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Chapter 18 - Business Finance

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  • Give ONE example of current expenditure.
    Wages / internet / electricity / cleaning supplies.
  • What is leasing?
    Renting an asset instead of buying it.
  • What is a grant?
    Money given by the government that does not need to be repaid.
  • Give ONE example of capital expenditure.
    Buying land / machinery / a building / delivery van.
  • What is hire purchase?
    Paying for an asset in instalments while using it immediately.
  • What is current expenditure
    Day-to-day running costs
  • What is trade credit?
    Buying goods now and paying later.
  • How long are medium-term sources repaid within?
    1-5 years
  • What are the two main types of business expenditure?
    Capital expenditure and current expenditure.
  • What is finance?
    Money that is available to a business.
  • Give ONE example of a short-term source of finance.
    Bank overdraft / trade creditors / accruals.
  • What principle states finance should match the time period of the need?
    The matching principle.
  • What are accruals (expenses due)?
    Expenses that do not need to be paid immediately.
  • How long are long-term sources repaid over?
    5+ years
  • What is a bank overdraft?
    Permission to withdraw more money than is in the bank account.
  • How long are short-term sources of finance repaid within?
    Within one year.
  • Give ONE example of medium-term finance.
    Term loan / leasing / hire purchase.
  • What are retained earnings?
    Profits reinvested back into the business.
  • What is crowdfunding?
    Raising small amounts of money from many people online.
  • What is capital expenditure?
    One-off or long-term spending
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