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Unit 3 Personal and Business finance Keywords Topic D
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TOPIC C KEYWORD TEST : UNDERSTAND THE PURPOSE OF ACCOUNTING Unit 3Personal and Business finance
Key words Definition
Internal source of finance
1. Internal Refer to money that comes from within a business. For example, retained
source of profit, net current assets and sale of assets
finance
2. Retained Profit kept in the business to fund future expenditure.
profit
3. Net current Current assets minus current liabilities shows the money available in the
assets business
to fund day-to-day expenditure.
4. Sale of assets Selling an item of worth owned by a business in order to achieve an
immediate
cash injection.
External source of finance
5. External Refer to money that comes from outside a business. For example, owner’s
source of capital and crowdfunding
finance
6. Owner’s This is money invested in the business from the owner’s personal savings.
capital
7. Loans Money borrowed from a financial institution normally for a set period
of time and for a specific purpose. Interest will be payable on the
mortgage.
8. Crowd-funding This involves attracting investment from a large number of speculative
investors
many of whom may invest relatively small amounts.
9. Mortgages These are long-term loans, normally around 25 years, that are secured
against a
specific asset, for example a building. Interest will be payable on the
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