Types of Income

Question 1

What are the 2 types of income?
1.
2.

Answer 1

Capital income.
Revenue income.

Question 2

What is capital income?

Answer 2

The money invested by the owners or other investors used to set up/ expand a business.

Question 3

What are the types of capital income?
1.
2.
3.
4.
5.

Answer 3

1. Loans
2. Mortgages
3. Shares
4. Owners
5. Debentures

Question 4

Capital income is used to buy fixed assets: what are fixed assets?

Answer 4

Things that stay in a business for a long time.

Question 5

Capital income can be used to buy opening stock. Later, what happens?

Answer 5

The stock is paid for by sales income.

Question 6

A loan lent to a business must be typically paid back __________________ with ____________ for ________________.

Answer 6

every month
interest
five years

Question 7

The interest rate can be ___________ or ____________ depending on the ___________________.

The _________________ on top of loan makes it relatively expensive as a source of capital income.

Answer 7

fixed
varied
current economy

interest payable

Question 8

A payable means the _____________ for ______________________ purchased on credit.

Answer 8

money owed
goods or services

Question 9

Often bank loans have to be ______________________ (for example, the entrepreneur’s home).

This means that if the business fails to meet payments, the
________________________.

Answer 9

secured against an asset

bank can claim the asset

Question 10

A mortgage typically lasts 25 years.

True or false: They are never secured on an asset.

Answer 10

False. They are secured on assets such as houses.

Question 11

What is an asset?

Answer 11

Any item of value.

Question 12

Shareholders own shares. A share is a unit of equity ownership in the capital stock.

The more shares they own, the greater their ability to _________________________.

Shareholders are rewarded for their investment by the payment of a _____________; this is a share of the
profits.

Answer 12

influence decision making

dividend

Question 13

A partnership is when two or more people join together to set up a business as partners.

Each partner would be expected to contribute towards the _________________ and __________________.

Answer 13

capital income
decision making

Question 14

Debentures are a type of _____________________ issued by large companies to raise income capital.

Answer 14

debt instrument

Question 15

For debentures, ____________ is paid at a _____________ and repaid as a ____________ on a set date.

Debentures can be ________________________.

Answer 15

interest
fixed rate
lumpsum

secured against an asset

Question 16

Revenue income is the money that comes into the business from day-to-day functions.

Such as:
1.
2.

Answer 16

1. Selling goods.
2. Providing services.

Question 17

What are the 5 main types of revenue received:
1.
2.
3.
4.
5.

Answer 17

1. Sales.
2. Rent.
3. Commission.
4. Interest.
5. Discounts.

Question 18

True or false:
Renting is when a business owns a property and charges others for use of all or part of that property.

Answer 18

True.

Question 18

Sales are the money coming in from the sales of goods or services.

Sales can be either:
1. Cash sales. The customer pays ______.
2. Credit sales. The customer pays ________.

Answer 18

now
later

Question 19

Commission is the percentage that a business makes when selling products or services on the ___________ of another business.

A commission is also a fee paid to a salesperson
in exchange for services in facilitating or completing a
sales transaction.

Commission could be a:
1.
2.

Answer 19

behalf

1. Flat fee
2. Percentage of a sale.

Question 19

Interest is the money earned on ___________ or ____________.

Answer 19

savings
lending

Question 20

Discounts become revenue when a business is given a ____________________, normally for a:

1.
2.

Answer 20

percentage off a sale

1. Quick payment
2. Bulk order