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Business Arithmetic — Revision Notes

CBSE · Class 12 · Entrepreneurship

Business Arithmetic revision notes for CBSE Class 12 Entrepreneurship: 4 topics in quick points. Part of the CBSE Class 12 Entrepreneurship syllabus.

11 formulas & key relations5 concepts

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An infographic explaining how 'Unit of Sale' is determined in businesses selling multiple products or services, using examples like a grocery store (customer as unit) and a restaurant (diner as unit).
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Key Topics to Revise

1

Unit of Sale, Unit Price, and Unit Cost – Multiple Products

  • Unit of Sale is the standard measure used to track and compare business performance. For multi-product businesses, it is usually defined as one 'customer transaction' or one 'customer visit'.
  • In a grocery store, the Unit of Sale is one 'customer' and the Unit Price is the average billing per customer (Total Billed Amount ÷ Total Number of Customers).
  • In a restaurant, the Unit of Sale is one 'diner' (not one table or one bill), and Unit Price is the average amount billed per diner.
2

Break-Even Analysis – Multiple Products

  • Breakeven Point (BEP) is the level of sales at which Total Revenue = Total Expenses — no profit, no loss.
  • For a single product: BEP (Qty) = Fixed Expenses ÷ (Selling Price per Unit – Variable Cost per Unit).
  • For multiple products, Weighted Average Contribution Margin per unit is calculated first, then used in the BEP formula.
3

Cash Flow Projection

  • Cash is the lifeblood of every business — without adequate cash flow, even profitable businesses can fail.
  • Cash Flow = Movement of money in and out of a business during a specific period.
  • Cash Inflow = money coming into the business (sales, loans received, interest earned, rent received, sale of assets).
4

Financial Management and Budgeting

  • Financial Management = Planning, Organizing, Directing, and Controlling financial activities (procurement and utilization of funds).
  • Main Objective: Wealth maximization of shareholders.
  • Three Key Elements of Financial Management: (1) Financial Planning, (2) Financial Control, (3) Financial Decision-Making.

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Full Notes

Key Concepts

In businesses dealing with multiple productsFor multiple productsCash Flow refers to the movementFinancial Management is the processA Budget is a quantitative expression

Frequently Asked Questions

What are the important topics in Business Arithmetic for CBSE Class 12 Entrepreneurship?
Key topics in Business Arithmetic include Unit of Sale, Unit Price, and Unit Cost – Multiple Products, Break-Even Analysis – Multiple Products, Cash Flow Projection, Financial Management and Budgeting. Study these first, then practise questions on each for the CBSE Class 12 board exam.

Sources & Official References

Content is aligned to the official syllabus. Refer to the board website for the latest curriculum.

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