NCEA L1 Commerce flashcards
NCEA L1 Commerce · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Sole trader liability
- A sole trader owns the business alone and has unlimited liability, meaning personal assets can be used to pay business debts if the business cannot pay.
- Limited liability
- Shareholders of a company can lose only the money they invested; their personal assets are protected if the company fails.
- Marketing mix 4 Ps
- Product, Price, Place, and Promotion: the four controllable elements a business combines to meet the needs of its target market.
- Market segmentation
- Dividing a market into groups of customers with similar characteristics, such as age, income, location, or lifestyle, so marketing can target them effectively.
- Product life cycle
- The stages a product passes through: introduction, growth, maturity, and decline. Sales and profits change at each stage, so marketing strategies must adapt.
- Stakeholders
- Individuals or groups affected by or interested in a business, including owners, employees, customers, suppliers, creditors, the community, and government.
- Business objective
- A goal a business aims to achieve, such as maximising profit, growing market share, surviving, or meeting social and environmental responsibilities.
- Operations management
- The planning and control of production methods, quality, inventory, and capacity so goods or services are produced efficiently and meet customer requirements.
- Accounting equation
- Assets = Liabilities + Owner's equity. Every transaction keeps this equation balanced, so at least two accounts change each time.
- Double-entry bookkeeping
- Every transaction is recorded with equal debits and credits. Debits increase assets and expenses; credits increase liabilities, equity, and income.
- Gross profit
- Revenue minus cost of goods sold. It shows profit from trading before operating expenses such as rent, wages, and depreciation are deducted.
- Cost of goods sold
- Opening stock plus purchases minus closing stock. It measures the cost of inventory actually sold during a period.
- Net profit
- Gross profit minus operating expenses. It represents the profit remaining after all day-to-day running costs have been deducted.
- Balance sheet
- A statement listing assets, liabilities, and equity at a point in time. Assets are usually split into current and non-current.
- Straight-line depreciation
- Depreciation = (Cost − Residual value) ÷ Useful life. It spreads the cost of a non-current asset evenly over its useful life.
- Gross profit margin
- Gross profit divided by sales, multiplied by 100 and expressed as a percentage. It shows how much of each sales dollar remains as gross profit.
- Trial balance
- A list of all ledger account balances where total debits must equal total credits. It detects some errors but not errors of principle or compensating errors.
- Scarcity
- Unlimited wants combined with limited resources. Economics studies how individuals, firms, and governments allocate scarce resources among competing uses.
- Opportunity cost
- The value of the next best alternative given up when a choice is made. It applies to individuals, businesses, and governments.
- Law of demand
- All else equal, as the price of a good rises, the quantity demanded falls; as price falls, quantity demanded rises.
- Market equilibrium
- The price at which quantity demanded equals quantity supplied. At this price there is no shortage or surplus and the market clears.
- Price elasticity of demand
- Percentage change in quantity demanded divided by percentage change in price. Demand is elastic if greater than 1 and inelastic if less than 1.
- Public good
- A good that is non-excludable and non-rival, such as street lighting or national defence. Markets tend to underprovide it, so government usually supplies it.
- Inflation
- A sustained rise in the general price level, measured by the Consumers Price Index. It reduces purchasing power and influences interest rates.
- Monopoly
- A market with a single seller and high barriers to entry. The firm has significant price-setting power and limited competition.
- Economic cycle
- The recurring pattern of expansion, peak, contraction or recession, and trough in an economy, reflected in output, employment, and prices.
- Budget surplus
- Income minus fixed and variable expenses is positive. A surplus can be saved or used to repay debt; a deficit means spending exceeds income.
- Compound interest formula
- A = P(1 + r/n)^(nt), where P is principal, r the annual rate, n compounding periods per year, and t the number of years.
- Simple interest formula
- I = P × r × t, where P is principal, r the annual interest rate as a decimal, and t the time in years.
- Risk and return
- Higher expected returns usually require accepting higher risk. Diversification spreads investments to reduce unsystematic risk.
- Insurance premium
- The amount paid to an insurer for cover. The insured also pays an excess on a claim, and policy exclusions limit what is covered.
- Consumer Guarantees Act
- New Zealand law requiring goods to be of acceptable quality, fit for purpose, and match their description, giving consumers remedies such as repair, replacement, or refund.