shortened when goods are perishable or costly.

Wholesaler

A trader who buys in large quantities from producers and resells in smaller lots to retailers, also storing stock, giving credit and passing on market information.

Stock turnover

A ratio showing how many times stock is sold and replaced in a period, calculated as cost of goods sold divided by average stock at cost.

Department store

A large retailer organised into separate departments selling different product lines under one roof, offering wide choice and services such as credit and delivery.

Barter

Direct exchange of goods for goods without money, limited by the double coincidence of wants, indivisible goods and lack of a common measure of value.

Central bank

The national monetary authority that issues currency, holds foreign reserves, acts as banker to government and commercial banks, and controls credit.

Credit multiplier

The maximum expansion of bank deposits from new reserves, calculated as one divided by the reserve ratio the banks must hold.

Current account

A bank account used for frequent transactions, allowing deposits and withdrawals by cheque or card, usually paying little or no interest.

Working capital

Money available for day-to-day operations, calculated as current assets such as stock and debtors minus current liabilities such as creditors and overdrafts.

Insurable interest

The requirement that the person buying insurance would suffer a genuine financial loss if the insured event occurred, such as an owner insuring a building.

Indemnity

The insurance principle that a claim restores the insured to the financial position held before the loss, neither profiting nor losing from it.

Break-even output

The number of units a business must sell to cover all costs, calculated as fixed costs divided by selling price minus variable cost per unit.

Debenture

A long-term loan to a company that pays a fixed rate of interest and is repaid on a stated date, with holders ranking as creditors, not owners.

Merchantable quality

An implied term that goods sold must be fit for their ordinary purpose, free from significant defects and safe when used as intended.

Consumer redress

The consumer's right to a remedy such as refund, repair or replacement when goods or services fail to meet the terms of the sale.

Unfair trading practice

Conduct such as misleading advertising, false weights and measures, or selling unsafe goods, which regulators may prohibit and penalise.

Progressive tax

A tax that takes a larger proportion of income from higher earners than from lower earners, such as graduated income tax bands.

Indirect tax

A tax charged on spending rather than income, such as value added tax, customs duty or excise duty, collected by sellers and passed to government.

Price control

Government setting maximum or minimum prices for goods or services, used to protect consumers from excessive charges or to support producers' incomes.

Balance of trade

The difference between the value of a country's visible exports and visible imports over a period; a deficit means imports exceeded exports.

Protectionism

Policies that restrict imports to shield domestic producers, using tariffs, quotas, embargoes, subsidies and technical or health standards.

Terms of trade

The ratio of a country's export price index to its import price index, multiplied by 100, showing how much imports a unit of exports can buy.

Invisible trade

International trade in services rather than goods, such as tourism, banking, shipping and insurance, which earns foreign currency without physical exports.