A LEVEL EDEXCEL BUSINESS PAPER 2
Capital - ANSWER-The money provided by the owners in a business
Capital expenditure - ANSWER-Spending on business resources that can be used
repeatedly over a period of time
Internal finance - ANSWER-Money generated by the business or its current owners
Retained profit - ANSWER-Profit after tax that is 'ploughed back' into the business
Revenue expenditure - ANSWER-Spending on business resources that have already
been consumed or will be very shortly
Sale and leaseback - ANSWER-The practice of selling assets, such as property or
machinery, and leasing them back from the buyer
Authorised share capital - ANSWER-The maximum amount that can be legally raised
Bank overdraft - ANSWER-An agreement between a business and a bank that means a
business can spend more money that it has in its account (going 'overdrawn'). The
overdraft limit is agreed and interest is only charged when the business goes overdrawn
Capital gain - ANSWER-The profit made from selling a share for more than it was
bought
Crowd funding - ANSWER-Where a large number of individuals invest in a business or
project on the internet, avoiding the use of a bank
Debenture - ANSWER-A long-term loan to a business
Equities - ANSWER-Another name for an ordinary share
External finance - ANSWER-Money raised from outside the business
Issued share capital - ANSWER-Amount of current share capital arising from the sale of
shares
Lease - ANSWER-A contract to acquire the use of resources such as property or
equipment
Peer-to-peer lending (P2PL) - ANSWER-Where individuals lend to other individuals
without prior knowledge of them, on the internet
Permanent capital - ANSWER-Share capital that is never repaid by the company
, Secured loans - ANSWER-A loan where the lender requires security, such as property,
to provide protection in case the borrower defaults
Share capital - ANSWER-Money introduced into the business through the sale of
shares
Unsecured loans - ANSWER-Where the lender has no protection if the borrower fails to
repay the money owed
Venture capitalism - ANSWER-Providers of funds for small or medium-sized companies
that may be considered too risky for other investors
Collateral - ANSWER-An asset that might be sold to pay a lender when a loan cannot
be repaid
Incorporated business - ANSWER-A business model in which the business and the
owner(s) have separate legal identities
Limited liability - ANSWER-A legal status that means shareholders can only lose the
original amount they invested in a business
Long-term finance - ANSWER-Money borrowed for more than one year
Rights issue - ANSWER-Issuing new shares to existing shareholders at a discount
Short-term borrowing - ANSWER-Money borrowed for 12 months or less
Undercapitalised - ANSWER-A business not raising enough capital when setting up
Unincorporated businesses - ANSWER-A business model in which there is no legal
difference between the owner(s) and the business
Unlimited liability - ANSWER-A legal status which means that business owners are
liable for all business debts
Business plan - ANSWER-A plan for the development of a business, giving details such
as the products to be made, resources needed, and forecasts such as costs, revenues
and cash flow
Cash-flow forecast - ANSWER-The prediction of all expected receipts and expenses of
a business over a future time period which shows the expected cash balance at the end
of each month
Cash inflows - ANSWER-The flow of money into a business
Capital - ANSWER-The money provided by the owners in a business
Capital expenditure - ANSWER-Spending on business resources that can be used
repeatedly over a period of time
Internal finance - ANSWER-Money generated by the business or its current owners
Retained profit - ANSWER-Profit after tax that is 'ploughed back' into the business
Revenue expenditure - ANSWER-Spending on business resources that have already
been consumed or will be very shortly
Sale and leaseback - ANSWER-The practice of selling assets, such as property or
machinery, and leasing them back from the buyer
Authorised share capital - ANSWER-The maximum amount that can be legally raised
Bank overdraft - ANSWER-An agreement between a business and a bank that means a
business can spend more money that it has in its account (going 'overdrawn'). The
overdraft limit is agreed and interest is only charged when the business goes overdrawn
Capital gain - ANSWER-The profit made from selling a share for more than it was
bought
Crowd funding - ANSWER-Where a large number of individuals invest in a business or
project on the internet, avoiding the use of a bank
Debenture - ANSWER-A long-term loan to a business
Equities - ANSWER-Another name for an ordinary share
External finance - ANSWER-Money raised from outside the business
Issued share capital - ANSWER-Amount of current share capital arising from the sale of
shares
Lease - ANSWER-A contract to acquire the use of resources such as property or
equipment
Peer-to-peer lending (P2PL) - ANSWER-Where individuals lend to other individuals
without prior knowledge of them, on the internet
Permanent capital - ANSWER-Share capital that is never repaid by the company
, Secured loans - ANSWER-A loan where the lender requires security, such as property,
to provide protection in case the borrower defaults
Share capital - ANSWER-Money introduced into the business through the sale of
shares
Unsecured loans - ANSWER-Where the lender has no protection if the borrower fails to
repay the money owed
Venture capitalism - ANSWER-Providers of funds for small or medium-sized companies
that may be considered too risky for other investors
Collateral - ANSWER-An asset that might be sold to pay a lender when a loan cannot
be repaid
Incorporated business - ANSWER-A business model in which the business and the
owner(s) have separate legal identities
Limited liability - ANSWER-A legal status that means shareholders can only lose the
original amount they invested in a business
Long-term finance - ANSWER-Money borrowed for more than one year
Rights issue - ANSWER-Issuing new shares to existing shareholders at a discount
Short-term borrowing - ANSWER-Money borrowed for 12 months or less
Undercapitalised - ANSWER-A business not raising enough capital when setting up
Unincorporated businesses - ANSWER-A business model in which there is no legal
difference between the owner(s) and the business
Unlimited liability - ANSWER-A legal status which means that business owners are
liable for all business debts
Business plan - ANSWER-A plan for the development of a business, giving details such
as the products to be made, resources needed, and forecasts such as costs, revenues
and cash flow
Cash-flow forecast - ANSWER-The prediction of all expected receipts and expenses of
a business over a future time period which shows the expected cash balance at the end
of each month
Cash inflows - ANSWER-The flow of money into a business
