5.1 Business Finance Quizs

Working capital

• is the cash a business has for its day-to-day spending.

• is the total amount of money a business has in its bank accounts.

• is the profit a business makes after all expenses are paid.

• is the value of a business's physical assets.

Short-term sources of finance

• are needed for a limited period of time, normally less than one year.

• are typically used for long-term investments.

• are only available to large corporations.

• are not necessary for small businesses.

Revenue expenditure

• refers to the purchase of items such as fuel and raw materials that will be used up within a short space of time.

• is the expenditure on long-term assets that will provide benefits over several years.

• includes costs related to employee salaries and benefits.

• refers to investments in stocks and bonds for future growth.

Liquidation

• is the process of merging two companies into one.

• is the dissolution of a company by selling its assets to settle its liabilities.

• is a method of increasing a company's market share.

• is the process of issuing new shares to raise capital.

Current assets

• are items owned by a business that can be readily turned into cash.

• are long-term investments that cannot be easily converted to cash.

• are liabilities that a business must pay off within a year.

• are items that have no monetary value to the business.

Bankruptcy

• occurs when an individual, a sole trader or a partnership is judged unable to pay its debts by a court of law.

• is a financial status where an individual has more assets than liabilities.

• is a legal process that allows individuals to eliminate all their debts without any consequences.

• occurs when a business is unable to generate enough revenue to cover its expenses.

Non-current assets

• are assets that a business expects to hold for one year or more.

• are assets that a business expects to sell within a year.

• are assets that have a lifespan of less than one year.

• are assets that are not used in the production of goods.

Trade receivables

• is the amount owed by a business’ customers for products that have been supplied but for which payment has not yet been made.

• is the total revenue generated by a business in a given period.

• is the amount a business owes to its suppliers for goods and services received.

• is the cash available to a business for immediate use.

Insolvency

• exists when a business’ debts exceed the assets available to pay them.

• is a state where a business has more assets than liabilities.

• occurs when a business is unable to generate any revenue.

• is defined as having equal assets and liabilities.

Administration

• is a process available to a company to protect itself while it attempts to pay its debts and to escape insolvency.

• is a method for increasing company profits through aggressive marketing strategies.

• is a legal procedure for dissolving a company and liquidating its assets.

• is a strategy for expanding a company's market share by acquiring competitors.