Definition List Part 4
CAMBRIDGE O LEVEL COMMERCE (7100)
COMPLETE DEFINITIONS NOTES — PART 4
DOCUMENTS USED IN TRADE
Invoice
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A document sent by the seller to the buyer showing details of goods sold.
Contains:
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Quantity
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Price
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Trade discount
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Total amount due
Pro Forma Invoice
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A preliminary invoice sent before goods are delivered.
Statement of Account
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A summary of transactions between buyer and seller over a period.
Receipt
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Written proof that payment has been received.
Debit Note
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Document sent to inform a buyer that their account has been debited.
Reasons:
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Undercharge correction
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Returned containers charged
Credit Note
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Document sent to inform a buyer that their account has been credited.
Reasons:
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Returned goods
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Overcharge correction
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Damaged goods
Order Form
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Document used by buyers to request goods.
Quotation
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Statement showing prices and terms offered by a seller.
Tender
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Formal offer to supply goods or services at a stated price.
Delivery Note
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Document accompanying goods delivered to a buyer.
Consignment Note
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Document used in transport showing goods being carried.
Bill of Exchange
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Written order requiring payment at a future date.
Promissory Note
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Written promise to pay a certain amount in future.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.
Hire Purchase
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System allowing goods to be paid for in instalments while using them immediately.
Features:
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Deposit paid first
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Ownership transferred after final payment
Instalment Credit
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Buying goods by paying regularly over time.
Cash Discount
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Reduction in price for immediate payment.
Trade Discount
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Reduction in catalogue price usually given to wholesalers or retailers.
Catalogue
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Book or digital list showing products for sale.
Price List
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List showing prices of goods offered for sale.
Goods on Approval
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Goods sent to customers who may return them if unsatisfied.
After-Sales Service
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Services provided after goods are sold.
Examples:
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Repairs
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Guarantees
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Installation
Guarantee
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Promise by seller to repair or replace faulty goods.
Warranty
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Written assurance covering repairs within a specified period.
Consumer Protection
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Laws and actions protecting consumers from unfair practices.
Consumer Rights
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Rights ensuring fair treatment of consumers.
Examples:
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Right to safety
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Right to information
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Right to choose
Bar Code
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Machine-readable code containing product information.
EPOS (Electronic Point of Sale)
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Computerised system recording sales electronically.
Stock Control
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Managing inventory levels effectively.
Buffer Stock
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Extra stock kept to avoid shortages.
Lead Time
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Time between placing and receiving an order.
Stock Turnover
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Number of times stock is sold and replaced over a period.
BUSINESS ORGANISATIONS
Sole Trader
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Business owned and controlled by one person.
Advantages:
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Easy to set up
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Keeps all profit
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Quick decisions
Disadvantages:
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Unlimited liability
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Limited capital
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Heavy workload
Partnership
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Business owned by two or more people.
Partnership Deed
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Written agreement between partners.
Limited Company
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Business owned by shareholders with limited liability.
Private Limited Company
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Company whose shares cannot be sold publicly.
Public Limited Company
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Company whose shares can be sold to the public.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.
Shareholder
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Person owning shares in a company.
Share Capital
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Money raised through issuing shares.
Ordinary Shares
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Shares giving voting rights and variable dividends.
Preference Shares
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Shares receiving fixed dividends before ordinary shareholders.
Dividend
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Portion of profit distributed to shareholders.
Debenture
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Long-term loan certificate issued by a company.
Co-operative Society
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Business owned and run by members for mutual benefit.
Franchise
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Right allowing a business to use another company’s brand and system.
Franchisor
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Business granting franchise rights.
Franchisee
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Person buying franchise rights.
Multinational Company
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Business operating in several countries.
Nationalisation
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Government takeover of private businesses.
Privatisation
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Transfer of businesses from public ownership to private ownership.
Public Corporation
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Government-owned business established by law.
Joint Venture
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Business project owned by two or more businesses together.
Merger
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Combining of two businesses into one.
Takeover
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One business gaining control of another.
Vertical Integration
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Combining businesses at different stages of production.
Horizontal Integration
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Combining businesses at the same stage of production.
Conglomerate Integration
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Combining businesses in unrelated activities.
Economies of Scale
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Cost advantages gained from large-scale production.
Diseconomies of Scale
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Problems arising when businesses become too large.
Limited Liability
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Owners only lose amount invested in business.
Unlimited Liability
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Owners are personally responsible for business debts.
Bankruptcy
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Legal condition where a person or business cannot pay debts.
Written and Compiled By Sir Hunain Zia (AYLOTI), World Record Holder With 154 Total A Grades, 11 World Records and 7 Distinctions, Educate A Change.
ENTREPRENEURSHIP
Entrepreneur
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Person who organises production and takes business risks.
Business Plan
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Document outlining business objectives and strategies.
Innovation
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Introduction of new ideas or methods.
Risk Bearing
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Taking responsibility for possible business losses.
Profit Motive
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Desire to earn profit from business activity.
Opportunity Cost
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Benefit lost by choosing one option over another.
Market Opportunity
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Gap in the market that businesses can exploit.
Business Ethics
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Moral principles guiding business behaviour.
Corporate Social Responsibility (CSR)
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Business responsibility towards society and environment.
Sustainability
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Meeting present needs without harming future generations.