3.1 - introduction to finance

Question 1

Capital expenditure

Answer 1

Refers to investment spending on fixed assets, such as the purchase of machinery, equipment, land and buildings

Question 2

Collateral

Answer 2

Refers to the financial guarantee for securing external loan capital to finance investment expenditure for business growth

Question 3

Fixed assets (or non-current assets)

Answer 3

Are items of monetary value that have a long-term function for businesses, so can be used repeatedly for the purpose of production

Question 4

Revenue expenditure

Answer 4

Refers to spending on the day-to-day running of a business, such as payment of rent, wages, salaries and utility bills.