Podcast
Questions and Answers
Which statement correctly defines cash inflows?
Which statement correctly defines cash inflows?
- Money that is spent on business expenses like rent and salaries.
- The balance remaining after deducting monthly expenses from revenues.
- Net revenue minus the total liabilities of the business.
- Money coming into the business from various sources such as sales and loans. (correct)
What represents the closing balance in accounting?
What represents the closing balance in accounting?
- The cash available at the end of the month after accounting for all inflows and outflows. (correct)
- Estimated profits from sales yet to be received.
- Money allocated for future expenses that have yet to occur.
- The total liabilities owed by the business at the end of the month.
Which term best describes expenses that are paid after the related period has ended?
Which term best describes expenses that are paid after the related period has ended?
- Closing balance
- Net cash flow
- Accrual (correct)
- Prepayment
What is included in non-current assets?
What is included in non-current assets?
Which best describes liquidity?
Which best describes liquidity?
What is a defining characteristic of crowdfunding?
What is a defining characteristic of crowdfunding?
How does hire purchase differ from leasing?
How does hire purchase differ from leasing?
What does a break-even point represent for a business?
What does a break-even point represent for a business?
Which of the following best describes variable costs?
Which of the following best describes variable costs?
What is the primary purpose of a cash flow forecast?
What is the primary purpose of a cash flow forecast?
What distinguishes trade credit from other forms of financing?
What distinguishes trade credit from other forms of financing?
Which factor does not contribute to total costs?
Which factor does not contribute to total costs?
What is the likely outcome of invoice discounting for a business?
What is the likely outcome of invoice discounting for a business?
Flashcards
Crowdfunding
Crowdfunding
Attracting investment from many people, who each invest a small amount.
Mortgages
Mortgages
Long-term loans for buying a property, often around 25 years.
Venture Capital
Venture Capital
Investment by experienced entrepreneurs in a company for a share.
Break-Even Point
Break-Even Point
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Variable Costs
Variable Costs
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Fixed Costs
Fixed Costs
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Total Revenue
Total Revenue
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Cash Flow Forecast
Cash Flow Forecast
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Cash inflows
Cash inflows
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Closing balance
Closing balance
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Liquidity
Liquidity
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Non-current assets
Non-current assets
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Current assets
Current assets
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Study Notes
Funding Sources for Businesses
- Crowdfunding: Attracting investment from many small investors.
- Mortgages: Long-term loans secured against a specific asset (e.g., building).
- Venture Capital: Investment from experienced entrepreneurs in exchange for a stake in the business.
- Debt Factoring: Selling a business's debts to receive immediate cash.
- Hire Purchase: Paying for an asset in installments.
- Leasing: Paying to use an asset, but not owning it.
- Trade Credit: Suppliers providing a payment period for purchases.
- Grants: Lump-sum funding from governments or organizations.
- Donations: Voluntary financial contributions to a charity or enterprise.
- Peer-to-Peer Lending: Loans between individuals.
- Invoice Discounting: Offering discounts for prompt payment of invoices.
Financial Forecasting and Analysis
- Break-Even Analysis: The point where total revenue equals total costs.
- Variable Costs: Costs changing with production ("output").
- Semi-Variable Costs: Partly fixed, partly variable, depending on business activity (e.g., overtime).
- Fixed Costs: Costs not changing with production.
- Total Costs: Fixed costs + Variable costs.
- Total Revenue: Total sales income.
- Total Revenue Calculation: Selling price x Quantity Sold.
- Total Sales: Total sales in a period (e.g., yearly). Expressed in value (money) or volume (quantity).
- Selling Price per Unit: The price for each item.
- Sales Volume (Units): Sales expressed in quantity.
- Cash Flow Forecasting: Predicting cash inflows and outflows. Essential for business survival.
- Cash Inflows/Receipts: Money coming into a business.
- Cash Outflows/Payments: Money leaving a business.
- Opening Balance: Cash available at the start of a period.
- Closing Balance: Cash available at the end of a period. Calculated as Opening Balance + Net Cash Flow
- Liquidity: Measures a firm's ability to meet short-term cash obligations.
Financial Statements
- Statement of Comprehensive Income (SOCI): Shows a company's trading position. Calculates gross profit and then net profit or loss.
- Accrual: An expense recorded in a period after it's incurred.
- Prepayment: An expense paid before the period to which it relates.
- Statement of Financial Position (SOFP): Summarizes a company's assets and liabilities at a specific point in time (usually year-end).
- Non-Current Assets: Items owned for more than one year (e.g., buildings).
- Current Assets: Assets with a likely and relatively frequent value fluctuation (e.g., inventory, cash).
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Description
This quiz covers essential funding sources for businesses such as crowdfunding, venture capital, and trade credit, along with concepts of financial forecasting like break-even analysis and variable costs. Test your knowledge on various financial strategies and their implications for business success.
