Theme 2 Definitions

Question 1

Internal finance sources (2.1)

Answer 1

Raised from within the business

Question 2

External finance sources (2.1)

Answer 2

Raised from outside the company

Question 3

Personal savings (2.1)

Answer 3

(Internal) investment using the owners own money

Question 4

Retained profit (2.1)

Answer 4

(Internal) Profit that a business makes after all payments are made

Question 5

Sale of assets (2.1)

Answer 5

(Internal) The selling of possessions of a business to generate funds

Question 6

Family & friends (2.1)

Answer 6

(External) Money from family or close friends that is given for investment etc

Question 7

Banks (2.1)

Answer 7

(External) Can offer loans, overdrafts or mortgages on a business property

Question 8

Peer to peer funding (2.1)

Answer 8

(External) Money that is raised by fundraisers done ran by a company, aiming for a specific target amount

Question 9

Business angels (2.1)

Answer 9

(External) Investors that offer money in return for a percentage of the business and/or profits

Question 10

Crowd funding (2.1)

Answer 10

(External) Where a large number of individuals provide funding for a business in return for shares/free products/discounts

Question 11

Other businesses (2.1)

Answer 11

(External) Big businesses buy shares in smaller businesses

Question 12

Methods of finance (2.1)

Answer 12

Financial agreement that is provided by a financial source

Question 13

Overdraft (2.1)

Answer 13

When you spend more than you have available in the bank and the bank allows it with the promise of you paying it back

Question 14

Loans (2.1)

Answer 14

Amount of money from the bank that you have to pay back by a certain deadline

Question 15

Share capital (2.1)

Answer 15

Amount of money raised by a business from selling shares

Question 16

Venture capital (2.1)

Answer 16

Professional investors fund businesses for a % ownership

Question 17

Leasing (2.1)

Answer 17

Rent an asset and return it at the end of the agreement

Question 18

Trade credit (2.1)

Answer 18

Business buys a good and pays later within 30, 60 or 90 days

Question 19

Consumer trends (2.2)

Answer 19

Habits of those involves in use of goods

Question 20

Sales forecast (2.2)

Answer 20

Shows a business how much sales they will potentially have

Question 21

Financial planning (2.2)

Answer 21

Plans for where funds will come from and go to

Question 22

Economic variables (2.2)

Answer 22

Economic factors that affect sales forecasting

Question 23

Actions of competitors (2.2)

Answer 23

What competitors do that ca affect your sales forecast

Question 24

Cash

Answer 24

An asset of a business which can come from investors, lenders or customers

Question 25

Cost of sales

Answer 25

The cost of inventory bought or produced

Question 26

Profit

Answer 26

Is recorded straight away after sales

Question 27

Profitability

Answer 27

Profit as a proportion of sales

Question 28

Statement of comprehensive income

Answer 28

A document to show income and expenditure of a business over a financial year

Question 29

Tax

Answer 29

A charge made by governments on activities, earnings and income of individuals and businesses

Question 30

Opening stock

Answer 30

This is the stock the business already has at the start of the financial year

Question 31

Income statement

Answer 31

Another name for profit and loss accounts used by limited companies

Question 32

Expenses

Answer 32

Shows how much money is going out of the business in terms of overheads and indirect costs

Question 33

Appropriation account

Answer 33

The final part of the profit and loss accounts used which shows how the profit is distributed

Question 34

Retained profit

Answer 34

This is the final profit after tax and other outgoings such as dividends have been distributed

Question 35

Dividend

Answer 35

The amount paid to shareholders as their share of the profit

Question 36

Gross profit

Answer 36

The profit after deducting cost of sales from revenue

Question 37

Operating profit

Answer 37

The profit after deducting operating expenses