Basic finance in business

Question 1

Define borrowing

Answer 1

To receive money with the intention of returning the same, often plus interest.

Question 2

Define saving

Answer 2

Unspent income that you keep in an account in a bank or similar financial organization, often to earn interest.

Question 3

Start-up capital

Answer 3

The money needed to get a business up and running.

Question 4

Define “ Short-term finance”

Answer 4

Money that is borrowed and repaid within 12 months or less.

Question 5

Define “ Long-term Finance”

Answer 5

Money that is borrowed and repaid in over 12 months and more, and is often larger amounts of money used to pay for a property or machinery.

Question 6

What is External sources of finance

Answer 6

Finance that comes from outside the business.

Question 7

What is Internal sources of finance

Answer 7

Finance that comes from inside the business and is usually available when the business is well established. This includes:
- Personal savings
- Retained profit
- Selling assets

Question 8

Define Personal Savings

Answer 8

The owner’s own savings that are often used to fund a business.

Question 9

What is Retained profit?

Answer 9

Profit that has not been kept by the owner, but kept in the busine