8. Distinguish between short-term personal financial goals and long-term personal financial goals, providing an example. 9. State the steps involved in preparing a long-term budget. EVALUATE AND COMMUNICATE 10. Determine the difference between wants and needs in relation to budgeting and financial planning. Answers and sample responses for this topic are available online.
LESSON 22.4 What is business finance?
LEARNING INTENTION By the end of this lesson you should be able to: • identify sources of revenues and costs for businesses • explain how financial records can inform decisions about how business is conducted.
Tune in Consider a simple cup of coffee.
FIGURE1 Coffee is a popular item sold in cafes.
1. Split a page in your book or Word document into two, so that you have two sides or columns. With a partner, brainstorm the costs involved in making a cup of coffee for a customer in a cafe. Place these on the left- hand side. 2. Now think about the money that the business takes in. How much is a cup of coffee? How many cups of coffee might a cafe sell in one day? Would the daily income from the cups of coffee a cafe sells be likely to cover its daily ingredient costs? 3. Is this the only source of income for a business? What else could the business sell? Where else might the business get money from? Add these to the right-hand side of your page.
22.4.1 Revenue and costs for businesses All business activity involves thinking about the money coming in or money going out of a business. Take the example of selling a cup of coffee in a cafe. Every time the cafe sells a cup of coffee, it receives money. Every time it buys milk from other businesses, it must pay for it. If a business owner employs any additional staff, they have to be paid wages. A cafe also has regular electricity, gas and internet bills topay. All of these money-based activities are known as financial transactions. Running a business involves keeping a record of all costs and sources of income because it will help the owner to track how well the business is performing.
TOPIC22 Financial goals and decision-making 637
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