Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

IB Business > Topic 3 - Finance and Accounts > Flashcards

Topic 3 - Finance and Accounts Flashcards

1
Q

Business Angels

A

wealthy entrepreneurs who risk their own money by investing in small to medium-sized businesses that have high grotwth potential

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Capital Expenditure

A

investment spending on fixed assets such as the purchase of land and buildings

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Debt Factoring

A

a financial service whereby a factor (such as a bank) collects debt on behalf of other businesses, in return for a fee

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

External sources of finance

A

getting funds from outside the organization

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Grants

A

government financial gifts to support business activities and are not expected to be repaid

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Initial Public Offering (IPO)

A

a business converting its legal status to a public limited company by floating (selling) its shares on the stock exchange for the first time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Internal sources of finance

A

getting funds from within the organization

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Leasing

A

A form of hiring whereby a contract is agreed between a leasing company (the lessor) and the customer (the lessee). The lessee pays rental income to hire assets from the lessor, who is the legal owner of the assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Loan Capital (debt capital)

A

medium to long-term sources of interest bearing finance obtained from commercial lenders, e.g. mortgages, business development loans and debentures

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Long-term finance

A

sources of finance of more than five years, used for the purchase of fixed assets or to finance the expansion of a business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Medium-term finance

A

sources of finance of one to five years in duration, used mainly to pay for fixed assets, i.e. capital expenditure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Overdrafts

A

allows a business to spend in excess of the amount in its bank account, up to a predetermined limit. they are the most flexible form of borrowing in the short term.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Personal Funds

A

a source of internal finance, referring to the use of an entrepreneur’s own savings, they are often used to finance business start-ups

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Retained Profit

A

the value of surplus that the business keeps to use within the business after paying corporate taxes on its profits to the government and dividend to its shareholders

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Revenue Expenditure

A

spending on the day-to-day running of a business, i.e. rent, wages and utility bills

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Sale-and-leaseback

A

a source of external finance involving a business selling a fixed asset (such as its computer systems or a building) but immediately leasing the asset back. In essence, the lessee transfers ownership to the lessor but the asset does not physically leave the business

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Share Capital

A

money raised from the sale of shares of a limited company, from its initial public offering (IPO) and any subsequent share issues

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Share issue (share placement)

A

exists when an existing public limited company raises further finance by selling more of its shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Short-term finance

A

sources of finance needed for the day-to-day running of a business, i.e. revenue expenditure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Sources of Finance

A

General term used to refer to where or how businesses obtain their funds, such as from working capital, commercial lenders and/or government assistance

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Stock Exchange

A

a highly regulated marketplace where individuals and businesses can buy and/or sell shares in public limited companies (joint stock companies)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Subsidies

A

funded by the government to lower a firm’s production costs as output provides extended benefits to society, e.g. farmers are often provided with subsidies to stabilize food prices

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Trade Credit

A

Allows a business to “buy now and pay later”. The credit provider does not receive any cash from the buyer until a later date.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Venture Capital

A

a high-risk capital invested by venture capital firms, usually at the start of a business idea. The finance is usually in the form of loans and/or shares in the business venture.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Examples of internal sources of finance
Personal funds, retained profit, sale of assets
26
Examples of external sources of finance
share capital, loan capital, overdrafts, trade credit, grants, subsidies, debt factoring, leasing, venture capital, business angels
27
Debentures
Long-term loans issued by a business.
28
Dividends
a share of the net profit distributed to shareholders at the end of the tax year
29
Balance Sheet
contains financial information on an organization’s assets, liabilities and the capital invested by the owners on one specific day, thus showing a ‘snapshot’ of the firm’s financial situation
30
Book value
the value of an asset as shown on a balance sheet
31
Costs of goods sold (COGS) or cost of sales (COS)
shown in the trading account and represents the direct costs of producing or purchasing stock that has been sold
32
Creditors
suppliers who allow a business to purchase goods and/or services on trade credit
33
Current Assets
the short-term assets that belong to a firm, which are expected to remain in the business for up to 12 months, e.g. cash, debtors and stock (inventory)
34
Debtors
a category of current assets, referring to customers who have bought goods or services on credit, i.e. they owe money to the business
35
Depreciation
the fall in the value of fixed assets over time, from wear and tear or outdated
36
Final Accounts
the published annual financial statements that all limited liability companies are legally obliged to report, i.e. the balance sheet and the profit and loss accounts
37
Fixed Assets
items owned by a business, not intended for sale within the next twelve months, but used repeatedly to generate revenue for the organization, e.g. land, premises and machinery
38
Goodwill
an intangible asset which exists when the value of a firm exceeds its book value
39
Gross Profit
the difference between the sales revenue of a business and its direct costs incurred in making or purchasing the products that have been sold to its customers
40
Historic cost
the purchase cost of a particular fixed asset
41
Intangible assets
fixed assets that do not exist in a physical from, e.g. goodwill, copyrights, brand names and registered trademarks
42
Long-term liabilities
the debts owed by a business, which are expected to take longer than a year from the balance sheet date to repay
43
Net assets
show the value of a business by calculating the value of all its assets. this must match the equity in a balance sheet
44
Net profit
the surplus that a business makes after all expenses have been paid for out of gross profit
45
Profit and Loss Account (income statement)
a financial record of a firms trading activity over the past 12 months, consisting of three parts: the trading account, the profit and loss account and the appropriation account
46
Reducing balance method
a method of depreciation that reduced the value of a fixed asset by the same percentage each year throughout its useful like
47
residual value
an estimate of the scrap or disposal value of the asset at the end of its useful life
48
Retained Profit
the amount of net profit after interest, tax and dividends have been paid
49
Share Capital
the amount of money raised through the sale of shares
50
Shareholders’ Funds
show the equity if the owners, i.e. the share capital invested by the owners and the retained profit and reserves that have been accumulated
51
Straight Line Method
a method of depreciation that reduces the value of a fixed asset by the same value each year throughout its useful life
52
Trading Account
the first section of a profit and loss account, showing the difference between a firm’s sales revenue and its direct costs of trading, i.e. it shows the gross profit of a business
53
Window Dressing
the legal act of creative accounting by manipulating financial data to make the results look more flattering
54
Acid Test Ratio
a liquidity ratio that measures a firms ability to meet its short-term debts
55
Capital Employed
the value of all long-term sources of finance for a business, e.g. bank loans, share capital and accumulated retained profit
56
Current Ratio
a short-term liquidity ratio that calculates the ability of a business to meet its debts within the next twelve months
57
Efficiency Ratio
indicates how well a firm’s resources have been used, such as the amount of profit generated from the available capital used in the business
58
Gross Profit Margin (GPM)
a profitability ration that shows the percentage of sales revenue that turns into gross profit
59
Liquid Assets
the possessions of a business that can be turned into cash quickly without losing their value, i.e. cash, stock, debtors
60
Liquidity Crisis
a situation where a firm is unable to pay its short-term debts, i.e. current liabilities exceed current assets
61
Liquidity Ratio
looks at the ability of a firm to pay its short-term liabilities, such as by comparing working capital to short-term debts
62
Net Profit Margin (NPM)
the percentage of sales revenue that turns into net profit, i.e. the proportion of sales revenue left over after all direct and indirect cost have been paid
63
Profitability Ratio
examine profit in relation to other figures, e.g the GPM and NPM ratios
64
Ratio Analysis
a quantitative management tool that compares different financial figures to examine and judge the financial performance of a business
65
Return on Capital Employed (ROCE)
an efficiency ratio measuring the profit of a business in relation to its size
66
Credit Control
the ability of a business to collect its debts within a suitable timeframe
67
Creditor Days Ratio
an efficiency ratio that measures the average number of days it takes for a business to pay its creditors
68
Debtor Days Ratio
an efficiency ratio that measures the average number of days it takes for a business to collect the money owed from debtors
69
Gearing Ratio
measures the percentage of an organizations capital employed that comes from external sources, such as debentures and mortgages
70
Profit Quality
the ability of a business to earn profit in the foreseeable future
71
Stock Turnover Ratio (Inventory Turnover Ratio)
measures the number of times a business sells its stocks within a year

IB Business (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions