Unit1-Finance

Question 0

Why does need businesses need to raise finance?

Answer 0

To purchase a range of items that are essential if it’s able to start trading

Question 1

What sources of finance are available for new businesses (4)

Answer 1

Government grants
Selling shares
Owner's fund 
 Overdraft
Bank loan 
loans from family and friends

Question 2

Typically how will and an entrepreneur need to spend moneyin order to start a business

Answer 2

Renting or buying a building
Advertising  the business
Stock of raw materials
Vehicles
Equipment and machinery

Question 3

What is an owners find?

Answer 3

It is money put into a business space owners all Owner

Question 4

What is an advantage using owners fund ?

Answer 4

The business does not have to pay any interest on it

Question 5

What is a bank loan and when would it be given ?

Answer 5

A bank loan involves a bank giving a business with a good business idea a a large sum of money in return for the business agreeing to repay the amount in instalments over the next few

Question 6

What are the disadvantages of having a bank loan?

Answer 6

The business will also be charged interest on the loan this is an extra payment the borrower has to make to the bank and allows the bank to make a profit on it

Question 7

What is a mortgage?

Answer 7

Mortgages or loans from banks and building societies that are used to buy land and buildings such as offices and shops

Question 8

What will happen if the business fails to make repayments on the mortgage?

Answer 8

The bank or building society also the building on land to the game its money

Question 9

What is an overdraft?

Answer 9

And overdrafts gives Entriken now and businesses the right to Borrow variable amounts of money up to an agreed limit

Question 10

What is the disadvantages of having an overdraft?

Answer 10

becomes a disadvantages in new businesses the bank may not agree to grant a new business an overdraft if it does save the rate of interest will be high making this an expensive sources of finance

Question 11

What is the advantage of having a loan from family and friends

Answer 11

Because it’s easy to arrange and often the money will be level free of interest payment

Question 12

What are the disadvantages of borrowing loans from family and friends

Answer 12

Family and find my not be able to lend a enough money on may need to have it returned sadly even the business short of finance

Question 26

What advice and guidance will banks give to business ?

Answer 26

• helps with writing business plan
• trade online
• how to find suitable building

Question 27

Where can entrepreneurs go to recieve help for advice

Answer 27

Accountants

Solicitors

Question 28

What is a source of finance ?

Answer 28

Bank loans

Banks will only give entrepreneurs money if they have a good business idea

Question 29

Owners fund ?

Answer 29

Money put into a business by its owner

Question 30

What is a morgage ?

Answer 30

Are loans from banks and building societies that are used to buy land and building such as offices and shop

Question 31

What is the key financial terms ?

Answer 31

Price
Sales
Revenue
Costs

Question 32

What is the importance of price ?

Answer 32

Price is the Amount a business askes a customer to pay for a single shop

Question 33

How will the entrepreneur guide price by?

Answer 33

The price set by other similar business

How much it costs to produce the good or service that the business sells

Question 34

What is revenue?

Answer 34

Is the income that a firm receives from Selling it’s goods or services

Question 35

How do you work out revenue?

Answer 35

Revenue = selling price x sales of the no. Of product sold

Question 36

How do you work out the total cost?

Answer 36

Total cost= fix costs +variable cost

Question 37

What is a fixed cost?

Answer 37

A fixed cost do not change as the firm produced is more or less

Question 38

What is a variable cost?

Answer 38

The variable costs rise and fall according to how much the business produces

Question 39

What are the expenses that a business has to pay regularly as a normal part of trading

Answer 39

Rent
Raw materials or components
Wages
Business taxes

Question 40

What is profit

Answer 40

Is the amount by which a business revenue from all its sales exceeds its costs

Revenue - total cost

Question 41

What are sales

Answer 41

The number of product sold

Question 42

What is revenue

Answer 42

The business income

Question 43

What is cash flow

Answer 43

Is the money that flows into and out of a business on a day to day basis

Question 44

Why might a buisness reciene cash inflow ?

Answer 44

Incomes from sale
Loans from banks
Money from owners fund

Question 45

What is cash outflow ?

Answer 45

Is when a business makes a payment which causes cash outflow

Question 46

What can lead to cash outflow ?

Answer 46

Establishing the business - one off payment such as advertising, buying equipment

Buying raw material

Wages

Rent

Taxes

Interest on loans

Question 47

What is a cash flow forecast

Answer 47

A plan of the expected inflow and outflow to and from a business over a period of time

Question 48

What is a cash flow statement

Answer 48

Is a historical record of the cash inflow and cash outflow that have taken place in the past

Question 49

Why might a business want to look at the cash flow statement?

Answer 49

To look at what’s happened to the cash flow over a previous trading period and use this to help you plan its future management of cash