25 sources of finance

Question 1

instalment

Answer 1

one of a series of regular payments made until all the money owed has been repaid

Question 2

short-term finance

Answer 2

money borrowed for one year or less

Question 3

long-term finance

Answer 3

money borrowed for more than one year

Question 4

capital

Answer 4

finance provided by the owners of a business

Question 5

internal finance

Answer 5

finance generated by the business from its own means

Question 6

retained profit

Answer 6

profit held by a business rather than returning it to the owners and which may be used in the future

Question 7

assets

Answer 7

resources used or owned by a business, such as cash, stock, machinery tools and equipment

Question 8

external finance

Answer 8

finance obtained from outside the business

Question 9

bank overdraft

Answer 9

agreement with a bank where a business spends more money than it has in its account (up to an agreed limit)

Question 10

trade payables

Answer 10

buying resources from suppliers, such as raw materials and components, and paying for them at a later date

Question 11

mortgage

Answer 11

long-term loan secured with property

Question 12

repossess

Answer 12

to take back cars, furniture or property from people who had arranged to pay for them over a long time, but cannot now continue to pay for them

Question 13

debunture

Answer 13

long-term security yielding a fixed rate of interest, issued by a company and secured against assets

Question 14

hire purchase

Answer 14

buying specific goods with a loan, often provided by a finance house

Question 15

right issue

Answer 15

sale of new shares to existing shareholders at a discount