unit 5 definitions

Question 1

start-up capital

Answer 1

finance needed by a new business to pay for essential non-current and current assets before it can begin trading

Question 2

working capital

Answer 2

the finance needed by a business to pay its day- to-day costs.

Question 3

capital expenditure

Answer 3

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

Question 4

revenue expenditure

Answer 4

the money spent on day-to-day expenses which do not involve the purchase of a long-term asset e.g wages or rent

Question 5

internal finance

Answer 5

obtained from within the business itself

Question 6

external finance

Answer 6

is obtained from sources outside of and separate from the business.

Question 7

micro-finance

Answer 7

providing financial services including small loans to poor people not served by traditional banks

Question 8

crowdfunding

Answer 8

funding a project or venture by raising money from a large number of people who each contribute a relatively small amount, normally via the internet

Question 9

cash flow

Answer 9

the cash inflows and outflows over a period of time

Question 10

cash inflows

Answer 10

the sums of money received by a business during a period of time

Question 11

cash outflows

Answer 11

the sums of money paid out by a business during a period of time

Question 12

cash-flow cycle

Answer 12

shows the stages between paying out cash for labour, materials and receiving cash from the sale of goods

Question 13

cash flow forecast

Answer 13

an estimate of future cash inflows and outflows of a business, usually on a month-by-month basis. This then shows the expected cash balance at the end of each month

Question 14

net cash flow

Answer 14

the difference, each month, between inflows and outflows

Question 15

working capital

Answer 15

the capital available to a business in the short term to pay for day to day expenses