Edexcel AS/A Level Business - Theme 2 With Correct Answers -2024

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 Cash outflows