Business Studies Edexcel: Theme 2.1

What is an advantage of a business using owner's capital as a source of finance?

• Very low rate of interest

• It will bring new skills to the business

• It doesn't need repaying

• Repayment is always spread over a period time

What is an advantage of a bank loan?

• There will be little or no interest
• You can pay in smaller installments
• They are quick and easy to arrange
• You don't have to pay it back

What is an advantage of an overdraft?

• There is never interest
• You can pay in smaller installments
• They are quick and easy to arrange
• You don't have to pay it back

What type of finance involves less profit going to the owners?

• Retained profit

• Sale of assets

• Overdraft

• Owner's capital

What source of finance could lead to an unwanted takeover of the business?

• Sale of assets

• Owner's capital

• Trade credit

• Share issue

What source of finance often requires no interest, equity, security or repayment?

• Bank loan

• Crowdfunding

• Taking on a new partner

• Overdraft

Which of these sources of finance is likely to charge the most interest?

• Trade credit

• Retained profit

• Bank loan

• Overdraft

When is a business making a profit?

• When revenues are higher than costs
• When revenues equal costs
• When revenues are less than costs

What is the definition of Revenue?

• Income from the sales of goods and services
• Income from the cost of goods and services 
• The money made on products
• Cash coming into the business from suppliers and customers

How do you calculate revenue?

• sales x price

• price x cost

• cost + sales

• sales - total price