Breakeven Quiz

Name 2 internal sources of finance.

• Bank loans and government grants

• Personal savings and retained profits

• Sale of assets and trade credit

• Overdrafts and venture capital

Name 2 external sources of finance.

• Personal savings and retained profits

• Sale of assets and trade credit

• Bank loans and government grants

• Overdrafts and venture capital

What is retained profit?

• Money borrowed from a bank

• Profit reinvested back into the company

• Income received from selling company shares

• Funds raised through selling company assets

Which source of finance is most suitable if a business wants to buy a new van?

• Issuing new shares

• Retained profits

• Bank overdraft

• Trade credit

What does break-even mean in a business context?

• When a company's income is less than its expenditure

• When a company's income is greater than its expenditure

• When a company's income is exactly equal to its expenditure, showing neither profit nor loss

• When a company has stopped operating

What must happen for a company to make a profit?

• Income must be equal to expenditure

• Income must be less than expenditure

• Income must be higher than expenditure

• The company must break even

When a company breaks even, what are its profit and loss?

• Profit > 0 & loss > 0

• Profit = 0 & loss = 0

• Profit < 0 & loss < 0

• Profit = 0 & loss > 0

What are variable costs?

• Costs that remain constant regardless of the level of output

• Costs that vary with the level of output

• Costs that are only associated with the production of one product

• Costs that include rent and utilities for business premises

Which of the following is an example of fixed costs?

• Cost of raw materials for products

• Rent for business premises

• Cost of production that increases with more output

• Transportation costs that vary depending on the number of deliveries

What happens to fixed costs as output changes?

• They increase

• They decrease

• They stay the same

• They are not related to output