BUSI 1301 Business Principles Exam 1 review
(key words to consider during exam prep)
University of Houston
,Business - --Any activity that seeks to provide goods and services to others while operating at
a profit.
Entrepreneur - --A person who risks time and money to start and manage a business.
Revenue - --The total amount of money a business takes in during a given period by selling
goods and services.
Profit - --The amount of money a business earns above and beyond what it spends for salaries
and other expenses.
Loss - --Occurs when a business's expenses are more than its revenues.
Risk - --The chance an entrepreneur takes of losing time and money on a business that may
not prove profitable.
Do Businesses take risks? - --Yes, but with great risks could come great profit. Risk should
match profit potential.
Standard of Living - --The amount of goods and services people can buy with the money they
have.
Quality of Life - --The general well-being of a society in terms of its political freedom, natural
environment, education, healthcare, safety, amount of leisure and rewards that add to
personal satisfaction.
, Stakeholders - --All the people who stand to gain or lose by the policies and activities of a
business and whose concerns the businesses need to address. To be World Class a company
must respond to ALL stakeholders
Outsourcing - --Contracting with other companies (often in other countries) to do some of the
firm's functions, like production or accounting.
Insourcing - --Foreign companies opening offices and factories in the United States.
Nonprofit Organization - --An organization whose goals do not include making a personal
profit for its owners or organizers. Nonprofits often strive for social gains that are achieved by
its financial gains. These organizations are not subject to income taxes.
Factors of Production - --Land
Labor
Capital
Machines, tools, and other means of manufacturing NOT cash, bonds, etc.
Entrepreneurship
Knowledge
Entrepreneurs use what they've learned maximize the factors of production to grow their
businesses and increase wealth.
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