Sources of Finance

Question 1

Retained profit -

Answer 1

profit held by a business rather than returning it to the owners and which may be used in the future

Question 2

Assets -

Answer 2

resources used or owned by a business

Question 3

Bank overdraft -

Answer 3

agreement with a bank where a business spends more money than it has in its account

Question 4

Trade payables -

Answer 4

buying resources from suppliers, such as raw materials and components, and paying for them at a later date

Question 5

Mortgage -

Answer 5

long-term loan secured with property

Question 6

Repossess -

Answer 6

to take back cars, furniture or property from people who had arranged to pay for them over a long time, but cannot now continue to pay for them

Question 7

Debenture -

Answer 7

long-term security yielding a fixed rate of interest, issued by a company and secured against assets

Question 8

Hire purchase -

Answer 8

buying specific goods with a loan, the fee is paid in monthly instalments. The goods bought do not legally belong to the buyer until the very last instalment has been paid.

Question 9

Rights issue -

Answer 9

a company gives the existing shareholders the right to buy new shares at a discount

Question 10

Venture capitalists -

Answer 10

specialist investors who provide money, for business purposes, often to new businesses. They provide expertise.

Question 11

Crowd funding -

Answer 11

where a large number of individuals invest in a business venture using an online platform and therefore avoiding using loans.