business finance : needs & sources

Business finance is needed to

• Establish a business

• Run a business

• Expand a business

• All of the above

Internal sources of capital are those that are

• generated through outsiders such as suppliers

• generated through loans from commercial banks

• generated through issue of shares

• generated within the business

Which is not an capital expenditure example

• Computer

• Rent

• Buildings

• Furniture & fixtures

Which is an example of Revenue expenditure

• Motor Van

• Gym equipment

• Salary

• Premises

Which are the internal source of finance

• Sales of inventories to reduce inventory levels

• Issue of shares

• Bank loan

• Selling Debentures

What do you mean by retained profits?

• Profit which occur during the year

• Profit kept in the business after the owners have taken their share

What shareholders get in return on investment?

• Interest

• Rent

• Debentures

• Dividend

State the advantage of Owners savings

• No interest is paid

• This makes better use of the capital tied up in the business

• Permanent source

Which of the following is the most suitable reason for using personal finance?

• Insufficient internal sources of finance

• Insufficient external sources of finance

• There is no interest obligation

• To please the owners (shareholders) of a company

Which of the following is not a feasible source of finance for an ordinary partnership?

• bank loans

• Sale and leaseback

• Debt factoring

• Initial public offering