Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Business (LC) > Chapter 17 - Finance > Flashcards

Chapter 17 - Finance Flashcards

1
Q

What is a cash flow forecast?

A

Plan of estimated income and expenditure for a business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is liquidity?

A

The ability to pay debts as they fall due

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a cash surplus?

A

More cash coming in that going out

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is a cash deficit?

A

More cash going out than coming in

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What is the purpose of a cash flow forecast?

A

Identifying periods of cash surplus
Identifying periods of cash deficit
Applying for finance
Financial control

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is important to consider when preparing a cash flow forecast?

A

Delays
Seasonal fluctuations
Bad debts

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are 5 ways to deal with a cash flow forecast deficit?

A 
Increase selling price
Decrease selling price
Discounts
Finance 
Adjust payments
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is a household budget?

A

A financial plan of future income and expenditure for a household

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is fixed expenditure?

A

The amount remains the same

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is irregular expenditure?

A

The amount varies

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is discretionary expenditure?

A

Non essential items

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What are 3 reasons for preparing a household budget?

A

Identify cash surplus
Identify cash deficit
Apply for loans

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How can a household deal with a cash deficit?

A

Spread payments out
Postpone expenditure
Shop around for cheaper alternatives

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How can a household deal with cash surplus?

A

Repay loans
Invest
Save

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How long is short term finance?

A

Up to 1 year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

How long is medium term finance?

A

1-5 years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

How long is long term finance?

A

5+ years

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is internal finance?

A

Finance obtained inside the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is external finance?

A

Finance obtained outside the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What is security?

A

Assets used to secure certain types of finance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is a bank overdraft?

A

Allows customers to withdraw more money than is in their account which they repay at a later date

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What are the advantages and disadvantages of a bank overdraft?

A
  1. Interest paid only on the amount used
  2. No security
  3. Fast Application process
  4. High interest rate
  5. Penalties if it not repaid
  6. Damage to credit rating
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is a credit card?

A

Customers pay for goods and services using a credit card and then pay the money on the balance of the card at an agreed time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What are the advantages and disadvantages of a credit card?

A
  1. No interest charge if paid on time
  2. Safety
  3. Worldwide use
  4. High interest rate
  5. Overspending
  6. Government tax
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What is accrued expenses?
When a supplier allows you to use its services first and then pay after
26
What are the advantages and disadvantages of accrued expenses?
1. Free finance 2. No security 3. Improves cash flow 1. Loss of services if not paid for 2. Limited availability 3. Loss of discounts
27
What is factoring?
A business sells its debts to a factoring firm who then go after the people who have no paid their debts and request payments
28
What a debtor?
A person who receives goods or services on credit from a business and agrees to pay at a later date
29
What is factoring without recourse?
The factoring firm cannot ask for a refund if the debtor refuses to pay the debt
30
What is factoring with recourse?
The factoring firm can ask for a refund if the debtor refuses to pay
31
What are the advantages and disadvantages of factoring?
1. No security 2. Immediate 3. Full control 1. High fees 2. Risk of bad debts 3. Business relationship damages
32
What is trade credit?
A business receives goods or services from suppliers and pays later
33
What is creditworthiness?
The ability to borrow money or pay later
34
What are the advantages and disadvantages of trade credit?
1. Free finance 2. No security 3. Immediate use 1. Loss of discounts 2. Damage to credit rating 3. Credit businesses only
35
What is hire purchase?
A buyer receives goods and pay a certain amount a month for a set number of months and then they own the good
36
What are the advantages and disadvantages of hire purchase?
1. Immediate use 2. No security 3. Fast 1. Delayed ownership 2. High interest rate 3. Risk of repossession
37
What is a medium loan?
Borrows money and pays it off over a period of 1-5 years
38
What are the advantages and disadvantages of a medium term loan?
1. Low interest rates 2. No security 3. No loss of control 1. Interest charged 2. Risk of repossession 3. Repayments may increase
39
What is leasing?
Regular payments are made for the use of a product or service but the lessee does not own it
40
What are the advantages and disadvantages of leasing?
1. Immediate use 2. No security 3. Access to up to date items 1. Ownership 2. Cost 3. Risk of repossession
41
What is a mortgage?
Long term loan for property
42
What is a tracker mortgage?
The rate of interest on a mortgage varies
43
What are the advantages and disadvantages of a mortgage?
1. Amount 2. Long repayment period 3. Low rate of interest 1. Risk of repossession 2. High overall cost 3. Repayments may increase
44
What are the advantages and disadvantages of savings?
1. No security 2. No financial control 3. No application process 1. Low rate of interest 2. Savings period 3. Regular saving
45
What are retained earnings?
Profits of a business that they use to reinvest in the business
46
What are the advantages and disadvantages of retained earnings?
1. Large amount of finance 2. No financial cost 3. No security 1. Savings period 2. One off payment 3. Impact on dividends
47
What is a deposit account?
Account used for savings
48
What are dividends?
The portion of profits paid to shareholders
49
What is equity capital?
A business sells shares in the business to investors
50
What are the advantages and disadvantages of equity capital?
1. No security 2. No financial cost 3. Repayments 1. Loss of control 2. Shareholders can sell shares 3. Shareholder disputes
51
What is a grant?
A sum of money that you don’t have to repay
52
What are the advantages and disadvantages of grants?
1. Amounts available 2. No financial control 3. No security 1. Criteria for grant 2. Application process 3. Partial fundings
53
What is a debenture?
A long term loan that you only pay interest on until you pay the rest at the end of the repayments
54
What are the advantages and disadvantages of a debenture?
1. Fixed rate of interest 2. No loss of control 3. Large amounts available 1. Costs 2. Risk of losing assets 3. Risk of business failure
55
What is sale and leaseback?
A business sells an asset and then leases it back from the buyer
56
What are the advantages and disadvantages of sale and leaseback?
1. Amounts available 2. Operation 3. No loss of control 1. One off source 2. Assets reduced 3. Time
57
What is venture capital?
A venture capital firm invests money in businesses
58
What are the advantages and disadvantages of venture capital?
1. Expertise 2. No interest 3. Amount available 1. Loss of control 2. Profit share 3. Time
59
What factors affect the choice of finance?
``` Purpose of finance Security Tax implications Cost Control ```
60
What is the loan criteria?
Collateral Character Capacity Creditworthiness
61
What is character in terms of loan criteria?
Lender wants to ensure the borrower has a good reputation and that there is less risk
62
What is a current account?
Day to day banking
63
What is a standing order?
A fixed amount that comes out of a bank account on a regular basis
64
What is direct debit?
A variable amount that comes out of a bank account on a regular basis
65
What does ATM stand for?
Automated teller machine
66
What does PIN stand for?
Personal identification number
67
What does PAC stand for?
Personal access code
68
What does iban stand for?
International bank account number
69
What does BIC stand for?
Bank identifier code
70
On a bank statement what does credit mean?
Money coming in
71
On a bank statement what does debit mean?
Money going out
72
What are 4 similarities of business and household finance?
1. Financial planning - cash flow forecast vs household budget 2. Record keeping - records must be kept for tax affairs 3. Sources of finance - they have common sources 4. Bank accounts
73
What are 4 differences between household and business finance?
1. Financial planning - business has to go into more detail 2. Amount borrowed 3. Taxes 4. Sources of finance are different

Business (LC) (23 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions