Sources of finance Flashcards
Definition of Owner’s Equity (Sole Traders/Partnerships only)
Money invested by the owner/partner into the business.
Definition of Bank Loan
Money from the bank which has to be repaid with interest over an agreed number of years.
Definition of Grant
Money received from the Local Council, Government, EU or Lottery for a specific purpose.
Definition of Re-invested Profits
Profit leftover at the end of the year that has not been shared with owner(s).
Definition of Mortgage
A loan specifically for the purpose of property.
Definition of Leasing
Paying a monthly fee for the use of equipment/vehicles (asset).
Definition of Hire Purchase
Buying an asset and paying it back over several months e.g. 48 months. An initial down payment is normally required.
Definition of Bank Overdraft
Withdrawing more money from your bank account than you have available.
Definition of Trade Credit
When goods/materials can be bought from suppliers but are not paid for until a later date. E.g. 30 days credit.
Definition of Issuing Shares
Selling shares to friends and family in return for part-ownership of the company.
