BTEC Business - C3
- Created by: Kaicee05
- Created on: 14-05-23 15:24
Capital Expenditure
Capital expenditure includes assets that are purchased and will stay in the business for more than 12 months.
Non Current Assets (Tangible)
Non current assets - Owned by the business and will remain for a long period of time. Most lose their value over time and are depreciated. Tangible means they can be touched.
Land - Land the business owns and can be used to build or grown on. They can rent out land which would lead to revenue income.
Buildings & premesis - Gives businesses places where they can create and manufacture their products.
Machinery - These are used to help create the products and ensure smooth running of business.
Vehicles - They owe these to help transport or deliver goods and raw materials.
Fictures & Fittings - These are the things a business needs to do to fulfill it's function, eg. restaurants need tables.
Intangible Assets
Intangible Assets - Owned by the business and will add value to it but cannot be touched.
Goodwill - When buying an existing business their name and reputation will already be known. They have exisiting customers and the selling price will be higher because of value. A sum of money is added.
Patents - A legal protection of an invention, eg. a new product. It stops others from copying it. Businesses can exploit this in the future at a premium selling price.
Brand name - A feature of a business recognised by people and helps distiguish from others. There may be certain expectations that come with them.
Trademarks - A symbol, logo, brand name, words or colours that set the business apart from each other and builds up customer loyalty. It can influence customers choices and adds value to the business.
Revenue Expenditure
Revenue expenditure is day to day expenses which are usually used immediately.
Types of Revenue Expenditure
Inventory - Materials the business holds to produce goods. These require an inventory, eg. shampoo for hairdressers.
Rents - Cost of using premesis not owned by the business. They're regular, monthly payments for the use of the premesis.
Rates - Businesses pay non-domestic rates in the same way people pay council tax. A sum of money is given towards services based on the location of the business.
Heating & Lighting - Covers payments for services such as gas and electric. Receive regular bills for provision and the use of service.
Water - Involves payments for supply of water. It may be at a fixed rate or is based on usage on a water meter.
Insurance - Legally required to take out certain types of insurance. It protects from cases. Eg. Buildings, contents, public and employee liability.
Marketing - Range of costs for things to attract customers. May include costs for advertisement and promotion.
Types of Revenue Expenditure
Administration - Paperwork done by a business. Done internally between employees or externally between customers. Costs may include postage, packagaing or telephone costs.
Saleries - An annual figure given to an employee divided into equal monthly payments. They will have to pay tax, national insurance and pension.
Wages - Hourly rate paid to employees. Direct link between hours worked and money paid.
Bank charges - Banks charge businesses for transactions that take place, eg. when cheques are paid in. It may be cost free as an incentive but also could be quite expensive.
Interest paid - If the bank has a loan or mortgage they'll be charged interest on top. They may offer big businesses preferential rates if they're confident the money will be paid back. Some have quite high charges.
Discount allowed - These are offered to customers and are an expense to the business as it reduces the amount of cash flowing into the business. It may be used to attract customers to buy bulk purchases or to gain a competitve advantage.
Types of Revenue Expenditure
Depreciation - This is when assets lose their value over time. Depreciation is used to spread the cost of an asset over it's useful life. Businesses can match the cost of an asset against time.
- Straight line depreciation is when an asset depreciates by a set amount each month.
- Reducing balance is done by a set percentage.
Comments
No comments have yet been made