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Business Arithmetic

CBSE · Class 12 · Entrepreneurship

Quick revision notes for Business Arithmetic — CBSE Class 12 Entrepreneurship. Key concepts, formulas, and definitions for last-minute revision.

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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?
Business Arithmetic covers several key topics that are frequently asked in CBSE Class 12 board exams. Focus on the core concepts listed on this page and practise related questions to build confidence.
How to score full marks in Business Arithmetic — CBSE Class 12 Entrepreneurship?
Start by understanding all key concepts. Practise previous year questions from this chapter. Revise formulas and definitions regularly. Use flashcards for quick revision before the exam.

Sources & Official References

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

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