3.1-3.3 Business Management

What is the type of expenditure is made by businesses on a daily basis to support their sales and production? 

• External Finance

• Capital Expenditure

• Revenue Expenditure

• Fixed Expenditure

Which of the following is an example of capital expenditure?  

• sustainability

• purchase of land

• paying salaries

• paying utility bills

Which one of the following sources of finance requires the payment of interest?

• Share capital

• Crowdfunding

• Loan capital

• Trade credit

Which of the following is an internal source of finance? 

• Business angels

• Sale of assets

• Leasing

• Share capital

The rent that a hair stylist has to pay for their salon is considered a __?

• Fixed Cost

• Variable Cost

• Revenue

• Profit

Answer explanation

A fixed cost is an expense that does not vary directly with the output of a good or service. The rent for the salon has to be paid regardless of whether the salon has 1 or 500 customers per month.

Total variable costs in a restaurant will __ ; when the sales quantity increases.

• Increase

• Decrease

• Stay the same

• Decrease initially and then increase

Elena’s business sells candles for $20 each.

When Elena’s output is at 150, her fixed costs are $800.

Therefore, if her output is 300, her fixed costs will be $ __?

• $800

• $1,500

• $3,000

• $6,000

A disadvantage of a bank loan as a source of finance is that interest repayments must be made even if the business is making a loss.

• True

• False

What is the formula to calculate to Total Revenue?

• TR = TFC + TVC

• TR = Profits - Costs

• TR = FC + VC

• TR = P × Q

Which external source of finance enables a business customer to purchase and obtain goods and services but to pay for these at a later date.

• Crowdfunding

• Loan capital

• Trade credit

• Overdraft