Sources of Finance
Authored by Ruo Lee
Business
University
Used 5+ times
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30 questions
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1.
OPEN ENDED QUESTION
2 mins • 6 pts
what are the differences between capital expenditure and revenue expenditure?
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Answer explanation
Capital expenditure is expenditure on purchasing non-current assets. It adds the value of the non-current assets. For example,buying a vehicle. Revenue expenditure is expenditure to run day-to-day operation of the business. For example, petrol cost.
2.
OPEN ENDED QUESTION
2 mins • 3 pts
What is the need for finance?
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Answer explanation
1. allow to start up the business
- buy equipment
2. expansion of the business
-new branch in different city
3. continuously run the business operation
-pay salaries and wages
3.
OPEN ENDED QUESTION
2 mins • 6 pts
What are the differences between internal and external sources?
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Answer explanation
Internal sources are funds that are available inside the business. It will be used up when the requirement of funding is limited. It not required collateral. External sources are funds that are sourced outside of the business. It will be required when the funding amount needed is huge. It may require collateral. It divides into short, medium, and long term.
4.
OPEN ENDED QUESTION
1 min • 3 pts
What are the examples of internal finance?
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Answer explanation
retained profits, working capital and sales of unused assets
5.
OPEN ENDED QUESTION
2 mins • 2 pts
What are the advantages of retained profits?
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Answer explanation
-no repayment is needed
-no interest charge
6.
OPEN ENDED QUESTION
2 mins • 2 pts
What are the disadvantages of retained profits?
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Answer explanation
-not available for new business/ business just started up
-profit retained in business may not be enough to be used
7.
OPEN ENDED QUESTION
1 min • 1 pt
What is the meaning of working capital?
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Answer explanation
reducing stockholding, delayng payments to creditors and encouraging debtors to pay on time
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