9310211
| Question | Answer |
| Capital | The money provided by owners in a business. |
| Capital Expenditure | Spending on business resources that can be used repeatedly over a period of time. E.g. a company vehicle, machinery or a factory. |
| Revenue Expenditure | Spending on business resources that have already been consumed of will be very shortly. E.g. wages, raw materials or fuel. |
| Retained Profit | Profit after tax that is put back into business and not returned to the owners. (+) No interest/admin (+) Flexible (-) Opportunity Cost (-) If used there are lower dividends for shareholders |
| Sale of Assets | An established business may be able to sell some unwanted assets to raise finance. |
| Sale and leaseback | The practice of selling assets such as property or machinery, and leasing them back from the buyer. |
| Owner's Capital | Money provided by the owner of a business, usually from personal savings. |
| External Finance | Money raised from outside the business. |
| Bank Overdraft | An agreement between a business and a bank that mean a business can spend more money than it has in its account (going 'overdrawn'). The overdraft limit is agreed and interest is only charged when the business goes overdrawn. |
| Crowd funding | Where a large number of individuals (the crowd) invest in a business or or project on the internet, avoiding the use of a bank. |
| Debenture | A long-term loan to a business. |
| Equities | Another name for an ordinary share. |
| Issued share capital | Amount of current share capital arising from the sale of shares. |
| Lease | A contract to acquire the use of resources such as property or equipment. |
| Peer-to-peer lending (P2PL) | Where individuals lend to other individuals without prior knowledge of them, on the internet. |
| Permanent Capital | Share capital that is never repaid by the company. |
| Secured Loans | A loan where the lender required security, such as property, to provide protection in case the borrower defaults. |
| Share Capital | Money introduced into the business through the sale of shares. |
| Unsecured loans | Where the lender has no protection if the borrower fails to repay the money owed. |
| Venture capitalism | Providers of funds for small or medium-sized companies (SMEs) that may be considered too risky for other investors. |
| Capital Gain | The profit made (by a shareholder) from selling a share for more than it was bought. |
| Collateral | An asset that might be sold to pay a lender when a loan cannot be repaid. |
| Incorporated business | A business model in which the business and owner(s) have separate legal identities. |
| Limited liability | A legal status that means shareholders can only lose the original amount they invested in a business. |
| Long-term finance | Money borrowed for more than one year. e.g. mortgage. |
| Rights issue | Issuing new shares to existing shareholders at a discount. |
| Short-term borrowing | Money borrowed for 12 months or less. E.g. bank overdraft. |
| Undercapitalised | A business not raising enough capital when setting up. |
| Unincorporated business | A business model in which there is no legal distinction between the owner(s) and the business. |
| Unlimited liability | A legal status which means that business owners are liable for all business debts. |
| Business plan | A plan for the development of a business, giving details such as the products to be made, resources needed, and forecasts such as costs, revenues and cash flow. |
| Cash-flow forecast | The prediction of all expected receipts and expenses of a business over a future time period which shows the expected cash balance at the end of each month. |
| Cash inflows | The flow of money into a business. |
| Cash outflow | The flow of money out of a business. |
| Net cash flow | The difference between the cash inflows and cash outflows in a given period of time. |
| Solvency | The degree to which a business is able to meet its debts when they are due. |
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