7 EMS: Terminology Revision 2

Money used to start a business.

• Capital

• Fixed capital

• Working capital

Money used in the business to cover daily costs.

• Capital

• Fixed capital

• Working capital

Current assets can be converted into cash within 12 months.

• True

• False

An example of a current asset is:

• Delivery vehicle

• Trading stock

• Office furniture

Non-current assets are typically kept for more than 12 months.

• True

• False

An example of a non-current asset:

• Delivery vehicle

• Trading stock

• Cash in the bank

People who owe the business money are:

• Debtors

• Creditors

People who the business owes money to are called:

• Debtors

• Creditors

A business who pays off a delivery vehicle loan over 5 years would classify this as a:

• Current liability

• Non-current liability

A trading business's main form of income is sales.

• True

• False