2.1.1 internal finance

Question 1

what is internal finance?

Answer 1

it is the money generated by the business or the current owners

Question 2

what is capital expenditure?

Answer 2

a capital expenditure is an amount spent to acquire or significantly improve the capacity or capabilities of a long-term physical asset

Question 3

what is revenue expenditure?

Answer 3

refers to payments for goods and services that have already been consumed or will be. it also includes the maintenance and repair of building and machines.

Question 4

what is owners capital?

Answer 4

it is money business owners or shareholders have invested in their business

Question 5

pros and cons of owners capital

Answer 5

(+) no third party
(+) no debt
(+) no interest
(-) risking personal funds
(-) opportunity cost
(-) limited

Question 6

what is retained profit?

Answer 6

it is profit after tax, that is put back into the business

Question 7

pros and cons of retained profit

Answer 7

(+) flexible
(+) no debt
(+) no interest
(-) opportunity cost
(limited)

Question 8

what is sales of assets?

Answer 8

selling parts of the business e.g vechicles, machinery, equipment etc

Question 9

pros and cons of sale of assets?

Answer 9

(+) no third party 
(+) no debt
(+) no interest
(-) can loose control
(-) limited