Sources of Finance

How can a business increase cash receipts?

• Use credit control methods

• Sell investments

• Have a sale

• All of the above

Why would a business prepare a cash flow?

• Help staff motivation

• Avoid cash deficits

• reduce profits

• none of the above

Short term source of finance will take up to 1 year to repay.

• True

• False

Medium sources of finance can take from 1 - 10 years to repay.

• True

• False

Which of these is NOT a short term source of finance?

• Bank Overdraft

• Factoring

• Personal Loan

• Trade credit

Which of these is a disadvantage of a credit card?

• Loose the card

• High interest if not paid on time

• More effort than carrying cash

• None of the above

The business raises money by selling its debtors to a bank for cash. Rather than waiting for the debtors to pay at a later date the business gets money now, this is _______.

• Credit Card

• Factoring

• Trade Credit

• None of the above

This involves buying an asset and taking delivery of it now but paying for it in instalments. The household/business will become the legal owner.

• Hire Purchase

• Leasing

• Personal Loan

• None of the above

The household borrows money from a bank which is repaid with interest over a period of 1-5 years

• Leasing

• Grant

• Mortgage

• Medium Term Loan

Example of a Receipt for a Household would be..

• Wages

• Pension

• Child Benefit

• All of the above