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Sources of Finance

The document introduces sources of finance for businesses, including start up capital, working capital, and finance for expansion or special situations. It discusses capital expenditure, revenue expenditure, and classifies sources of finance as either internal sources from a business's own assets and profits, or external sources from outside the business for short, medium, or long-term periods.

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abrar mahir Sahil
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43 views1 page

Sources of Finance

The document introduces sources of finance for businesses, including start up capital, working capital, and finance for expansion or special situations. It discusses capital expenditure, revenue expenditure, and classifies sources of finance as either internal sources from a business's own assets and profits, or external sources from outside the business for short, medium, or long-term periods.

Uploaded by

abrar mahir Sahil
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Sources of finance introduction

Introduction:
 Businesses need finance
o For start up capital
 Capital needed by an entrepreneur to set up a business
o Working capital
 Capital needed to pay for raw materials, day to day running costs and
credit offered to customers.
o For expansion
o For special situations
 E.g. decline in sales
o For some businesses for research and development

Capital expenditure and revenue expenditure:


 Capital expenditure: Involves the purchase of assets that are expected to last for more
than one year, such as building and machinery
 Revenue expenditure: is spending on all costs and assets other than fixed assets and
includes wages and salaries and materials bought for stock

Various sources of finance:


 Sources are classified into
o Internal sources: money raised from business’s own assets or from profits left in
the business
o External sources: external money raised from sources outside the business.
 Can be for short, medium and long-term period.

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