Unit 5: Chapter 22

Question 1

Why do businesses need finance?

Answer 1

start up capital, expansion, additional working capital

Question 2

What is working capital?

Answer 2

finance needed for businesses to run and pay its day to day costs

Question 3

What happens to a business with insufficient working capital?

Answer 3

bankruptcy

Question 4

What is capital expenditure?

Answer 4

money spent on non-current assets which will last for more than a year

Question 5

What is revenue expenditure?

Answer 5

money spent on day to day expenses which do not involve the purchase of a long term asset

Question 6

What is an asset?

Answer 6

something that we own

Question 7

What are some internal sources of finance?

Answer 7

retained profits, sale of assets + stock, owners savings, trade credit

Question 8

What are some external sources of finance?

Answer 8

issue of shares, bank loan, debenture, debt factoring, hire purchase, grants + subsidies, microfinance, crowd funding, overdraft, leasing