The amount of money required for the day-to-day running of a business is known as

Step 1: Analyze the question The question asks for the term used for money needed for the day-to-day running of a business, meaning money used for routine, short-term expenses.

Step 2: Explain the concepts

• Economics capital (A): Not a standard business finance term.
• Fixed capital (B): Money invested in long-term assets such as land, buildings, and machinery. It is not used up in daily operations.
• Paid-up capital (C): The part of a company's issued share capital that shareholders have actually paid.
• Reserve capital (D): The portion of capital a company holds back, to be called up only in the event of liquidation or special need.
• Working capital (E): Money available for daily operations, such as paying wages, buying raw materials, settling utility bills, and covering transport costs. It is calculated as:

Working capital = Current assets − Current liabilities

Step 3: Match the definition Day-to-day running expenses (salaries, raw materials, electricity, and so on) are financed by working capital.

Answer: E. Working capital

Exam tip: Link the word "working" with "daily work". If a question mentions day-to-day, short-term, or running costs, think working capital. If it mentions long-term assets like land, buildings, or machines, think fixed capital.