Money Words
What is revenue?
The money a business earns
What is a budget?
A plan for how a business will spend and save money
What is the formula for profit?
Profit = Revenue - Expenses
Your store is busy, but profit is low. What might be the problem?
Costs are high OR prices are too low.
You sold 12 items at $4 each. Your total expenses were $30. What is your profit?
Revenue = 12 × $4 = $48
Profit = $48 − $30 = $18
What is a liability?
Something that a business owes
What is the purpose of tracking expenses?
To know where the money is going and stay within the budget
What is markup?
How much a business increases the price above cost
A new competitor opens across the street. What is one financial change you might make?
Lower prices, increase advertising, add deals
A product costs $6 to make and sells for $10. What is the per-unit markup?
$4
What is equity?
The value an owner has after subtracting liabilities
What is a fixed expense?
A cost that stays the same each month
A product costs $12 to make and is sold for $20. What is the markup?
$8
Your business wants to grow but doesn’t have enough money. What can you do?
Get a loan, find investors, or save profits.
A business needs $500 to break even. Each item sells for $25. How many items must they sell?
20 items.
What is cash flow?
The movement of money into and out of a business
What is cost-cutting?
Finding ways to reduce spending
What is break-even point?
When total revenue = total costs
You lowered the price and sold more items, but total profit decreased. Why?
The price was too low to cover costs.
You start with $100. You spend 30% of it on shirts for your team. How much money do you have left?
30% of 100 = 30
Left = $70
What is interest?
Extra money paid for borrowing money
A business budgeted $500 for materials but ended up needing $650. What should the business do next?
Adjust the budget, cut spending in other areas, or find a cheaper supplier.
Why might a business raise its prices?
To increase profit, cover higher costs, or show higher value.
A business buys a $1,000 machine that will last 5 years. What is this type of financial planning called?
Capital investment
A notebook costs $5. Sales tax is 8%. What’s the total price you pay?
Tax = 0.08 × 5 = 0.40
Total = 5.40 → $5.40