Lesson 11 Financing Your Business

The one-time investment of starting a business is called

• financing

• start-up investment

• venture capital

• working capital

Which of the following is the mathematical formula for payback?

• start-up investment + net profit per month

• net profit per month ÷ start-up investment

• start-up investment ÷ net profit per month

• net profit per month – start-up investment

Starting a business by yourself, without any outside investment is called

• start-up investment

• payback

• capital control

• bootstrapping

Which of the following would not be considered a bootstrapping strategy?

• borrowing money from a bank

• using personal savings

• using credit cards

• getting by without any start-up costs at all

Venture capital is typically a source of which type of financing?

• debt financing

• equity financing

• bootstrapping

• government-sponsored financing

The major source of debt financing is a(n)

• credit union

• angel

• customer

• bank

If a business borrows money, the effect on the accounts in its balance sheet will show a(n)

• assets and owner’s equity increase

• assets and liabilities increase

• assets increase and owner’s equity

  decrease

• liabilities and owner’s equity increase

If an owner of a business sells a share of the business to a partner, the effect on the balance sheet of the business will be that

• the total of assets and liabilities will increase

• the total of assets and liabilities will decrease

• the total of owner’s equity will increase

• the total of owner’s equity will decrease

Which one of the following is not a source of

equity financing?

• an angel

• a venture capitalist

• a new partner

• a credit union

Which one of the following sources of equity capital makes investments mainly to receive a high return on investment?

• venture capitalists

• angels

• banks

• MESBICs