3.1 - Introduction to Finance

Question 1

what is finance and accounts?

Answer 1

the department of the business that is responsible for managing its financial position

Question 2

what is finance and accounts responsible for?

Answer 2

• acquiring money for the business
• managing the money of the business
• cash flow management
• profit and loss management
• budgeting

Question 3

why is finance important for businesses?

Answer 3

• to pay employees
• to pay shareholders dividends
• to buying inputs for the production process
• to buying new machinery
• Investing in research and development

Question 4

what is capital?

Answer 4

the money invested into a business in return for a range of assets

Question 5

what is capital expenditure

Answer 5

the spending on fixed assets that can be used for a long period of time

• Non current assets that will be owned and last for more than one year
• The main purpose is to drive growth in the business

Question 6

what is revenue expenditure

Answer 6

the day to day spendings of a business
* may be paid daily, weekly or monthly
* when a business can no longer pay for these - it can be considered bankrupt