5.1 Business Finance

Question 1

Start-up capital

Answer 1

Investment required by an entrepreneur or business person to build up their business.

Question 2

Working capital

Answer 2

The capital needed to pay for raw materials, day-to-day running costs and credit offered to customers.

Question 3

Capital expenditure

Answer 3

Involves the purchase of assets that are expected to last for more than one year, such as building and machinery.

Question 4

Revenue expenditure

Answer 4

Is spending on all costs and assets other than fixed assets and includes wages and salaries and materials bought for stock.

Question 5

Liquidity

Answer 5

The ability of a firm to be able to pay its short-term debts.

Question 6

Liquidation

Answer 6

When a firm ceases trading and its assets are sold for cash to pay suppliers and other creditors.