BTEC Business - C2

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  • Created by: Kaicee05
  • Created on: 14-05-23 15:02

Revenue Income

Revenue income is the money that comes into the business from performing it's day to day function which is selling goods or providing a service. 

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Types of Revenue Income

Sales - Money coming in from the sales of goods and services. Cash sales are paid by the customer there and then. Credit sales are buy it now and pay it later. 

Rent received - A business that owns property and charged others for it's use. A business may own land which they rent to another business. 

Comission received - A business may sell products as an agent of another business. They'll sell other businesses products on behalf of them and get a percentage of the sale (a comission).

Discount received - This is received when a business is given a percentage off a sale, normally in return for a quick payment or bulk order. It reduces the cost to the business. 

Interest Received - Money earned on savings or lendings. A business with a positive bank balance will receive interest on this. They could lend money to another business. 

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Capital Income

Capital income is money invested in the business to set it up or later buy additional assets. It's a long term investement. 

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Types of Capital Income

Loans - An amount of money lent to the business from a bank. It has to be paid back in regular installments and interest is added. This is the amount the bank charges for the loan, it may fluctuate.

Mortgage - Similar to a bank loan. It's a larger sum of money over a longer period of time. Always secured against an asset, eg. a house. Businesses may take out a mortgage to buy their premesis. 

Shares - Must be regulated with Companies House amd issues shares to shareholders. They normally receive a voting right and the more shares they own, the greater their ability to influence decisions. They're rewarded for their investement with dividends (share of profit). 

Owner's Capital - Money invested into the business from personal savings. Sole traders own businesses by themselves so rely on their own savings or loans. Partnerships are between multiple people and they each contribute to money that's available. 

Debentures - A medium to long term source of finance from the Government raised by the public for capital requirements, eg. Government raising funds to construct roads for the public. Large companies use them to secure income. Interest is payable. It's repaid as a lump sum on a fixed date. They can be secured against an asset. 

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