Self Employment Finances

What is the definition of fixed costs in business?

• Variable expenses that change with the level of production

• Costs that are only incurred when sales are made

• Expenses that increase with the level of production

• Expenses that do not change regardless of the level of production or sales

Give an example of a fixed cost in a business.

• Cost of raw materials

• Employee salaries

• Rent for the business premises

• Advertising expenses

Explain the concept of variable costs in business.

• Variable costs are expenses that remain constant regardless of business activity.

• Variable costs are expenses that only occur once in a business's lifetime.

• Variable costs are expenses that are not related to the business's activity.

• Variable costs are expenses that change in proportion to the activity of a business.

Provide an example of a variable cost in a business.

• Raw materials

• Advertising expenses

• Rent for the office space

• Employee salaries

How is Gross Profit calculated in a business?

• Total revenue minus cost of goods sold

• Total revenue plus cost of goods sold

• Total revenue divided by cost of goods sold

• Total revenue multiplied by cost of goods sold

What does Gross Profit indicate about a business?

• It indicates the amount of debt a business has.

• It indicates the profitability of a business.

• It indicates the total revenue of a business.

• It indicates the number of employees in a business.

What is Net Profit in a business context?

• The amount of money a company has left over after all expenses have been deducted from its total revenue.

• The salary paid to the CEO of a company

• The total revenue of a company before deducting any expenses

• The amount of money a company owes to its creditors

How is Net Profit different from Gross Profit?

• Net profit considers all expenses, including taxes, while gross profit only considers the cost of goods sold.

• Net profit is the total revenue, while gross profit is the profit after deducting all expenses.

• Net profit includes personal expenses, while gross profit only includes business expenses.

• Net profit is calculated before taxes, while gross profit is calculated after taxes.

Define the term Cash Flow in business.

• Cash flow is the process of managing employee salaries in a business

• Movement of money into and out of a business

• Cash flow is the movement of goods within a business

• Cash flow refers to the amount of cash a business has on hand at any given time

Explain the concept of Capital in business.

• The marketing and advertising strategies used by a business

• Financial assets or resources used to start and operate a business

• The number of employees working in a business

• The physical buildings and equipment used in a business