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IB Business Management Finance

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Terms in this set (123)

wealth in the form of money or other assets owned by a person or organization or available or contributed for a particular purpose such as starting a company or investing:

property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies

a company's financial debt or obligations that arise during the course of its business operations; settled over time through the transfer of economic benefits including money, goods or services

Capital Expenditure

money spent to acquire items in a business that will last for more than a year and may be used over and over again

Capital Expenditure

money spent to acquire fixed assets in a business

type of capital expenditure that includes machinery, land, buildings, vehicles, and equipment; can be used as collateral because of their high fixed costs

Revenue Expenditure

money spent on the day-to-day running of a business; include payments or expenses such as rent, wages, raw materials, insurance, and fuel

Revenue Expenditure

money used in the day-to-day running of a business

financial security pledged for repayment of a particular source of finance such as bank loans

internal sources of finance

this can include: personal funds, retained profit, and the sale of assets

an internal source of finance that comes from personal savings; it is cheap and easily available because there is no interest to be paid; it can prove difficult because of the risk of possibly investing life savings or needing more than what this source can offer; a source of finance for sole traders that comes mostly from their personal savings

Retained profit (earnings)

an internal source of finance; profit that remains after a business has paid corporation tax to the government and dividends to shareholders; also known as ploughed-back profit to be reinvested into the business

an internal source of finance that happens when a business sells off its unwanted or unused assets to raise funds

external sources of finance

This can include: share capital, loan capital, overdrafts, trade credit, grants, subsidies, debt factoring, leasing, venture capital, and business angles

Share (equity) capital

external source of finance; money raised from the sale of shares of a limited company