C2 - Types Of Income Flashcards
1
Q
Definition of capital income
A
Money invested by owners or investors as well as money borrowed to set up the business and buy extra equipment. It is a long term investment used to buy long term assets. (machinery)
2
Q
Definition of loan
A
A lump sum of money borrowed from a bank or investors. It is repaid with interest over many years. It is usually against the assets of the business, so they can be repossessed if the loan is not paid back.
3
Q
Definition of mortgages
A
A loan to buy a property over a longer period of time (25+ years). Interest is usually variable and the property is security against the loan and can be repossessed.
