Unit 3: Financial

Question 1

capital expenditure

Answer 1

spending on a company’s fixed assets

Question 2

fixed asset

Answer 2

asset kept for over 1 year

Question 3

examples of capital expenditure

Answer 3

factories, tech, production equipment and vehicles

Question 4

revenue expenditure

Answer 4

spending on a company’s general operational costs

Question 5

examples of revenue expenditure

Answer 5

utility bills, wages, paying suppliers, repaying debt, taxes

Question 6

3 types of internal sources of finance

Answer 6

personal funds
retained profit
sale of assets

Question 7

sale of assets

Answer 7

selling its (fixed) assets

Question 8

personal funds

Answer 8

owner investing own money

risky

receive shares in return

Question 9

retained profit

Answer 9

money company has left at end of trading period

Question 10

short term finance

Answer 10

repaid within 12 months

Question 11

medium term finance

Answer 11

repaid within 1 and 5 years

Question 12

long term finance

Answer 12

repaid in over 5 years

Question 13

3 types of external sources of finance

Answer 13

equity finance
debt finance
others

Question 14

equity finance

Answer 14

outside investor receives part ownership (shares) in exchange for finance

Question 15

3 types of equity finance

Answer 15

business angel
venture capital
share capital

Question 16

business angel

Answer 16

successful business person who invests their money into new businesses

Question 17

venture capital

Answer 17

financing that pools resources from a group of investors to fund a new project/company

Question 18

share capital

Answer 18

money raised through selling shares in stock market

Question 19

debt finance

Answer 19

money borrowed from a bank or another financial institution

Question 20

types of debt finance

Answer 20

overdraft, loan capital, microfinance, trade credit

Question 21

loan capital

Answer 21

business receives a loan and offers collateral

Question 22

overdrafts

Answer 22

business can loan/ take out more than what they have in the bank

Question 23

microfinance

Answer 23

providing financing to people with very limited income and assets, who aren’t able to get services from traditional banks

Question 24

microcredit

Answer 24

small loans that enable someone to start and continue a small business

Question 25

trade credit

Answer 25

business receives goods/services from a supplier immediately, but pays for them later
(no interest)

Question 26

examples of other forms of finance

Answer 26

leasing and crowdfunding,

Question 27

leasing

Answer 27

renting a fixed asset over a period of time, instead of buying it

Question 28

crowdfunding

Answer 28

many people invest small amount of money to fund a business/project

Question 29

variable costs

Answer 29

costs that vary directly with output

Question 30

direct cost

Answer 30

cost traceable to a product, service or department

Question 31

indirect cost

Answer 31

cost that can’t be traced to a specific product, service or department

Question 32

revenue stream

Answer 32

one specific way a company generates income

Question 33

order of profit and loss statement

Answer 33

revenue
cost of sales
gross profit
expenses
profit before interest or tax
interest
profit before tax
tax
profit for the period
dividends
retained profit

Question 34

order of balance sheet

Answer 34

non-current assets
[…]
– non-current assets
current assets
[…]
– current assets
total assets
current liabilities
[…]
– current liabilities
non-current assets
[…]
– non-current assets
total liabilities
net assets
equity
- share capital
- retained profit
total equity

Question 35

intangible assets examples

Answer 35

patents
copyright
registered trademark
goodwill