Business Studies Terminology Quiz

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