Finance

Question 1

Start up capital

Answer 1

the finance needed by a new business to pay for essential fixed and current assets before it can begin trading.

Question 2

Working capital

Answer 2

finance needed by a business to pay its day-to-day costs

Question 3

Capital expenditure

Answer 3

is money spent on fixed assets which will last for more than one year

Question 4

Revenue expenditure

Answer 4

money spent on day-to-day expenses which do not involve the purchase of a long-term asset

Question 5

Internal finance

Answer 5

obtained from within the business itself

Question 6

External finance

Answer 6

obtained from sources outside of and separate from the business

Question 7

Micro finance

Answer 7

providing financial services - including small loans
- to poor people not served by traditional banks

Question 8

Crowdfunding

Answer 8

funding a project or venture by raising money from a large number of people who each contribute a relatively small amount

Question 9

Cash flow

Answer 9

Cash inflows and outflows during a period of time

Question 10

Cash inflow

Answer 10

sum of money received by the business in a period of time

Question 11

Cash outflow

Answer 11

amount of money spent by the business in a period of time

Question 12

Cash flow cycle

Answer 12

shows the stages between the amount of money spent by the business and the amount of money brought into the business

Question 13

Profit

Answer 13

revenue - total costs

Question 14

Cash flow forecast

Answer 14

an estimate of future cash inflows and outflows of a business, usually on a month-by-month basis. This then shows the expected cash balance at the end of each month

Question 15

Net cash flow

Answer 15

the difference (each month) between inflow and outflow

Question 16

Closing cash balance

Answer 16

the amount of cash held by the business at the end of each month

Question 17

Opening cash balance

Answer 17

the amount of cash held by the business at the start of the month

Question 18

Working capital

Answer 18

capital available to a business in the short term to pay for day-to-day expenses.

Question 19

Accounts

Answer 19

the financial records of a firm’s transactions

Question 20

Accountants

Answer 20

the professionally qualified people who have responsibility for keeping accurate accounts and for producing the final accounts

Question 20

Final accounts

Answer 20

produced at the end of the financial year and give details of the profit or loss made over the year and the worth of the business

Question 21

Income statement

Answer 21

a financial statement that records the income of a business and all costs incurred to earn that income over a period of time

Question 22

Revenue

Answer 22

the income to a business during a period of time from the sale of goods or services

Question 23

Cost of sales

Answer 23

the cost of producing or buying in the goods actually sold by the business during a time period

Question 24

Trading account

Answer 24

shows how the gross profit of a business is calculated

Question 24

Gross profit

Answer 24

made when revenue is greater than the cost of sales

Question 24

Net profit

Answer 24

the profit made by a business after all costs have been deducted from revenue gross profit - total costs

Question 25

Depreciation

Answer 25

the fall in the value of a fixed asset over time

Question 26

Retained profit

Answer 26

net profit reinvested back into a company, after deducting tax and payments to owners, such as dividends