Chapter 3: Entrepreneur and Finances

Question 1

said that a budget is telling your money where to go instead of wondering where it went.

Answer 1

Dave Ramsey

Question 2

3 Sources of Capital

Answer 2

1. Self
2. Informal Sector
3. Formal Sector

Question 3

6 Principle of Action

Answer 3

1. Make progress while you wait
2. Take feedback
3. Exploit bootstrapping possibilities
4. Be sure that money hatches money
5. Raise funds from the right sources
6. Pay yourself a salary

Question 4

is a measure of a cash (or potential cash) generated by an investment, or the cash lost due to the investment and the payback period.

Answer 4

Return of Investment (ROI)

Question 5

Formula of ROI

Answer 5

ROI = Net income / Cost of investment x 100

Question 6

3 Ways to Use Resources

Answer 6

1. Effectively
2. Efficiently
3. Economically

Question 7

refers to all current assets that can be used to meet day to day obligation of the business.

Answer 7

Working Capital

Question 8

3 Types of Management

Answer 8

1. Management of Debtors (Receivables)
2. Management of Payables (Creditors)
3. Management of Inventories

Question 9

Type of management where we record all the credit, monitors the creditor’s due date, and pay the creditor.

Answer 9

Management of Payables (Creditors)

Question 10

Type of management where we ensure availability of optimal stock level which allows uninterrupted production and minimize reordering costs.

Answer 10

Management of Inventories

Question 11

consists of raw materials, work in progress, and finished goods.

Answer 11

Stocks

Question 12

Is a numerical representation of an action or plan for a specific time.

Answer 12

Budget

Question 13

is a planned outcome of the future

Answer 13

Budgeting

Question 14

is keeping records of what is bought, sold, and owned, as well as records of money in, out, and what is left.

Answer 14

Bookkeeping

Question 15

5 Type of Books for Bookkeeping

Answer 15

1. Cash Book
2. Debtor’s Book
3. Creditor’s Book
4. Inventory Book
5. Income and Expenditure

Question 16

the book in which you will record all the cash money that comes in and goes.

Answer 16

Cash Book

Question 17

this book is used to record the sales on credit.

Answer 17

Debtor’s Book

Question 18

use this book to record all credit purchases or accrued expensed.

Answer 18

Creditor’s Book

Question 19

the book that is used to keep record of your inventory

Answer 19

Inventory Book

Question 20

define as the goods available for sale and raw materials used to produce goods available for sale.

Answer 20

Inventory

Question 21

this is what your business OWNED.

Answer 21

Assets

Question 22

this is what your business OWED.

Answer 22

Liabilities

Question 23

this is what your business OWNED after paying off the liabilities.

Answer 23

Equity