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Business AS > 29. Glossary > Flashcards

29. Glossary Flashcards

1
Q

Start up capital

Definition

A

the capital needed by an entrepreneur to set up a business.

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2
Q

Working capital

Definition

A

the capital needed to pay for raw materials, day-to-day running costs and credit offered to customers.

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3
Q

Shirt term finance

Definition

A

money required for short periods of time of up to one year.

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4
Q

Long term finance

Definition

A

money required for more than one year.

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5
Q

Liquidity

Definition

A

the ability of a business to pay its short-term debts.

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6
Q

Administration

Definition

A

when administrators manage a business that is unable to pay its debts with the intention of selling it as a going concern.

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7
Q

Bankruptcy

Definition

A

the legal procedure for liquidating a business (or property owned by a sole trader) which cannot fully pay its debts out of its current assets.

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8
Q

Liquidation

Definition

A

when a business ceases trading and its assets are sold for cash to pay suppliers and other creditors.

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9
Q

Current assets

Definition

A

assets that either are cash or likely to be turned into cash within 12 months (inventory and trade receivables or debtors).

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10
Q

Current liabilities

Definition

A

debts that usually have to be paid within one year.

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11
Q

Capital expenditure

Definition

A

the purchase of non-current assets that are expected to last for more than one year, such as buildings and machinery.

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12
Q

Revenue expenditure

Definition

A

spending on all costs and assets other than non-current assets, which includes wages, salaries and inventory of materials.

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13
Q

Revenue expenditure

Definition

A

spending on all costs and assets other than non-current assets, which includes wages, salaries and inventory of materials.

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14
Q

Retained earnings

Definition

A

profit after tax retained in a company rather than paid out to shareholders as dividends.

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15
Q

Internal sources

Definition

A

raising finance from the businesss own assets or from profits left in the business (retained earnings).

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16
Q

External sources

Definition

A

raising finance from sources outside the business, for example banks.

17
Q

Non-current assets

Definition

A

assets kept and used by the business for more than one year.

18
Q

Overdraft

Definition

A

credit that a bank agrees can be borrowed by a business up to an agreed limit as and when required.

19
Q

Factoring

Definition

A

selling of claims over trade receivables (debtors) to a specialist organisation (debt factor) in exchange for immediate liquidity.

20
Q

Hire purchase

Definition

A

company purchases an asset and agrees to pay fixed repayments over an agreed time period. The asset belongs to the purchasing company once the final payment has been made.

21
Q

Leasing

Definition

A

obtaining the use of an asset and paying a leasing charge over a fixed period, avoiding the need to raise long-term capital to buy the asset. The asset is owned by the leasing company.

22
Q

Long term loans

Definition

A

loans that do not have to be repaid for at least one year.

23
Q

Debentures

Definition

A

long-term bonds issued by companies to raise debt finance, often with a fixed rate of interest.

24
Q

Share capital

Definition

A

permanent finance raised by companies through the sale of shares.

25
Q

Business mortgages

Definition

A

long-term loans to companies purchasing a property for business premises, with the property acting as collateral security on the loan.

26
Q

Venture capital

Definition

A

risk capital invested in business startups or expanding small businesses that have good profit potential but do not find it easy to gain finance from other sources.

27
Q

Collateral security

Definition

A

asset which a business pledges to a lender and which must be sold off to pay a debt if the loan is not repaid.

28
Q

Rights issue

Definition

A

existing shareholders are given the right to buy additional shares at a discounted price.

29
Q

Microfinance

Definition

A

providing financial services for poor and low-income customers who do not have access to the banking services, such as loans and overdrafts, offered. by traditional commercial banks.

30
Q

Crowd funding

Definition

A

use of small amounts of capital from a large number of individuals to finance a new business venture.

Business AS (39 decks)

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