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IBBusinessDPBusiness ManagementSLFlashcards3. Finance & Accounts3.1 Introduction to Finance

3.1 Introduction to Finance (DP IB Business Management)

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  • True or False?

    Entrepreneurs need finance to cover initial setup costs when starting a new business.

    True.

    Entrepreneurs need finance to cover initial setup costs when starting a new business.

  • Define the term working capital.

    Working capital is the finance necessary to manage the day-to-day expenses of a business, such as purchasing inventory, paying suppliers and paying staff.

  • What does R&D stand for?

    R&D stands for Research and Development.

  • True or False?

    Businesses only need finance for capital expenditure.

    False.

    Businesses need finance for both capital expenditure and revenue expenditure.

  • What is meant by the term debt servicing?

    Debt servicing is the repayment of debts such as loans or credit facilities, including interest, over an agreed-upon period.

  • True or False?

    Finance provides a metric to measure business performance.

    True.

    Finance provides a metric to measure business performance.

  • Define the term capital expenditure.

    Capital expenditure is business spending on non-current assets that will be used many times and for more than one year.

  • Define the term revenue expenditure.

    Revenue expenditure is spending on goods and services that a business uses in the short-term as part of its normal trading activities.

  • True or False?

    Buildings are an example of current assets.

    False.

    Buildings are an example of non-current assets.

  • True or False?

    Machinery is considered a revenue expenditure.

    False.

    Machinery is considered capital expenditure.

  • What does the term non-current assets mean?

    Non-current assets are assets that will be used many times and for more than one year.

  • Define the term current assets.

    Current assets are short-term assets that are expected to be converted into cash or used up within one year.

  • Give two examples of revenue expenditure.

    Examples of revenue expenditure include:

    • Stock/inventory

    • Wages and salaries

    • Utilities

    • Distribution costs

    • Fuel

    • Insurance

  • True or False?

    Rent is considered capital expenditure.

    False.

    Rent is considered revenue expenditure.

Previous:3.9 BudgetsNext:3.2 Sources of Finance

    1. Topic 1

      1.1 What is a Business?

    2. Topic 2

      1.2 Types of Business Entities

    3. Topic 3

      1.3 Business Objectives

    4. Topic 4

      1.4 Stakeholders

    5. Topic 5

      1.5 Growth & Evolution

    6. Topic 6

      1.6 Multinational Companies (MNCs)

    1. Topic 1

      2.1 Introduction to Human Resource Management

    2. Topic 2

      2.2 Organisational Structure

    3. Topic 3

      2.3 Leadership & Management

    4. Topic 4

      2.4 Motivation & Demotivation

    5. Topic 5

      2.5 Communication

    1. Topic 1

      3.1 Introduction to Finance

    2. Topic 2

      3.2 Sources of Finance

    3. Topic 3

      3.3 Costs & Revenues

    4. Topic 4

      3.4 Final Accounts

    5. Topic 5

      3.5 Profitability & Liquidity Ratio Analysis

    6. Topic 6

      3.6 Cash Flow

    7. Topic 7

      3.7 Investment Appraisal

    1. Topic 1

      4.1 Introduction to Marketing

    2. Topic 2

      4.2 Marketing Planning

    3. Topic 3

      4.3 Market Research

    4. Topic 4

      4.4 The Marketing Mix (7 P's)

    1. Topic 1

      5.1 Introduction to Operations Management

    2. Topic 2

      5.2 Operations Methods

    3. Topic 3

      5.3 Location

    4. Topic 4

      5.4 Break-even Analysis

    1. Topic 1

      6.1 The Business Management Toolkit