What is one advantage of using friends and family as a method of finance according to the image?

They may not require the money to be paid back at all.

They always charge high interest rates.

They can invest unlimited funds into the business.

They guarantee business success.

What is a disadvantage of financing from friends and family as mentioned in the image?

They may not have any more money to invest in the business.

They provide professional business advice.

They require immediate repayment.

According to the image, what can be a consequence of borrowing money from friends and family?

It can cause family tension if the money is not paid back on time.

It can increase the credit score of the entrepreneur.

It can lead to a decrease in interest rates in the market.

What does retained profit mean in the context of business finance?

The profit a business has made and kept for future investment

The loss a business has incurred in the previous year

The profit a business has distributed among shareholders

The initial capital invested in starting a business

Would a start-up business typically have retained profit?

No, because retained profit is generated over time

Yes, as all businesses start with retained profit

Yes, if it has been in operation for many years

No, because start-ups are not profitable

What is one advantage of using retained profit as a method of finance compared to a loan?

There is no interest to pay back on retained profit.

Retained profit requires high interest payments.

Retained profit is difficult to access.

Retained profit can be used for personal expenses.

What is a disadvantage of using retained profit for financing?

If retained profit is used up, it cannot be used elsewhere, leading to opportunity cost.

It can be used to support other projects without any limitations.

It leads to a high interest rate.

Which statement is true regarding the applicability of retained profit?

Retained profit only applies to a business that has traded for at least 1 year and made a profit surplus.

Retained profit can be used by a startup in its first year.

Retained profit is applicable to all businesses regardless of their trading history.

Retained profit is only for businesses that have traded for more than 5 years.

What can limited companies do to raise funds for growth or expansion?

Issue shares in return for money

Offer discounts on their products

Who can a private limited company issue shares to?

Only to friends and family of the owners

How can a public limited company raise funds through shares?

By floating the share issue on the stock market and selling to anyone

By issuing shares to specific individuals

By borrowing shares from other companies

What is one of the advantages of issuing new shares as a method of finance for a company?

It acts as an incentive for staff using shares or share options as a motivation tool.

It requires the company to pay high interest rates.

It decreases the profile of the business.

It leads to a quick return on investment.

What is a disadvantage of a new share issue for a company?

It can dilute the control of existing owners.

It allows the company to avoid paying any interest.

It demotivates the staff by offering shares or share options.

It reduces the company's ability to make key decisions.

How does issuing new shares affect the company's financial obligations compared to a loan?

There is no interest to pay when issuing new shares.

The company has to pay interest on shares.

The company has to repay the principal amount in a short period.

The company's debt increases significantly.

An amount of money borrowed from a bank or other lender

A document for property ownership

What will the payments for a loan typically include?

An amount of interest e.g. 9.9%

A name for a loan on a house or business premises

A name for a loan on a car or other vehicle

What is one of the advantages of obtaining a loan or mortgage for a business?

It allows the business to budget as they will know exactly how much they owe.

It increases the complexity of financial management.

It reduces the business's credibility with investors.

It requires full payment in a short period of time.

What can be a disadvantage of a business failing to keep up with loan or mortgage payments?

The premises or assets may be repossessed by the bank.

The business can easily refinance the loan.

The business will receive additional funding from the bank.

The business will be offered a longer period to pay back the loan.

How can a loan or mortgage affect a business's fixed costs?

It will help manage fixed costs with regular monthly payments.

It will increase variable costs instead of fixed costs.

It will have no impact on the business's costs.

It will cause fixed costs to fluctuate significantly.

What is a potential long-term disadvantage of obtaining a loan or mortgage?

It can work out to be very expensive in the long term.

It can be less expensive than other financing methods.

It can lead to a surplus of funds that the business cannot invest.

It can significantly reduce the interest rates on future loans.

What impact can too much debt from loans or mortgages have on a business?

It can make the business unattractive to investors.

It can make the business more attractive to investors.

It can lead to a decrease in overall market competition.

It can have no impact on the business's financial position.

What is an asset in the context of business finance?

Anything that the business owns that has value.

A liability that the business needs to pay off.

A long-term business investment.

Why might a business decide to sell machinery as an asset?

To raise finance by selling something that is no longer needed.

Because it wants to invest in new technology.

As a standard end-of-year procedure.

What is one of the advantages of selling unwanted assets as a method of finance?

It is a good way to raise cash quickly in the business

It increases the interest expenses of the business

It ensures the business retains the benefit of the asset

It improves the value of assets on the business's balance sheet

What is a disadvantage of selling unwanted assets as a method of finance?

It may make the business appear to own less, potentially putting off investors

It creates a good market for second-hand business machinery

It has no impact on the business's balance sheet

It generates interest that the business has to pay

Why might some assets not be beneficial to sell as a method of finance?

They may not be worth much second-hand

They can raise too much cash for the business

They are always worth a lot second-hand

They do not have any impact on the business's balance sheet

Why might a business need an overdraft?

To tide over until a better month when cash flow is low

To invest in long-term projects

To pay for employee training programs

To purchase a new business property

What is an overdraft?

A short-term lending of smaller amounts of money organized by the bank

A financial investment in stocks

A grant provided by the government

How can an overdraft be useful for a business owner with a bank account balance of £500 and a bill of £750?

They can use the overdraft facility to borrow the £250 they don't have

They can request the bank to waive the bill

They can use the overdraft to pay the full £750 bill

They can invest the £500 to make more money

Why would using an overdraft be important when paying suppliers?

It ensures suppliers are paid on time even if the business is short on cash

It allows the business to delay payment indefinitely

It helps in building a good credit score

It allows the business to negotiate lower prices with suppliers

What is one of the advantages of using an overdraft as a method of finance?

It is extremely flexible and can be used even for a single day

Interest is paid on the maximum level allowed

It is a guaranteed long-term source of finance

Why should overdrafts be used with caution?

They have very high rates of interest

They offer a guaranteed period of finance

They require extensive security

Banks give overdrafts easily once the business is established

What is a disadvantage of overdrafts regarding the bank's control?

The bank may refuse to give an overdraft until the business is established

The bank guarantees the overdraft for a long period

The bank requires no interest on overdrafts

The bank allows unlimited overdraft amounts

When is interest paid on an overdraft?

Only on the amount of the overdraft being used

On the maximum level allowed at all times

Once the overdraft period is guaranteed

What is trade credit?

Credit offered by a seller to a buyer to purchase goods without immediate payment

A loan from a financial institution

A discount given by a wholesaler for cash payments

A method of direct payment for goods

What might a wholesaler do for a buyer who uses cash instead of trade credit?

Require immediate payment for future purchases

Finance Sources Quiz

Authored by Carlon Gittens

Business

11th Grade

Used 1+ times

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54 questions

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MULTIPLE CHOICE QUESTION

20 sec • 1 pt

Which of the following is NOT a main source of finance mentioned in the lesson objectives?

Family and friends

Retained profit

Stock market investment

Government grants

MULTIPLE CHOICE QUESTION

20 sec • 1 pt

What should students be able to analyze according to the lesson objectives?

The advantages and disadvantages of each method for a given situation

The historical development of financial sources

The economic impact of financial sources on the global market

The legal implications of financial sources

MULTIPLE CHOICE QUESTION

20 sec • 1 pt

What is the focus of the evaluation in the lesson objectives?

The suitability of sources of finance for new and established businesses

The profitability of new and established businesses

The marketing strategies for new and established businesses

The customer service approaches for new and established businesses

MULTIPLE CHOICE QUESTION

20 sec • 1 pt

What is finance?

The management of small amounts of money in business.

The management of large amounts of money in business.

The process of borrowing money from banks.

The study of human resources in organizations.

MULTIPLE CHOICE QUESTION

20 sec • 1 pt

Which of the following is NOT a method businesses use to raise finance according to the AQA specification?

Issuing bonds

Family and friends

Trade credit

Government grants

MULTIPLE CHOICE QUESTION

20 sec • 1 pt

What is a common method for businesses to raise finance that involves borrowing against the value of a property?

Retained profit

A new share issue

Obtaining a loan or mortgage

Overdrafts

MULTIPLE CHOICE QUESTION

20 sec • 1 pt

Which method of raising finance involves a business using money that it has saved from its profits?

Selling unwanted assets

Retained profit

Hire purchase

Family and friends

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Finance Sources Quiz

Which of the following is NOT a main source of finance mentioned in the lesson objectives?

What should students be able to analyze according to the lesson objectives?

What is the focus of the evaluation in the lesson objectives?

What is finance?

Which of the following is NOT a method businesses use to raise finance according to the AQA specification?

What is a common method for businesses to raise finance that involves borrowing against the value of a property?

Which method of raising finance involves a business using money that it has saved from its profits?

What type of finance is provided by the government to support businesses?

What is one method an entrepreneur may use to finance a business start-up?

Why might an established business ask friends and family for finance?

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