3.1 Introduction to Finance

Question 1

Finance/Financing

Answer 1

System of creating, circulating and managing money

Question 2

Accounts/Accounting

Answer 2

Process of recording/summarising/reporting financial transactions in regards to economic entities (businesses, companies)

Question 3

Capital Expenditure

Answer 3

Funds used by a company with the aim to acquire/upgrade/maintain physical assets/capital items. It is a PURCHASE

Question 4

Capital Item

Answer 4

An asset that will stay within the company for a long period of time (1+ years)

Question 5

Fixed Asset

Answer 5

Part of capital items but usually involves buildings or equipment used in operations to generate income

Question 6

Revenue Expenditure

Answer 6

Funds used for items that are used daily by a business (e.g. staff costs, inventory costs , rent etc). It is a PURCHASE

Question 7

Inventory

Answer 7

All raw materials, materials being made and goods that are available and owned by a business to be sold

Question 8

Debt Finance

Answer 8

Act of raising capital via borrowing money from a lender or bank, to be repaid with additional interests later on