Finance

Question 1

Start up capital

Answer 1

The finance required by a new business to pay for the essential fixed assets and current assets so that it can start trading

Question 2

Working capital

Answer 2

Capital available to a business in the short term to pay for day to day expenses

Question 3

Capital expenditure

Answer 3

The money spent on non current assets

Question 4

Revenue expenditure

Answer 4

Money spent on day to day expenses

Question 5

Internal finance

Answer 5

Finance form within the business itself

Question 6

External finance

Answer 6

Finance from outside and separate from the business

Question 7

Micro-finance

Answer 7

This provides financial services to poor people who can not get a traditional loan

Question 8

Short term source of finance

Answer 8

Finance that must be paid back within a year (include : overdraft facility, trade credits, factoring)

Question 9

Long term source of finance

Answer 9

Finance obtained for a time frame that exceeds a year (includes: share capital, loans and grants)

Question 10

Cash flow

Answer 10

Cash inflows and outflows over a period of time

Question 11

Cash flow forcast

Answer 11

Estimate of future cash inflows and outflows of a business usually on a monthly basis and shows the expected cash balance at the end of the month.

Question 12

Cash inflows

Answer 12

Sums of money received by a business over a period of time

Question 13

Cash outflows

Answer 13

Sums of money paid out by a business over a period of time

Question 14

Cash flow cycle

Answer 14

Shows the stages between paying out cash for materials and labor and receiving cash from sales of goods

Question 15

Profit

Answer 15

Sales revenue- Total costs

Question 16

Net cash flow

Answer 16

Inflows - outflows

Question 17

Accounts

Answer 17

Financial records of a businesses transactions

Question 18

Final accounts

Answer 18

Produced at the end of the financial year and give details to profit or loss made and gives the worth of the business

Question 19

Gross profit

Answer 19

Sales revenue - cost of sales

Question 20

Sales revenue

Answer 20

Income to a business over a period of time from the sales of goods

Question 21

Cost of sales

Answer 21

The direct cost of producing goods that are sold by the business during a period of time

Question 22

Net profit

Answer 22

Gross profit - expenses

Question 23

Depreciation

Answer 23

The fall in value of an asset over time

Question 24

Retained profit

Answer 24

Net profit reinvested into the company

Question 25

Dividends

Answer 25

Annual payments from company profits to shareholders

Question 26

Balance sheet

Answer 26

Shows the value of a businesses assets and liabilities at a particular point and time

Question 27

Assets

Answer 27

Items of value owned by a business

Question 28

Liabilities

Answer 28

Debts owned by a business

Question 29

Current liabilities

Answer 29

Short term debts owned by the business

Question 30

Non current liabilities

Answer 30

Long term debts owned by the business

Question 31

Current assets

Answer 31

Assets owned by the business to be used within a year

Question 32

Non current assets

Answer 32

Items owned by the business for more than a year

Question 33

Liquidity

Answer 33

The ability of a business to pay back its short term debts

Question 34

illiquid

Answer 34

Assets are not easily turned into cash

Question 35

Capital employed

Answer 35

Share holders equity + non current liabilities (permanent and long term capital invested in a business)