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True or False?
Entrepreneurs need finance to cover initial setup costs when starting a new business.
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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.