Sources of finance

Which of the following is classed as a short-term source of finance?

• Trade Credit

• Venture Capital

• Personal Savings

• Retained Profit

Which of the following is a reason why a new business start-up would need finance?

• To fund expansion

• To pay for replacement equipment

• To pay for maintenance on a new piece of machinery

• To buy equipment

An established seasonal partnership is experiencing cash flow problems during the winter months. Which of the following would be a suitable source of finance to overcome this problem?

• Overdraft

• Share capital

• venture capital

• crowd funding

A successful sole trader wants to raise funds to open a second restaurant and is eager to retain full control of the business. Which of the following sources of finance would be the most appropriate to fund this expansion?

• issue new shares

• bank loan

• overdraft

• gain a partner

Raising funds from a wide variety of small investors by publicising an idea on the internet is called:

• venture capital

• trade credit

• crowd funding

• personal savings

A possible drawback to an entrepreneur of using personal savings to finance a new business enterprise is:

• the amount of money available may be limited

• it is an expensive form of finance

• they will lose control of the business

• the amount will need to be repaid with interest

Which of the following is a benefit to a private limited company of using retained profit to finance its growth?

• the amount will not need to be paid back

• the business will not need to pay dividends

• the business will pay less tax

• the business will always have access to it

To which of the following businesses might a supplier be reluctant to issue trade credit?

• an established partnership

• a successful franchise

• a new business

• a private limited company

When using which of the following sources of finance would interest always need to be paid?

• a loan from family members

• venture capital

• share capital

• overdraft

Which type of business would venture capitalists be usually interested in investing funds?

• a start up with the possibility of high profits

• a small business with slow sales growth

• an established private limited company

• a well known franchise