Tiêu đề Section 5.pdf ✅

SECTION 5 Topic 1: Business finance 2+3 MARKS (M/J 2012, V1), Q4 (a) Define the term ‘startup capital’. [2] (b) Explain one source of startup capital. [3] Answer (a) It is the investment required by an entrepreneur to business person to start up a business. Example expenditure on premises and capital equipment. Sources are usually personal friends and family, partnership funds, venture capital, crowd funding etc. (b) One significant source of startup capital for entrepreneurs is securing a business partner. A business partner typically contributes financial resources, expertise, or both, to help launch and grow the new venture. The infusion of capital from a business partner not only provides the necessary financial backing but also brings in additional perspectives, industry knowledge, and strategic guidance, which can be invaluable in navigating the challenges of a startup. This collaborative approach to startup capital can lead to a more robust foundation for the business and increase the likelihood of long-term success.
AS / Level – Business (9609) – PAPER 1 – Short-Questions AATIK TASNEEM | AS / LEVEL: BUSINESS (9609) | 03041122845 2 (New addition) Q1 (a) Define the term ‘administration’. [2] (b) Explain one difference between bankruptcy and liquidation. [3] Answer (a) When administrators manage a business that is unable to pay its debts with the intention of selling it and trying to find a buyer for it. (b) Bankruptcy is a legal status that denotes an individual or business's inability to meet financial obligations, and it can result in either the restructuring of debts or the orderly distribution of assets to creditors. Liquidation, on the other hand, is a specific outcome within bankruptcy proceedings where a business's assets are sold to convert them into cash, with the proceeds used to settle outstanding debts.
AS / Level – Business (9609) – PAPER 1 – Short-Questions AATIK TASNEEM | AS / LEVEL: BUSINESS (9609) | 03041122845 3 (F/M 2017, V2), Q2 (a) Define the term ‘working capital’. [2] (b) Explain one difference between revenue expenditure and capital expenditure. [3] Answer (a) It is the amount of capital that is used to meet the day-to-day expenses of a business such as fuel, bills, raw material etc. (b) The primary distinction between revenue and capital expenditure lies in their impact on a company's financial statements and their nature. Revenue expenditure refers to expenses incurred in the day-to-day operations of a business to maintain and generate revenue, typically within a short period. These costs are expensed immediately and appear on the income statement. In contrast, capital expenditure involves significant investments in assets that provide long-term benefits to the business, such as acquiring or upgrading property, plant, or equipment. Capital expenditures are capitalized on the balance sheet and depreciated or amortized over their useful lives. The key difference is that revenue expenditure is aimed at maintaining ongoing operations and generating immediate benefits, while capital expenditure involves substantial, long-term investments that contribute to the company's growth and efficiency over an extended period.
AS / Level – Business (9609) – PAPER 1 – Short-Questions AATIK TASNEEM | AS / LEVEL: BUSINESS (9609) | 03041122845 4 (M/J 2013), Q1 (a) Define the term ‘retained profit’. [2] (b) Explain one advantage for a business of using retained profit as a source of finance. [3] Answer (a) It is the profit after tax and dividends that is reinvested into the business. This is not given to shareholders. (b) One benefit of utilizing retained profits as a source of finance is that it incurs no cost of borrowing. Unlike external financing options that often involve interest payments or other associated costs, using retained profits allows a company to fund its activities without incurring additional financial obligations. This absence of borrowing costs provides a distinct financial advantage, as it enhances the company's overall profitability and financial flexibility. By relying on retained profits, businesses can reduce debt levels, and allocate funds internally, leading to sustainable growth without the burden of external debt costs.