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caie-igcse-business-studies-0450-definitions-65706794bdb8c270dbee4814-799
caie-igcse-business-studies-0450-definitions-65706794bdb8c270dbee4814-799
caie-igcse-business-studies-0450-definitions-65706794bdb8c270dbee4814-799
ORG
CAIE IGCSE
BUSINESS
STUDIES
SUMMARIZED NOTES ON THE DEFINITIONS SYLLABUS
Prepared for Dev Agarwal for personal use only.
CAIE IGCSE BUSINESS STUDIES
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CAIE IGCSE BUSINESS STUDIES
42. A social enterprise has social objectives as well as an 24. Staff managers are specialists who provide support,
aim to make a profit to reinvest back into the business information and assistance to line managers.
43. A stakeholder is any person or group with a direct 25. Delegation means giving a subordinate the authority
interest in the performance and activities of a to perform particular tasks.
business 26. Leadership styles are the different approaches to
dealing with people and making decisions when in
1.2. People in Business apposition of authority - autocratic, democratic and
laissez-faire.
1. Motivation is the reason why employees want to work 27. Autocratic leadership is where the manager expects
hard and work effectively for the business. to be in charge of the business and to have their
2. Wage is a payment for work, usually paid weekly orders followed.
3. Time rate is the amount paid to an employee for one 28. Democratic leadership gets other employees involved
hour of work in the decision-making process.
4. The piece rate is the amount paid for each unit of 29. Laissez-faire leadership makes the broad objectives of
output the business known to employees, but then they are
5. Salary is payment for work, usually paid monthly. left to make their own decisions and organise their
6. Bonus is an additional amount of payment above basic own work.
pay as a reward for good work. 30. Recruitment is the process of identifying that the
7. The commission is a payment relating to the number business needs to employ someone up to the point at
of sales made which applications have arrived at the business.
8. Profit sharing is a system whereby a proportion of the 31. Job analysis identifies and records the responsibilities
company's profits are paid out to employees and tasks relating to a job.
9. Job satisfaction is the enjoyment derived from feeling 32. A job description outlines the responsibilities and
that you have done a good job duties to be carried out by someone employed to do a
10. Job rotation involves workers swapping around and specific job.
doing each specific task for only a limited time and 33. Job specification is a document which outlines the
then changing around again requirements, qualifications, expertise, physical
11. Job enrichment involves looking at jobs and adding characteristics, etc., for a specified job
tasks that require more and/or responsibility 34. Internal recruitment is when a vacancy is filled by
12. Team-working involves using groups of workers and someone who is an existing employee of the business
allocating specific tasks and responsibilities to them 35. External recruitment is when a vacancy is filled by
13. Training is the process of improving a worker's skills someone who is not an existing employee and will be
14. Promotion is the advancement of an employee in an new to the business
organisation, for example, to a higher job/managerial 36. induction training is an introduction given to a new
level employee, explaining the business's activities,
15. Organisational structure refers to the levels of customs and procedures and introducing them to their
management and division of responsibilities within an fellow workers
organisation 37. On-the-job training occurs by watching a more
16. An organisational chart refers to a diagram that experienced worker doing the job
outlines the internal management structure 38. Off-the-job training involves being trained away from
17. Hierarchy refers to the levels of management in any the workplace, usually by specialist trainers.
organisation, from the highest to the lowest. 39. Workforce planning is establishing the workforce
18. A level of hierarchy refers to needed by the business for the foreseeable future in
managers/supervisors/other employees who are terms of the number and skills of employees required.
given a similar level of responsibility in an 40. Dismissal is when employment is ended against the
organisation. will of the employee, usually for not working according
19. Chain of command is the structure in an organisation to the employment contract.
which allows instructions to be passed down from 41. Redundancy is when the employee is no longer
senior management to lower levels of management. needed and so loses their job. It is not due to any
20. The span of control is the number of subordinates aspect of their work being unsatisfactory.
working directly under a manager. 42. A contract of employment is a legal agreement
21. Directors are senior managers who lead a particular between an employer and an employee, listing the
department or a division of a business. rights and responsibilities of workers.
22. Line managers have direct responsibility for people 43. Communication is the transferring of a message from
below them in the hierarchy of an organisation. the sender to the receiver, who understands the
23. Supervisors are junior managers who have direct message.
control over the employees below them in the 44. A message is the information or instructions being
organisational structure. passed by the sender to the receiver
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for personal use only by Dev Agarwal at Chirec International School on 15/07/24.
CAIE IGCSE BUSINESS STUDIES
WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised
for personal use only by Dev Agarwal at Chirec International School on 15/07/24.
CAIE IGCSE BUSINESS STUDIES
WWW.ZNOTES.ORG Copyright © 2024 ZNotes Education & Foundation. All Rights Reserved. This document is authorised
for personal use only by Dev Agarwal at Chirec International School on 15/07/24.
CAIE IGCSE BUSINESS STUDIES
assets before it can begin trading. 24. A gross profit is made when revenue is greater than
2. Working capital is the finance needed by a business to the cost of sales
pay for its day-to-day activities. 25. A trading account shows how the gross profit of a
3. Capital expenditure is money spent on non-current business is calculated
assets which will last for more than one year. 26. Net profit is the profit made by a business after all
4. Revenue expenditure is money spent on day-to-day costs have been deducted from revenue. It is
expenses which do not involve the purchase of a long- calculated by subtracting overhead costs from gross
term asset, for example, wages or rent. profits
5. Internal finance is obtained from within the business 27. Depreciation is the fall in the value of a fixed asset
itself over time
6. External finance is obtained from sources outside of 28. Retained profit is the net profit reinvested back into
and separate from the business the company after deducting tax and payments to
7. Micro-finance is providing financial services - including owners, such as dividends
small loans - to poor people not served by traditional 29. The statement of financial position shows the value of
banks a business's assets and liabilities at a particular time
8. Crowdfunding is funding a project or venture by 30. Assets are those items of value which are owned by
raising money from a large number of people who the business. They may be non-current (fixed) assets
each contribute a relatively small amount, typically via or current assets
the internet 31. Liabilities are debts owed by the business. They may
9. The cash flow of a business is the cash inflows and be non-current liabilities or current liabilities
outflows over a period of time 32. Non-current assets are items owned by the business
10. Cash inflows are the sums of money received by a for more than one year
business during a period of time 33. Current assets are owned by the business and used
11. Cash outflows are the sums of money paid out by a within one year
business during a period of time 34. Non-current liabilities are long-term debts owed by
12. A cash flow cycle shows the stages between paying the business, repaid over more than one year
out cash for labour, materials, and so on, and 35. Current liabilities are short-term debts owed by the
receiving cash from the sale of goods business, repaid in less than one year
13. Profit is the surplus after total costs have been 36. Capital employed is shareholders' equity + non-
subtracted from revenue current liabilities and is the total long-term and
14. A cash flow forecast is an estimate of future cash permanent capital invested in a business
inflows and outflows of a business, usually on a 37. Liquidity is the ability of a business to pay back its
month-by-month basis. This then shows the expected short-term debts
cash balance at the end of each month 38. Profitability is the measurement of the profit made
15. Net cash flow is the difference, each month, between relative to either the value of sales achieved or the
inflows and outflows. capital invested in the business
16. Closing cash (or bank balance) is the amount of cash 39. Illiquid means that assets are not readily convertible
held by the business at the end of each month. This into cash
becomes next month's opening cash balance.
17. Opening cash (or bank balance) is the amount of cash 1.6. External Influences on Business
held by the business at the start of the month.
18. Working capital is the finance needed by a business to Activity
pay for its day-to-day expenses.
19. Accounts are the financial records of a firm's 1. Gross Domestic Product (GDP) is the total value of the
transactions output of goods and services in a country in one year
20. Final accounts are produced at the end of the financial 2. A recession is when there is a period of falling GDP
year and give details of the profit or loss made over 3. Inflation is the increase in the average price level of
the year and the worth of the business goods and services over time
21. An income statement is a financial statement that 4. Unemployment exists when the people who are willing
records the income of a business and all costs and able to work cannot find a job
incurred to earn that income over a period of time. It is 5. Economic growth is when a country's GDP increases-
also known as a profit and loss account more goods and services are produced than in the
22. The revenue is the income to a business during a previous year
period of time from the sale of goods and services 6. Balance of payments records the difference between
23. The cost of sales is the cost of producing or buying the a country's exports and imports
goods actually sold by the business during a time 7. Real income is the value of income, and it falls when
period prices rise faster than money income
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CAIE IGCSE BUSINESS STUDIES
8. Exports are goods and services sold from one country 21. Private benefits of an activity are the gains to a
to another country business or the consumer of the product
9. imports are goods and services bought by one country 22. External costs are costs paid for by the rest of society,
from other countries other than the business, as a result of business activity
10. The exchange rate is the price of one currency in 23. External benefits are the gains to the rest of society,
terms of another other than the business, as a result of business activity
11. Exchange rate appreciation is the rise in the value of a 24. Social cost = external costs + private costs
currency compared with other currencies 25. Social benefit = external benefits + private benefits
12. Exchange rate depreciation is the fall in value of a 26. Globalisation is the term used to describe increases in
currency compared with other currencies worldwide trade and movement of people and capital
13. Fiscal policy is any change by the government in tax between countries
rates or public sector spending 27. Free trade agreements exist when countries agree to
14. Direct taxes are paid directly from incomes, eg, trade imports/exports with no barriers, such as tariffs
income tax or profits tax or quotas
15. indirect taxes are added to the prices of goods, and 28. An import tariff is a tax placed on imported goods
taxpayers pay the tax as they purchase the goods, eg- when they arrive in the country
VAT 29. An import quota is a restriction on the quantity of a
16. Disposable income is the level of income a taxpayer product that can be imported
has after paying income tax 30. Protectionism is when a government protects
17. An import tariff is a tax on an imported product domestic businesses from foreign competition using
18. Monetary policy is a change in rates by the tariffs and quotas
government or central bank 31. Multinational businesses are those with factories,
19. Supply-side policies aim to increase supply and make production or service operations in more than one
the economy more efficient country
20. Private costs of an activity are the costs paid for by a
business or the consumer of the product
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CAIE IGCSE
Business Studies
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