Chapter 21 Flashcards
Start-up capital
The finance required by a new business to pay for the essential fixed assets
and current assets so that it can start trading.
Working capital
Capital available to a business in the short term to pay for day-to-day expenses.
Capital expenditure
The money spent on non-current assets (fixed assets) lasting more than one year.
Revenue expenditure
Money spent on day-to-day expenses, e.g. wages, raw materials.
Internal finance
Finance from within the business itself.
External finance
Finance from sources outside of and separate from the business.
Micro-finance
This provides financial services to poor people who cannot use traditiona
banks, e.g. small loans
Short-term source of finance
Finance that must be paid back within a year and includes: overdraft facility,
trade credits, factoring.
Long-term source of finance
Funding obtained for a time frame exceeding one year in duration and
includes: owner’s savings/share capital; loans; debentures; a mortgage; hire
purchase or leasing; grants.