JC Business Studies key terms

A plan that sets out expected income and planned spending over a period of time, helping a person or household match outgoings to the money actually available.

The money a person has left after income tax and other compulsory deductions have been taken from their earnings, available to spend or save as they choose.

A bank account used for everyday transactions, from which money can be withdrawn or paid out by card, direct debit or standing order, usually paying little or no interest.

A savings account where money is lodged to earn interest, with restrictions on how often and how quickly funds can be withdrawn compared with an everyday transactions account.

The percentage charged or paid for the use of money, expressed per period, so borrowers see the cost of credit and savers see the return on their deposits.

Interest calculated on the original sum plus interest already added, so the balance grows faster over time than under simple interest on the same amount.

Income not spent on consumption and set aside, usually in a financial institution, to meet future needs or emergencies and to earn a return.

An arrangement in which goods, services or money are received now and paid for later, normally with interest or charges added to the amount owed.

A form of credit for buying goods in which the buyer pays a deposit and instalments, owning the item only after the final payment is made.

A contract in which a person pays regular premiums to a company that agrees to compensate them for specified losses, spreading the risk across many policyholders.

The amount a policyholder pays, usually monthly or annually, to keep an insurance policy in force and to remain covered against the risks named in it.

A person who buys or uses goods and services for personal rather than business use, and who therefore relies on legal protections against faulty or unsafe products.

Laws and agencies that safeguard buyers of goods and services against misleading claims, unsafe products and unfair terms, and that provide routes to complaint and compensation.

The remedy a consumer can obtain when a seller breaches their rights, such as a refund, repair, replacement or compensation for loss suffered.

A promise, often from a manufacturer or seller, to repair or replace a product that fails within a stated period, offered in addition to the buyer's statutory rights.

A written assurance about the condition or performance of goods, setting out what the seller or maker will do if the item does not meet the stated standard.

Promotion that gives a false impression about a product's price, quality, origin or effect, causing consumers to make a purchase they would not otherwise have made.

The willingness of a person to take a financial risk and organise resources to start and run a business venture in the hope of making a profit.

A person who identifies a market opportunity, gathers the capital, labour and materials needed, and bears the risk of a new business venture.

The surplus remaining when total costs are subtracted from total revenue over a trading period; it rewards the owner for risk-taking and funds reinvestment.

The total money a business receives from selling its goods or services over a period, before any costs or expenses are deducted from it.

The level of output or sales at which total revenue exactly equals total costs, so the business makes neither a profit nor a loss.

Business expenses that do not change with the level of output in the short run, such as rent, insurance and salaried management, and must be paid even at zero production.

Business expenses that rise or fall directly with the quantity produced or sold, such as raw materials, packaging and piece-rate wages.

A business owned and run by one person, who keeps all profits but has unlimited liability for the debts of the business.

A business owned by two or more people who share capital, profits and decision-making under an agreed deed, and who are usually personally liable for business debts.

A business registered as a separate legal entity from its owners, whose shareholders' liability for debts is limited to the amount of capital they invested.

The protection that means owners of a company can lose only the money they invested, not their personal assets, if the business cannot pay its debts.

The position of an owner whose personal assets can be used to settle business debts if the firm's own funds are insufficient, typical of sole traders and ordinary partnerships.

A person or institution that owns shares in a company, giving them a claim on profits paid as dividends and usually a vote at general meetings.

A share of a company's profits paid to shareholders, usually decided by the directors and expressed as an amount per share held.

A financial statement showing what a business owns, what it owes and the owners' stake at a particular date, based on assets equalling liabilities plus capital.

Any resource of value that a business owns or controls, such as cash, stock, machinery or money owed by customers, expected to bring future benefit.

A debt or obligation that a business must settle in future, such as a bank loan, an overdraft or money owed to suppliers for goods received.

The section of a profit and loss statement that compares sales revenue with the cost of goods sold to show gross profit for the period.

Sales revenue minus the cost of the goods sold, measuring the margin earned before overheads such as rent, wages and administration are deducted.

The final profit left after all expenses, including overheads, interest and tax, have been deducted from gross profit; also called the net profit for the year.

The direct cost of the stock a business actually sold during a period, calculated as opening stock plus purchases minus closing stock.

A sustained rise in the general level of prices, which reduces the purchasing power of money and is usually measured by changes in a consumer price index.

The total market value of all final goods and services produced within a country's borders in a given period, used as the main measure of national output.

The situation of people who are able and willing to work, are actively seeking it, but cannot find paid employment at prevailing wage rates.

A tax charged on the income or wealth of a person or company, such as income tax or corporation tax, which cannot legally be shifted to someone else.

A tax on spending, such as value added tax or excise duty, collected by sellers and passed on to the government, so the burden falls on the final consumer.