DEFINITIONS

1. Private limited company : A business owned by shareholder, but they

cannot sell shares to the public

2. Average cost : total cost of production divided by total output

3. Working capital : The amount of capital available to the business to

pay its day to day expenses . Working capital = current assets-
current liabilities

4. Stakeholder groups : Any person/ group with a direct interest in or

affected by what the business does

5. Cost of sales : Cost of purchasing the goods used to make the

product sold.

6. Secondary sector : Firms that process and manufacture goods from

natural resources .

7. Variable costs : The cost that changes with the level of output
produced

8. Opportunity cost : it is the next best alternative given up while

choosing another resource .

9. Non - current assets : Resources owned by the company that will be

used for a longer period of time than an year

10. Statement of financial position : It shows the business’s assets and

liabilities at a particular point in time

11. Revenue : Money coming in from selling a product over a given

period of time

12. Primary sector : Businesses whose business includes extraction of

raw materials

13. Limited Company : A business which has a separate legal identity to

its owner
14. Income Statement : Financial document that records the revenue ,
costs and profit for the given period of time

15. Fixed costs : Costs that does not change as the level of activity
/output/sale changes

16. Specialisation : When people or businesses concentrate at what

they are best at .

17. Public Corporations : A business that is owned and controlled by the

government .

18. Franchise : A business that is based upon the use of names ,

promotional logos and trading methods of an existing successful
business . The franchisee buys the licence to operate this business
from the franchisor .

19. Limited Liabilities : The liability of the shareholders in a company is

only restricted to the amount they invest .

20. Non-current liabilities : The debts of a business which will be

payable after more than 1 year

21. Sole trader : Sole trader is an unincorporated business wherein the

ownership of the business is in the hands of one individual

22.Microfinance : Provides financial services / small loans to poor

people who are not served by traditional banks

23.Return on capital employed : Profit as percentage of capital

employed

24.Entrepreneur : a person who organises , operates and takes risks in

a new business venture

25.Non - current assets : resources owned by a business that lasts for

more than a year

26.Public sector : Businesses that are owned and controlled by the state
( government ) .
27. Profit : The surplus after total cost is subtracted from revenue
28.Opening balance : The amount held by the business at the start of
the month

29. Partnership : It is a form of business wherein two or more people

agree to jointly own a business .

30. Business plan : A document consisting of its objectives and

important details about the operations , finance and owners of the
new business

31. Business objectives : These are goals / targets set by the owners for
the business to achieve .

32.Public limited company : Are companies owned by the shareholders

but they can sell shares to the public and their shares are tradable
on stock exchange .

33.Shareholder’s equity : The amount that is left after current assets-

current liabilities .

34.Current liabilities : The debts of a business which will be payable

within a 1 year

35.External cost : Costs paid for by the rest of society, other than the
business, as a result of business activity

36.Retained profits : Profit left or reinvested back into the business,

after all payments have been made.

37. Current assets : Items owned by/belong to business and used within
one year

38.Variable costs : costs which change directly with OR in proportion to

the number of items sold or produced.

39. Limited liabilities : The liabilities of the shareholders is limited to the

amount that they invest in the business.

40.Total costs : Sum of total fixed cost plus total variable costs
41. Gross domestic output : the total value of output of goods and
services in a country (in one year OR at a given point in time)