Introduction to finance Definitions

Question 1

Procurement

Answer 1

the process of purchasing goods and services that are used by a business to produce its products

Question 2

Capital expenditure

Answer 2

spending on the non-current(fixed) assets of a business

Question 3

Long-term finance

Answer 3

large-scale funds needed to finance expensive equipment and facilities that a business needs to operate

Question 4

Fixed(non-current) asset

Answer 4

an item or property that has value, is owned by a person or business, and which the business plans on holding or using for longer than one year

Question 5

Revenue expenditure

Answer 5

spending on a company’s general operational costs; this spending will enable the business to generate ongoing revenue

Question 6

Insolvency

Answer 6

a situation in which a business is unable to pay for its revenue expenditures

Question 7

Short-term finance

Answer 7

funding that is used by businesses which are used to meet their immediate financial needs(i.e. revenue expenditure) and that is typically needed for a period of one year or less

Question 8

Current asset

Answer 8

an item or property that has vlaue, is owned by a person or business, and that can be consumed, sold or used within one year

Question 9

Liquid asset

Answer 9

an asset that can be quickly and easily converted into cash without significantly affecting their value

Question 10

Asset

Answer 10

an item or property owned by a person or business that has value and is available to meet debts, commitments or legacies

Question 11

Direct cost

Answer 11

expenses that are directly linked to the goods or services a business sells

Question 12

Indirect cost

Answer 12

general business and administration expenses that aren’t directly linked to making products or delivering services

Question 13

Turnover

Answer 13

the amount of money made by a business in a particular period