Business Finance Flashcards
Asset
Is any item owned by a business that can generate an income for the enterprise
Capital
Is the money invested into a business either by its owners or by organisations such as banks
Non current assets
Are assets that a business expects to hold for one year or more eg vehicles
Short term sources of finance
Are needed for a limited period of time, normally less than a year
Long term sources of finance
Are those hat are needed over a longer period of time, usually over a year
Insolvency
Exists when a business debts exceed the assets available to pay them
Liabilities
Refers to the money owed by a business to individuals, suppliers and banks
Working capital
Is the cash a business has for its day to day spending
Current assets
Are items owned by a business that can be readily turned into cash. Eg cash, money owed by customers and stocks
Trade payables
Is the amount of money owed by a business to its suppliers for goods and services that have been received but not yet paid for
Trade receivables
The amount of money owed by a business customers for products that have been supplied for but not yet paid for
Revenue expenditure
Refers to the purchase of items as fuel and raw materials that will be used up within a short space of time
Capital expenditure
Is the spending by a business on non current assets such as premises, production equipment and vehicles
A statement of financial position
Is a financial statement that records the assets and liabilities of a business on a particular day at the end of an accounting period ( balance sheet )
Income statement
Is a financial statement showing a business sales revenue over a trading period and all the relevant costs incurrent to generate that revenue
Internal sources of finance
Ones that exist within the business
External sources of finance
Is an injection of funds into the business from individuals, other businesses or financial institutions