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IB Syllabus 3.1
IB Syllabus 3.1
The learning outcomes (or assessment objectives) for this section of the IB Business Management syllabus are:
Role of finance for businesses (AO2):
Capital expenditure
Revenue expenditure
In-Class Activities
In-Class Activities
Reflection of last unit:
Reflection Questions:
Importance/Interesting: What did you learn and why is it important? What is something you found interesting?
Wonder: What is something you want to know more about?
Wish: What is something you wish everyone knew about the last unit?
Challenge: What is something you found challenging? What strategies, skills, and procedures can you use next time?
Proud: What is something that you're proud of?
Day 1:
Day 1:
The role of finance for businesses
What is Finance?
What is Accounting?
Choose a company:
What is the role of finance in your company?
Make a lists of different capital expenditures and revenue expenditures they may have
What you should know
By the end of this subtopic, you should be able to:
define the following terms: (AO1)
capital expenditure
investment
revenue expenditure
distinguish between capital expenditure and revenue expenditure (AO2)
https://quizlet.com/_csicrz?x=1qqt&i=4jrhob
https://www.gimkit.com/view/63ea150c2350150032f3d6de
Capital expenditure
Refers to business spending on fixed assets or capital equipment of a business. Eg. factories, delivery trucks, technology, production equipment
Revenue expenditure
Refers to business spending on its everyday and regular operations. Eg. utility bills, wages, salaries, paying suppliers, taxes, debt repayments
Finance
the process of acquiring and managing money for a business
Accounting
The process of recording money flows and assets of a business.
Procurement
The process of purchasing goods and services that are used by a business to produce its products.
Investment
Spending by a business on non-current (fixed) assets; also known as capital expenditure
Fixed assets
An item or property that has value, is owned by a person or business, and which the business plans on holding or using for longer than one year.
Long-term finance
Large-scale funds needed to finance expensive equipment and facilities that a business needs to operate. Defined as any financial instrument with maturity exceeding one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments.
Insolvency
A situation in which a business is unable pay its debts.
3.1 Extra Notes
3.1 Extra Notes
Role of finance for businesses (AO2):
Role of finance for businesses (AO2):
Capital expenditure
Capital expenditure
Capital expenditure, also known as investment, is spending on a company’s fixed assets.
A fixed asset is an item of property that has value and is owned by a person or business which the business plans on holding or using for longer than one year.
Eg: purchases of land, buildings and machines.
Is often very expensive.
Normally funded using long-term finance.
Investment in capital expenditure allows a business to grow in the future. The idea is that extensive research and development will pay off in the long term, even if it involves significant spending in the short term.
Examples of Capital Expenditure
Land, Buildings, Machines
factories
delivery trucks or other vehicles needed for the good or service
technology
production equipment
Revenue expenditure
Revenue expenditure
Revenue expenditure is spending on a company’s general operational costs.
It is best thought of as the day-to-day running costs of a company; in other words, the cost a company has to pay on a daily, weekly or monthly basis in order to enable the business to generate revenue.
If a business cannot pay for its revenue expenditures, it will go out of business rapidly. This is referred to as insolvency. If they are not paid, employees may refuse to work, suppliers may stop sending materials and utility companies may shut off the electricity or water supply.
Revenue expenditure is funded using short-term or medium-term sources of finance.
Examples of Revenue Expenditure
utility bills, such as gas, electricity and water
paying wages and salaries to workers
paying suppliers
settling tax bills with the government
repayments of debts, such as mortgages and loans
Differences between Revenue Expenditure and Capital Expenditure
3.1-revenue---capital-expenditure-quiz.pdfPage updated
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