2.1 keywords

Question 1

internal finance

Answer 1

Funds used within a business to fund expansion or growth e.g. retained profits, sale of assets

Question 2

owners capital

Answer 2

When an entrepreneur invests their own money into a business e.g. from personal savings.

Question 3

retained profit

Answer 3

Profit kept within the business from profit after tax to help finance future activity.

Question 4

sale of assets

Answer 4

A method of raising short term finance by disposing of business assets in return for cash.

Question 5

external finance

Answer 5

The ability to raise funds from sources outside of the business e.g. bank loans

Question 6

peer to peer funding

Answer 6

The practice of an individual lending to other individuals with whom there is no relationship or contact.

Question 7

business angels

Answer 7

Wealthy individuals making personal investments into a start-up business in return for a share of the business i.e. percentage equity.

Question 8

crowd funding

Answer 8

This is when a business venture is funded by raising small amounts of money from lots of people e.g. through the internet.

Question 9

loans

Answer 9

When a lender provides capital to a borrower and the borrower agrees to repay the borrowed money, with interest over a period of time.

Question 10

share capital

Answer 10

Money raised from the sale of shares which is used to fund future activities.

Question 11

venture capital

Answer 11

Investment from an established business or entrepreneur into a new business in return for a percentage equity.

Question 12

overdraft

Answer 12

The pre-agreed facility to overspend on a current account, up to an agreed sum.

Question 13

leasing

Answer 13

A contract that allows the renting of assets from another party e.g. machinery, equipment, lease premises.

Question 14

grants

Answer 14

Fixed amount of capital provided to a business by the government or other organisations to fund specific projects.

Question 15

trade credits

Answer 15

An arrangement by a business to provide goods or services on account e.g. 30 days.

Question 16

limited liability

Answer 16

Where the investor is only liable for the amount that they have invested, not the debts of the business.

Question 17

unlimited liability

Answer 17

Where the investor is liable for all the debts incurred by a business, risking the loss of their assets and possession.

Question 18

shareholders

Answer 18

Investors who are part owners of a company and receive dividends in return for their investment.

Question 19

dividends

Answer 19

A percentage of profit paid to shareholders as a reward for their investment.

Question 20

business plans

Answer 20

A document that describes how an entrepreneur proposes to set up a new business in order to receive external finance (Finance, Marketing, HR and Operations).

Question 21

cash flow forecast

Answer 21

The movement of cash in and out of a business over a period of time.

Question 22

cash flow forecasting

Answer 22

The process of estimating the expected cash inflows and outflows of a business over a period of time.