Key Words (Junior Cert Business Studies): Revision Notes
Key Words
Understanding key business and economic terms is essential for success in Junior Cycle Business Studies. These terms form the foundation of business knowledge and appear frequently in exam questions. Learning these definitions will help you understand business concepts and communicate your ideas clearly in exams.
Essential financial terms
Account - A record that tracks money coming in and going out. For example, your bank account shows deposits and withdrawals.
Balance - The amount of money in an account at any given moment. If you have €100 in your bank account, that's your current balance.
Budget - A financial plan showing expected income and planned spending for a future period. Families create budgets to manage household expenses, just like businesses plan their finances.
An account is simply a record of financial transactions, like a diary for money movements. Think of it as keeping track of every euro that comes in and goes out of your business or personal finances.
Profit - Money left over after a business pays all its expenses. If Supermac's earns €1000 in sales but spends €600 on ingredients and wages, their profit is €400.
Loss - When a business spends more money than it earns. This happens when expenses exceed income.
Worked Example: Calculating Profit
Step 1: Identify total income (revenue) Supermac's daily sales = €1,000
Step 2: Identify total expenses Ingredients + wages + rent = €600
Step 3: Apply the profit formula
Core business concepts
Enterprise - The ability to spot business opportunities and take risks to turn ideas into successful businesses. Irish entrepreneurs like the founders of Ryanair showed great enterprise.
Entrepreneur - A person who starts and runs their own business, taking personal and financial risks hoping to make a profit. Paddy McKillen and Denis O'Brien are famous Irish entrepreneurs.
Competition - When businesses try to win customers by offering better products, services, or prices. Tesco and Dunnes Stores compete for grocery shoppers.
Market - Any place where buyers and sellers meet to exchange goods and services. This could be a physical location like Moore Street Market or online platforms like Done Deal.
Enterprise means having the vision and courage to start a business and take calculated risks. It's about turning ideas into profitable reality, not just having good ideas.
Economic fundamentals
The economy operates on basic principles that affect every business and consumer decision. Understanding these concepts helps explain why prices change and how businesses respond to market conditions.
Supply - The quantity of products businesses are willing to sell at different prices. When iPhone prices are high, Apple supplies more phones to shops.
Demand - The quantity of products customers want to buy at different prices. When concert tickets are expensive, fewer people demand them.
Inflation - When the general price level of goods and services increases over time. Your weekly shopping might cost more this year than last year due to inflation.
Economic cycle - The pattern of economic growth that includes periods of boom (high growth), recession (decline), slump (low activity), and recovery (improvement).
Supply and demand work together to determine market prices - high demand and low supply usually mean higher prices. This relationship drives most business pricing decisions.
Employment and workplace terms
Employment - Work done in return for payment. Most adults in Ireland are employed by businesses or organisations.
Unemployment - When people who want to work cannot find suitable jobs. Ireland's unemployment rate shows what percentage of workers are looking for jobs.
Wage - Payment calculated by multiplying hourly rate by hours worked. If you earn €12 per hour and work 20 hours, your wage is €240.
Salary - Fixed monthly or yearly payment regardless of hours worked. Teachers and civil servants typically receive salaries.
The difference between wages and salaries is important: wages vary with hours worked, while salaries remain fixed regardless of hours. Most part-time jobs pay wages, while professional careers typically offer salaries.
Government and taxation
Tax - Money collected by the government from individuals and businesses to pay for public services like hospitals and schools.
VAT (Value Added Tax) - A tax added to the price of goods and services. In Ireland, standard VAT rate is 23%, so a €100 item costs €123 including VAT.
Income tax - Tax paid on earnings from work. Higher earners pay higher rates of income tax in Ireland's progressive tax system.
VAT is included in most prices you see in shops, but it's important to understand that businesses must collect this tax for the government. When calculating business costs, always consider whether prices include or exclude VAT.
Banking and finance basics
Interest - Money paid for borrowing or earned for saving. Banks pay interest on savings accounts and charge interest on loans.
Loan - Money borrowed that must be repaid with interest over time. Mortgages for buying houses are long-term loans.
Credit - The ability to borrow money or buy goods with payment delayed until later. Credit cards allow you to spend now and pay later.
Overdraft - Permission from a bank to withdraw more money than you have in your account, up to an agreed limit.
Interest works both ways in banking: you earn interest when you save money (the bank pays you), but you pay interest when you borrow money (you pay the bank). Understanding this helps explain why savings accounts have low interest rates while loans have higher rates.
Insurance essentials
Insurance - Protection against financial loss from unexpected events. Car insurance covers accident costs, while health insurance helps pay medical bills.
Premium - The fee paid to an insurance company for coverage. You might pay €500 annually as a premium for car insurance.
Claim - A request for payment from an insurance company when something insured is damaged or lost.
Key Points to Remember:
- Profit formula: - businesses succeed by earning more than they spend
- Supply and demand determine market prices - high demand with low supply increases prices
- Enterprise involves taking calculated risks to create business opportunities
- Budgeting helps individuals and businesses plan their finances effectively
- Key terms appear frequently in exams, so understanding their meanings is crucial for success
- VAT at 23% is added to most goods and services in Ireland
- Interest can work for you (savings) or against you (borrowing)