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Questions and Answers
What is the term for the amount of money borrowed from a lender, which must be paid back with interest?
What is the term for the amount of money borrowed from a lender, which must be paid back with interest?
What is the term for the amount of money or assets that an individual or business owns?
What is the term for the amount of money or assets that an individual or business owns?
What is the reason for starting a business that is most focused on personal fulfillment?
What is the reason for starting a business that is most focused on personal fulfillment?
What is the term for the amount of money gained from the sale of goods or services?
What is the term for the amount of money gained from the sale of goods or services?
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What are the three types of business?
What are the three types of business?
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What is a common source of capital for business startups?
What is a common source of capital for business startups?
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Which of the following is NOT a source of capital for business startups?
Which of the following is NOT a source of capital for business startups?
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What type of financing involves sharing ownership with investors?
What type of financing involves sharing ownership with investors?
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Which source of capital is best suited for small, high-risk investments?
Which source of capital is best suited for small, high-risk investments?
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What type of financing involves borrowing money that must be repaid with interest?
What type of financing involves borrowing money that must be repaid with interest?
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Study Notes
Business and Finance Terms
- Business: An economic system or organization that provides goods and services to consumers in exchange for money.
- Capital: The money or assets used to start or operate a business, often including investments, loans, and owner's equity.
- Liability: A debt or financial obligation that a business must pay, such as loans, accounts payable, or taxes owed.
- Collateral: An asset or property that is used to secure a loan, which can be seized if the loan is not repaid.
- Loan: A sum of money borrowed from a lender, often with interest, to be repaid over a set period.
- Profit: The amount of money earned by a business above its expenses, resulting in a financial gain.
- Loss: A financial deficit or negative outcome, where a business's expenses exceed its revenue.
- Income: The revenue or earnings generated by a business through its operations, sales, or investments.
Reasons for Starting a Business
- Most suitable reason for starting a business: To earn a profit, be one's own boss, or pursue a passion or entrepreneurial dream.
Types of Business
- Three types of business: Sole Proprietorship, Partnership, and Corporation.
Sources of Raising Capital for Business Start-up
- True or False statements:
- Personal Savings: A common source of start-up capital for small businesses. (True)
- Venture Capital: A type of investment in high-growth potential startups. (True)
- Bank Loans: A traditional source of financing for businesses. (True)
- Crowdfunding: A modern way to raise capital from a large number of people. (True)
- Government Grants: A source of funding for businesses, often with specific requirements. (True)
- Angel Investors: Wealthy individuals who invest in startups in exchange for equity. (True)
- Retained Earnings: Profits reinvested in the business to fuel growth. (True)
- Trade Credit: A type of short-term financing provided by suppliers. (True)
- Business Plan: A document outlining the business strategy and financial projections. (False)
- Partnership: A type of business structure, not a source of capital. (False)
Business and Financial Concepts
- Business: An organization that produces and distributes goods and services to earn profits.
Financial Terms
- Capital: Money invested in a business to purchase assets, goods, and services.
- Liability: A debt or obligation that a business must pay.
- Collateral: An asset that serves as security for a loan.
- Loan: Borrowed money that must be repaid with interest.
- Profit: The amount of money earned above and beyond what it costs to run a business.
- Loss: The amount of money lost when expenses exceed revenue.
- Income: The money earned from the sale of goods and services.
Reasons for Starting a Business
- The most suitable reason for starting a business is to earn a profit.
Types of Business
- The three types of business are:
- Sole Proprietorship: A business owned and operated by one individual.
- Partnership: A business owned and operated by two or more individuals.
- Corporation: A business that is a separate legal entity from its owners.
Sources of Capital for Business Start-up
- The following are true sources of raising capitals for business start-up:
- Personal savings
- Bank loans
- Venture capital
- Angel investors
- Crowdfunding
- Government grants
- The following are false sources of raising capitals for business start-up:
- Free money from the government
- Charitable donations
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Description
Test your understanding of basic business terms and concepts, including types of businesses and sources of capital. Identify the correct definitions and types of businesses.
