2.3 Managing Finance

Question 1

Profit

Answer 1

Financial gain from investment or business operation after subtracting all expenses

Question 2

Statement of Comprehensive Income

Answer 2

Financial document showing income and expenditure. Also known as profit and loss account

Question 3

Liquidity

Answer 3

Ability to convert assets into cash, to pay for current liabilities

Question 4

Statement of Financial Position

Answer 4

Summary of a businesses’ value in terms of assets, liabilities and capital. Also known as a balance sheet.

Question 5

Working Capital

Answer 5

Cash needed to pay for day-to-day operations (including current liabilities), measures liquidity of business

Question 6

Shareholders Equity

Answer 6

Capital invested by shareholders

Question 7

Current Assets

Answer 7

Assets than can be converted into cash within a year / liquid assets e.g cash, inventory, receivables

Question 8

Non-current Assets

Answer 8

Long-term / fixed assets used repeatedly e.g land, brand logo

Question 9

Current Liability

Answer 9

Money owed paid within a year e.g overdrafts

Question 10

Non-current Liability

Answer 10

Money owed that doesn’t need to be paid for at least a year e.g mortgage