Business Quiz

What is capital expenditure

• Money spent to acquire fixed assets in a business

• Money used in the day-to-day running of a business.

• Profit that remains after a business (a profit-making entity) has paid out dividends to its shareholders. (also known as ploughed-back profit) 

• Money obtained from sources outside the business, usually from financial institutions or individuals.

What are fixed assets

• institutions that provide banking services to low-income or unemployed individuals or groups who would otherwise have no other access to financial services

• money sourced from financial institutions such as banks, with interest charged on the loan to be repaid

• Items in a business that will last for more than a year and may be used over and over again. (long term)

• a source of finance that allows a firm to use an asset without having to purchase it with cash.

What is a collateral

•  a source of finance for sole traders that comes mostly from their own personal savings.

•  Money spent to acquire fixed assets in a business

• Items in a business that will last for more than a year and may be used over and over again. (long term)

• a financial security pledged for repayment of a particular source of finance, such as bank loans

What is Revenue expenditure

• Money used in the day-to-day running of a business. (ex: rent, wages, raw materials, insurance, and fuel) (short term) 

• Items in a business that will last for more than a year and may be used over and over again. (long term)

• a source of finance that allows a firm to use an asset without having to purchase it with cash.

• is an expenditure or amount paid to produce or sell a good or service, including the acquisition of business resources.

What are Personal Funds

• money sourced from financial institutions such as banks with interest charged on the loan to be repaid

• an agreement between businesses that allows the buyer of goods or services to pay the seller at a later date

• a source of finance for sole traders that comes mostly from their own personal savings.

• Money spent to acquire fixed assets in a business

What are advantages of personal funds

•  It is an interest-free means of raising funds for the length of the credit period.

• The sole trader knows exactly how much money is available to run the business

• It is a valuable form of marketing because pitching a project or business through the online platform can result in media attention that publicizes the business.

• It is cheap because it does not incur charges(like bank loans do)

• It provides the sole trader with much more control over finances than other finance options.

What are disadvantages of personal funds?

• It poses a large risk to the owners or sole traders because they could be investing their life's savings, hence putting a strain on family or personal life.

•  If the savings are not sufficient it may be difficult to start to maintain a business, especially if this is the only source of funding.

• Start up business will not have any retained profit as they are new ventures

• If retained profit is too low, it may be sufficient for business growth or expansion.

What are sales of assets?

• when a business venture or project is funded by a large number of people each contributing a small amount of money

• money sourced from financial institutions such as banks, with interest charged on the loan to be repaid

• When a business sells off its unwanted or unused assets to raise funds

• Money spent to acquire fixed assets in a business

What are advantages of sales assets

• This is good way of raising cash from capital that is tied up in assets which are not being used.

• It provides the sole trader with much more control over finances than other finance options.

• It is cheap because it does not incur charges(like bank loans do

• • No interest or borrowing costs are incurred. 

What are disadvantages of retained profit

• This option is only available to established businesses as new business may lack excess assets to sell.

• Start up business will not have any retained profit as they are new ventures.

• It poses a large risk to the owners or sole traders because they could be investing their life's savings, hence putting a strain on family or personal life.

• If retained profit is too low, it may be sufficient for business growth or expansion