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.

Superannuation – Contributions paid towards a pension

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 

Strongroom - A safe for storage of valuables and important documents 

Trustee - A person appointed by another person to manage funds.