Theme 2 Key Terms

Question 1

Capital

Answer 1

The money provided by the owners in a business

Question 2

Capital Expenditure

Answer 2

Spending on business resources that can be used repeatedly over a period of time

Question 3

Internal Finance

Answer 3

Money generated by the business or its current owners

Question 4

Retained Profit

Answer 4

Profit after tax that is “ploughed back” into the business

Question 5

Revenue Expenditure

Answer 5

Spending on business resources that have already been consumed or will be shortly

Question 6

Sale and Leaseback

Answer 6

the practice of selling assets, property or machinery, and leasing them back from the buyer

Question 7

Authorised Share Capital

Answer 7

The maximum amount that can be legally raised

Question 8

Bank Overdraft

Answer 8

An agreement between a business an bank that means a business can spend more money than it has in its account.

Question 9

Capital Gain

Answer 9

Profit made from selling a share for more than it was bought

Question 10

Crowd Funding

Answer 10

When a large number of individuals invest in a business or project on the internet, avoiding the use of the bank

Question 11

Debenture

Answer 11

A long- term loan to a business

Question 12

Equities

Answer 12

Another name for an ordinary share

Question 13

External Finance

Answer 13

Money raised from outside the business

Question 14

Issued Share Capital

Answer 14

Amount of current share capital arising from the sale of shares

Question 15

Lease

Answer 15

A contract used to acquire the use of resources such as property or equipment

Question 16

Peer to Peer Lending

Answer 16

Where individuals lend to other individuals without prior knowledge of them, on the internet.

Question 17

Permanent Capital

Answer 17

Share capital that is never repaid by the company

Question 18

Secured Loans

Answer 18

A loan where the lender requires security, such as property, in case the borrower defaults

Question 19

Shared Capital

Answer 19

Money introduced into the business via sale of shares

Question 20

Unsecured Loans

Answer 20

Where the lender has no protection if the borrower cannot pay back money owed

Question 21

Venture Capitalism

Answer 21

Providers of funds for small or medium sized companies that may be considered too risky for other investors