Finance Terms

Ability of a business to continue trading profitably, and for its value to be greater than its debt.

• Balance Sheet

• Stability

• Asset

• Profitability

Answer explanation

Eg. value of the business is more than the debts of the business. Owners Equity is greater than Assets less Liabilities.

Ability of a business to earn money from its investment in assets and equity.

• Financial Position

• Stability

• Liquidity

• Profitability

Ability of a business to repay short term debts when they fall due.

• Liquidity

• Budget

• Stability

• Profitability

A ______ is a forecast of the financial position and performance of the business. Used to plan, monitor and control business operations.

Answer explanation

Budgets are measured against actuals to monitor business performance and control any problems which become evident.

This report shows the Financial Stability of the organisation. Shows Financial Position of the business.  Lists all Assets, Liabilities and Owner’s Equity

• Budget

• Balance Sheet

• Profit & Loss statement

• Cash Flow statement

Items of value owned by the business

• Drawings

• Capital

• Assets

• Liabilities

Answer explanation

Current Assets are expected to be used up within 12 months.

Non-current Assets are expected to be of value after 12 months

___________ are debts owed by the business to other entities

Overdrafts, payables, loans and mortgages are all examples of

• Capital

• Equity

• Assets

• Liabilities

Answer explanation

Current liabilities are: Overdrafts and accounts payable

Non-current Liabilities are: Loans greater than 12 months and mortgages

The owners share of the business is called:

• Equity

• Capital

• Drawings

• Assets

Capital, Drawings and profit/(loss) are all examples of ______