Learning objective
Explain revenue, costs, profit and loss in a business planning context.
Read the explanation, check the common trap, then practise with flashcards and questions.
At a glance
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Flashcards
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Topic
Business planning
Subtopic
Basic financial terms
Study support
Understand this objective
Quick explanation
Explain revenue, costs, profit and loss in a business planning context
- This point belongs to Business planning, especially Basic financial terms.
- You need to be able to explain revenue, costs, profit and loss in a business planning context.
- The key ideas to know are revenue, loss, and profit.
- Use the linked flashcards and practice questions to check recall, then practise applying the idea in an exam-style answer.
Key concepts
Why it matters
This objective helps connect Basic financial terms to exam-style questions, flashcards, and revision notes for Business planning.
Quick student answer
A small manufacturer has revenue of £50,000, fixed costs of £12,000 and variable costs of £25,000. Calculate the profit or loss.
Direct answer
£13,000 profit
How it works
Total costs = £12,000 + £25,000 = £37,000. Profit = £50,000 – £37,000 = £13,000. Since the result is positive, the business makes a profit of £13,000.
Key terms
- Profit: The amount remaining after all costs have been deducted from revenue.
Common trap
Mixing up revenue and profit: Revenue is the total sales income; profit is revenue minus total costs.
Related questions
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Flashcard prompts
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Revision tools
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Revision notestopic notes
Open the full topic revision notes when you are ready to review this objective in context.
Open revision notesRelated learning objectives
- Explain why businesses create plans, including setting up a new business, raising finance, setting objectives and organising business functions.
Purpose and sections of business planning
- Identify the main sections of a business plan.
Purpose and sections of business planning
- Analyse the benefits and drawbacks of business planning.
Purpose and sections of business planning
- Distinguish variable costs, fixed costs and total costs.
Basic financial terms