Key Business Terms
Income
Basic wage – Payment for working a normal week
Bonus – Income in addition to basic pay
Budget – A plan of future income and expenditure
Commission - A payment based on each item sold to encourage salespeople to sell more goods.
Deductions - Money taken from an employees pay before he receives it.
Gross pay - total earnings before deductions.
Income tax – money paid to the government
Net Pay - Take home pay
Overtime - The payment for working extra hours
Payslip – the document that an employee gets on payday, giving details of pay and deductions.
Statutory Deductions – Deductions compulsory by law paid to the government.
Tax credit – Given each year to individual taxpayers for the purpose of reducing their tax liability
Expenditure
False economies – Short term saving – long term cost
Impulse buying – Buying without thinking of the cost.
Opportunity cost – Making a choice as a result of having a limited income.
Priorities – Spending on the most needed or most important items first
Household budgeting
Breakeven – Income equals expenditure
Budget – A plan of future income and expenditure
Closing Cash – Opening cash and net cash.
Consumer Durables – Goods that will last for a long period of time.
Deficit - Expenditure greater than income
Estimate – A guess at the size of the income and expenditure.
Net Cash – Total income minus total expenditure
Surplus – Income greater than expenditure.
Household accounts
Balance – The difference between the two sides of an account
Contra Entry – Where money is switched between the Cash A/C and Bank A/C.
Credit - Right hand side of Analysed Cash book
Debit – Left hand side of Analysed Cash book
The consumer
Loss Leader - A product sold at a very low price to attract customers.
Price war - Where shops are selling similar products undercut each other to attract customers.
Caveat Emptor
Caveat Emptor - Let the buyer beware - Goods should be carefully examined before purchase
Redress - Some form of compensation
Money and Banking
Cheque - Written instruction by a current account holder to his bank to pay a stated amount of money to a named person.
Credit Card - Plastic money: Buy now - Pay later with interest
Token money - Coins that do not contain their actual value in metal
Bank Reconcilliation Statement - Prepared to reconcile bank account and bank statement
Bank statement - Contains details of all transactions in a customers current account
Current account - Customer receives cheque book - no interest paid on account
Deposit account - Savings account where interest is earned on money invested.
Government Duty on Cheques - Tax collected by the government on cheques
Overdraft Accommodation - Permission granted by banks to currecnt account holders allowing them to overdraw their accounts by a stated amount.
Electronic Funds Transfer at Point of Sale - The use of Laser Cards and smart cards to pay for goods.
Executor - A person appointed by another to ensure that his / her estates is distributed according to his / her will.
Life assurance - Policy providing money for family after death of main earner in family.
Mortgage - House Loan, deeds of house are given as security.
Share - Part ownership of a company
Stock Exchange - A market where shares are bought and sold
Trustee - A person appointed by another person to manage funds.
