3.1, 3.2, and 3.3 business quiz

Capital Expenditure

Refers to business spending on fixed assets or capital equipment of a business.

Revenue Expenditure

Refers to business spending on its everyday and regular operations.

External Sources of Finance

Funds obtained from outside the business, e.g, share capital and loan capital, used to finance capital expenditure or overdrafts and trade credit, used to finance revenue expenditure.

Business Angels

Wealthy and successful private individuals who risk their own money in a business venture that has high potential growth.

Leasing

A financial service that enables businesses to have access to non-current assets, by hiring these assets, but without the high costs of capital expenditure.

Microfinance

An external source of finance provided by financier who support entrepreneurs of small businesses like those on low incomes who are ordinarily unable to secure loans from commercial banks.

Retained Profit

This is the surplus funds that are reinvested back in the business, rather than being distributed to the owners.

Share Capital

Also known as equity capital, this is the finance raised through the issuing of shares via a stock exchange or stock market.

Fixed Costs

Costs that do not change with the level of output, e.g, loan repayments and management salaries. 

Revenue Stream

The different sources of revenue or income for a business e.g, revenue from sponsorship deals, membership fees and royalties. 

Variable Costs

Costs that change with the level of output, they rise when output or sales increase.

Direct vs. Indirect Costs (overhead costs)

Direct costs are clearly associated with the level of output or sale of a certain good, service, or business operation whereas indirect costs are are not easily identifiable with the sale or output of a specific good, service, or business operation.