Theme 2 Edexcel A-level Business

• Capital


  The money provided by the owners in a business
• Capital expenditure


  Spending on business resources that can be used repeatedly over a period of time
• Internal finance


  Money generated by the business or its current owners
• Retained profit


  Profit after tax that is 'ploughed back' into the business
• Revenue expenditure


  Spending on business resources that have already been consumed or will be very shortly
• Sale and leaseback


  The practice of selling assets, such as property or machinery, and leasing them back from the buyer
• Authorised share capital


  The maximum amount that can be legally raised
• Bank overdraft


  An agreement between a business and a bank that means a business can spend more money that it has in its account (going 'overdrawn'). The overdraft limit is agreed and interest is only charged when the business goes overdrawn
• Capital gain


  The profit made from selling a share for more than it was bought
• Crowd funding


  Where a large number of individuals invest in a business or project on the internet, avoiding the use of a bank
• Debenture


  A long-term loan to a business
• Equities


  Another name for an ordinary share
• External finance


  Money raised from outside the business
• Issued share capital


  Amount of current share capital arising from the sale of shares
• Lease


  A contract to acquire the use of resources such as property or equipment
• Peer-to-peer lending (P2PL)


  Where individuals lend to other individuals without prior knowledge of them, on the internet
• Permanent capital


  Share capital that is never repaid by the company
• Secured loans


  A loan where the lender requires security, such as property, to provide protection in case the borrower defaults
• Share capital


  Money introduced into the business through the sale of shares
• Unsecured loans


  Where the lender has no protection if the borrower fails to repay the money owed
• Venture capitalism


  Providers of funds for small or medium-sized companies that may be considered too risky for other investors
• Collateral


  An asset that might be sold to pay a lender when a loan cannot be repaid
• Incorporated business


  A business model in which the business and the owner(s) have separate legal identities
• Limited liability


  A legal status that means shareholders can only lose the original amount they invested in a business
• Long-term finance


  Money borrowed for more than one year
• Rights issue


  Issuing new shares to existing shareholders at a discount
• Short-term borrowing


  Money borrowed for 12 months or less
• Undercapitalised


  A business not raising enough capital when setting up
• Unincorporated businesses


  A business model in which there is no legal difference between the owner(s) and the business
• Unlimited liability


  A legal status which means that business owners are liable for all business debts
• Business plan


  A plan for the development of a business, giving details such as the products to be made, resources needed, and forecasts such as costs, revenues and cash flow
• Cash-flow forecast


  The prediction of all expected receipts and expenses of a business over a future time period which shows the expected cash balance at the end of each month
• Cash inflows


  The flow of money into a business
• Cash outflows


  The flow of money out of a business
• Net cash flow


  The difference between the cash flowing in and the cash flowing out of a business in a given time period
• Solvency


  The degree to which a business is able to meet its debts when they fall due
• Consumer income


  The amount of income remaining after taxes and expenses have been deducted from wages
• Consumer trends


  The habits or behaviours of consumers that determine the goods and services they buy
• Economic growth


  The rise in output of an economy as measured by the growth in GDP usually as a percentage
• Economic variables


  Measures within the economy which have effects on business and consumers. Examples include unemployment, inflation and exchange rates