Theme 3 Task 1: Review Questions

Which one of the following is an internal source of finance?

• Business Angel

• Bank

• Retained profit

• Peer-to-peer funding

Which of the following is an example of debt?

• Personal savings

• Venture Capital

• Overdraft

• Share Capital

Which one of the following is not a suitable method of finance for a sole trader?

• Venture capital

• Share capital

• Loans

• Family and friends

Which term is used when a business pays for the right to use an asset it does not own?

• Sale of asset

• Leasing

• Venture capital

• Grants

Which one of the following sources of finance is available from a bank?

• Trade credit

• Retained profit

• Overdraft

• Venture capital

A firm has a closing balance of (£12 000) at the end of January. In February it has cash inflows of £85 000 and cash outflows of £65 000. What is its closing balance in February?

• £8 000

• (£8 000)

• £32 000

• (£32 000)

Which action would improve cash flow?

• Increase stock levels

• Reduce payables time

• Reduce receivables time

• Increase advertising

Which one of the following is an implication of limited liability?

• Can only sell a small product range

• Must have public liability insurance

• Investors personal possessions are at risk

• Shareholders can only lose up to the amount invested

Which one of the following forms of business has unlimited liability?

• Sole trader

• Private limited company

• Public limited company

• A business plan

What is the formula for net cash flow?

• Cash in – cost of sales

• Cash in + cost of sales

• Cash inflows – cash outflows

• Cash inflows + cash outflows