Finance refers to the various available money that an organization has to fund its business activities. Finance is necessary for all businesses, from starting up a new business, to upgrading its capital equipment or to funding its expansion plans in overseas markets.

This section of the IB Business Management syllabus looks at the role (or purpose) of finance for business organizations (namely for capital expenditure and revenue expenditure).

 There is a single learning outcome (or assessment objective) for this section of the IB Business Management syllabus:

• Role of finance for businesses (AO2):

1. Capital expenditure

2. Revenue expenditure

 Teacher only box

Note to teachers

This topic was formerly part of the larger section on sources of finance (which has now moved to Unit 3.2 in the new syllabus. The new Unit 3.1 is, perhaps, the shortest section of the new IB Business Management syllabus.

Whilst the contents are straightforward to teach and learn, this part of the course is important for understanding the remainder of Unit 3 (finance and accounts). It is important that students are able to distinguish between revenue and capital expenditure.